UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                    For the fiscal year ended April 30, 2006
                        Commission file number 002-26821

                            BROWN-FORMAN CORPORATION
             (Exact name of registrant as specified in its charter)

                    Delaware                                   61-0143150
       (State or other jurisdiction of                        (IRS Employer
        incorporation or organization)                      Identification No.)

             850 Dixie Highway                                    40210
            Louisville, Kentucky                                (Zip Code)
   (Address of principal executive offices)

        Registrant's telephone number, including area code (502) 585-1100

Securities registered pursuant to Section 12(b) of the Act:

                                                         Name of Each Exchange
              Title of Each Class                         on Which Registered
              -------------------                        ----------------------
Class A Common Stock (voting) $0.15 par value            New York Stock Exchange

Class B Common Stock (nonvoting) $0.15 par value         New York Stock Exchange

Securities registered pursuant to
  Section 12(g) of the Act:                              None


Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.  Yes [X]  No [ ]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.  Yes [ ]  No [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes [X] No[ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer [X]   Accelerated filer [ ]   Non-accelerated filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).  Yes [ ]  No [X]

The aggregate market value, as of the last business day of the most recently
completed second fiscal quarter, of the voting and nonvoting equity held by
nonaffiliates of the registrant was approximately $3,800,000,000.

The number of shares outstanding for each of the registrant's classes of
Common Stock on May 31, 2006 was:
     Class A Common Stock (voting)            56,829,151
     Class B Common Stock (nonvoting)         65,874,221

                       DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 2006 Annual Report to Stockholders are incorporated
by reference into Parts I, II, and IV of this report.  Portions of the Proxy
Statement of Registrant for use in connection with the Annual Meeting of
Stockholders to be held July 27, 2006 are incorporated by reference into Part
III of this report.



                                     PART I
Item 1.  Business

Brown-Forman Corporation ("we," "us," or "our" below) was incorporated under the
laws of the State of Delaware in 1933,  successor to a business  founded in 1870
as  a  partnership  and  subsequently   incorporated   under  the  laws  of  the
Commonwealth of Kentucky in 1901.

We primarily  manufacture,  bottle, import, export, and market a wide variety of
alcoholic  beverage  brands.  We also  manufacture  and  market new and used oak
barrels, and Hartmann Luggage. Our principal beverage brands are:

     Jack Daniel's                                 Fetzer
     Southern Comfort                              Bolla
     Finlandia                                     Five Rivers
     Gentleman Jack                                Fontana Candida
     Jack Daniel's Single Barrel                   Jekel
     Jack Daniel's Ready-to-Drinks                 Bel Arbor
     Canadian Mist                                 Sonoma-Cutrer
     Early Times                                   Bonterra
     Old Forester                                  Virgin Vines
     Pepe Lopez                                    Gala Rouge
     Tuaca                                         Sundial
     Woodford Reserve                              Durbanville Hills*
     Amarula*                                      Korbel*
     Appleton*                                     Mariah*
     Don Eduardo*                                  Michel Picard*
     Chambord Liqueur**


  *  Brands represented in the U.S and other select markets by Brown-Forman
  ** Acquired May 31, 2006


Our primary spirits brand is Jack Daniel's,  which is the fourth-largest premium
spirits  brand  and the  largest  selling  American  whiskey  brand in the world
according  to  volume   statistics   recently   published  by  a  leading  trade
publication.  Our other leading brands are Southern Comfort,  the second-largest
selling  liqueur in the United  States,  and Canadian  Mist,  the  third-largest
selling Canadian whisky  worldwide,  according to the recently  published volume
statistics  referenced  above.  Our largest wine brands are Fetzer Vineyards and
Bolla,  two of the leading  premium wine brands in the United  States  generally
selling in the $6-9 per bottle price range according to information published by
a leading  consumer  market  research  firm.  That same firm cites Korbel as the
largest selling premium champagne in the retail channel in the United States. We
believe the statistics used to rank these products are reasonably accurate.

Geographic  information  about net sales and long-lived  assets is in Note 13 of
the Notes to  Consolidated  Financial  Statements  on page 64 of our 2006 Annual
Report to Stockholders,  which  information is incorporated  into this report by
reference.

Our strategy is to market high quality  products that satisfy the preferences of
consumers of legal  drinking age and to support those  products  with  extensive
international,  national,  and regional marketing  programs.  These programs are
intended to extend consumer brand recognition and brand loyalty.

                                       2


We own  numerous  valuable  trademarks  that  are  essential  to  our  business.
Registrations of trademarks can generally be renewed indefinitely as long as the
trademarks are in use. We have authorized,  through licensing arrangements,  the
use of some of our  trademarks on promotional  items for the primary  purpose of
enhancing brand awareness.

Customers

In the  United  States,  we sell  spirits  and wines  either  through  wholesale
distributors  or  directly to state  governments  in those  states that  control
alcohol  sales.  The contracts that we have with many of our  distributors  have
formulas which determine reimbursement to distributors if we terminate them. The
amount  of  reimbursement  is based  primarily  on the  distributor's  length of
service and a percentage of its purchases  over time.  Some states have statutes
which limit our ability to terminate distributor  contracts.  Outside the United
States,  we  typically  distribute  our  products  by  selecting  the best local
distributor for our brands in each specific market. Our principal export markets
are the United Kingdom, Germany, Spain, Italy, Australia,  France, South Africa,
Canada, Japan, and China.

Ingredients and Other Supplies

The principal  raw  materials  used in  manufacturing  and  packaging  distilled
spirits are corn, rye, malted barley, glass, cartons, and wood for new white oak
barrels, which are used for storage of bourbon and Tennessee whiskey. Currently,
none of these raw materials is in short supply,  and there are adequate  sources
from which they may be obtained.

Due to aging  requirements,  production  of whiskeys is scheduled to meet demand
three to six years in the future.  Accordingly,  our  inventories  are larger in
relation  to sales  and  total  assets  than  would  be  normal  for most  other
businesses.

The  principal  raw  materials  used in the  production  of wines are grapes and
packaging  materials.  Grapes  are  primarily  purchased  under  contracts  with
independent  growers and, from time to time,  are adversely  affected by weather
and other forces which may limit  production.  We believe that our relationships
with our growers are good.

Competition

The  industry  is  highly  competitive  and there  are many  brands  sold in the
consumer market. Trade information indicates that we are one of the largest wine
and spirit suppliers in the United States in terms of revenues.

Regulatory Environment

The  Alcohol  and Tobacco  Tax and Trade  Bureau of the United  States  Treasury
Department  regulates the wine and spirits  industry with respect to production,
blending,  bottling, sales, advertising and transportation of industry products.
Also, each state regulates  advertising,  promotion,  transportation,  sale, and
distribution of such products.

                                       3


Under  federal  regulations,  whiskey  must be aged for at least two years to be
designated  "straight  whiskey." We age our  straight  whiskeys for a minimum of
three to six years. Federal regulations also require that "Canadian" whisky must
be  manufactured  in Canada in compliance with Canadian laws and must be aged in
Canada for at least  three  years.  We believe we are in  compliance  with these
regulations.

For  information  on the effects of compliance  with federal,  state,  and local
environmental regulations, refer to Note 15, "Environmental Matters," on page 64
of our 2006 Annual Report to  Stockholders,  which  information is  incorporated
into this report by reference.

Employees

As of April 30, 2006, we employed about 3,750 persons,  including  approximately
400  employed  on a  part-time  or  temporary  basis.  We believe  our  employee
relations are good.

Available Information

You may  read  and copy any  materials  that we file  with the SEC at the  SEC's
Public Reference Room at 100 F Street, NE, Washington,  D.C. 20549.  Information
on  the  Public   Reference   Room  may  be  obtained  by  calling  the  SEC  at
1-800-SEC-0330.  In addition,  the SEC  maintains an Internet site that contains
reports,  proxy and  information  statements,  and other  information  regarding
issuers that file with the SEC at http://www.sec.gov.

Our Web site  address  is  www.brown-forman.com.  Please  note that our  website
address is provided as an inactive textual reference only. Our annual reports on
Form 10-K,  quarterly reports on Form 10-Q, current reports on Form 8-K, and any
amendments to these reports are available free of charge on our Web site as soon
as reasonably  practicable after we  electronically  file those reports with the
Securities and Exchange Commission.  The information provided on our Web site is
not part of this report,  and is therefore not  incorporated by reference unless
such information is otherwise specifically referenced elsewhere in this report.

On our Web site, we have posted our Corporate Governance Guidelines, our Code of
Conduct that applies to all directors and employees, and our Code of Ethics that
applies  specifically to our senior financial  officers.  We have also posted on
our Web site the charters of our Audit and  Compensation  Committees.  Copies of
these  materials are also  available  free of charge by writing to our Corporate
Secretary, Michael B. Crutcher, 850 Dixie Highway, Louisville, Kentucky 40210 or
e-mailing him at Michael_Crutcher@b-f.com.


Item 1A.  Risk Factors

You should carefully consider the following factors that could materially affect
our  business,  as well as the other  information  set forth in this report.  In
addition,  in our  periodic  filings  with the SEC,  press  releases  and  other
statements,   we  discuss   estimates  and  projections   regarding  our  future
performance and business outlook.  Such "forward-looking  statements",  by their
nature, involve known and unknown risks, uncertainties and other factors that in
some cases are out of our control.  These factors could cause our actual results
to differ materially from our historical  experience or our present expectations
and projections.  The following is a non-exclusive  discussion of such risks and
uncertainties.

                                       4


OUR BUSINESS MAY BE ADVERSELY AFFECTED BY UNFAVORABLE ECONOMIC CONDITIONS IN THE
UNITED STATES AND ABROAD.

Our business is subject to changes in global  economic  conditions.  The bulk of
our business is in the United States and our business prospects generally depend
heavily on the health of the U.S. economy.  Earnings could be adversely affected
by lower  consumer  confidence  and  decreased  bar,  hotel and travel  spending
resulting from terrorist attacks and related  subsequent  events,  including the
U.S.  response,  major  natural  disasters,  widespread  outbreak of  infectious
diseases such as avian influenza, other hostile acts, retaliation, or threats of
any of these.  Earnings could also be hurt by the United States'  current war in
Iraq, or if the United States goes to war against  another  country deemed to be
harboring terrorists or otherwise a threat to U.S. interests.

If  global  economic  conditions  deteriorate,  or if  there is an  increase  in
anti-American  sentiment  in the  principal  countries  to which we  export  our
beverage  products,   including  the  United  Kingdom,  Germany,  Italy,  Spain,
Australia,  France,  Poland,  China,  and  Japan,  our  sales  could  materially
decrease.  The long-term outlook for our beverage business anticipates continued
success of Jack Daniel's Tennessee Whiskey,  Southern Comfort,  Finlandia Vodka,
and our other core wine and spirits brands.  This assumption is based in part on
favorable demographic trends in the United States and many international markets
for the sale of wine and spirits.  Current  expectations for our global beverage
business  may not be met if  these  demographic  trends  do not  translate  into
corresponding sales increases.

OUR  INTERNATIONAL  OPERATIONS  SUBJECT  US TO  RISKS  ASSOCIATED  WITH  FOREIGN
CURRENCY EXCHANGE RATES.

Sales of our brands in  international  markets are conducted in local  currency.
Thus, profits from our overseas business could be adversely affected if the U.S.
dollar strengthens against other currencies,  especially the British Pound, Euro
and the Australian Dollar,  because the local currency received from the sale of
our  products  would  translate  into fewer U.S.  dollars.  To the extent we are
unable to effectively  manage our exposure to such  fluctuations,  our financial
results will likely suffer.

RISING ENERGY COSTS COULD AFFECT OUR FINANCIAL RESULTS.

If  energy  costs  continue  to rise,  our  transportation,  freight  and  other
operating costs, such as distilling, will likely increase. We may not be able to
pass  along  such  cost  increases  to  our  customers  through  higher  prices.
Additionally,  rising  energy costs may diminish  consumer  confidence,  thereby
resulting in decreased demand for our brands.

                                       5


DEMAND FOR OUR  PRODUCTS  MAY BE  ADVERSELY  AFFECTED  BY  CHANGES  IN  CONSUMER
PREFERENCES AND TASTES.

We operate in a highly  competitive  marketplace.  Maintaining  our  competitive
position  depends on our continued  ability to offer products that have a strong
appeal to consumers. Consumer preferences may shift due to a variety of factors,
including  changes in demographic  and social trends,  and changes in dining and
beverage consumption  patterns, as might be indicated by recent published trends
suggesting  a  slight  reduction  in  the  growth  rate  of  distilled   spirits
consumption in the U.S. In addition,  sales of a brand might diminish because of
a scare over product  contamination or some other negative  publicity  regarding
the brand. If a product recall becomes necessary, that can affect our business.

NATIONAL AND LOCAL  GOVERNMENTS  MAY ADOPT  REGULATIONS  THAT COULD INCREASE OUR
COSTS OR OUR  LIABILITIES,  OR THAT COULD  LIMIT OUR WINE AND  SPIRITS  BUSINESS
ACTIVITIES.

Our  operations  are  subject to  extensive  regulatory  requirements  regarding
advertising,   marketing,  labeling,   distribution  and  production.  Legal  or
regulatory   measures  against  beverage  alcohol  could  adversely  affect  our
business.  In particular,  governmental bodies in countries where we operate may
impose or increase  limitations on advertising  and promotional  activities,  or
adopt other non-tariff measures that could hurt our sales.

TAX INCREASES COULD HURT OUR FINANCIAL RESULTS.

The wine and spirits business is highly sensitive to changes in taxes. Increases
in state or federal excise taxes in the U.S. would depress our domestic wine and
spirits business,  both through reducing overall  consumption and by encouraging
consumers  to  switch  to  lower-taxed   categories  of  beverage  alcohol.   No
legislation  to increase  U.S.  federal  excise  taxes on  distilled  spirits is
currently pending, but future increases are possible, as are taxes levied on the
broader business community.  Tax rates also affect the beverage alcohol business
outside the United States, but the impact of those changes in any one country is
less  likely  to be  significant  to our  overall  business.  Nevertheless,  the
cumulative  effect  of such  tax  increases  over  time  would  likely  hurt our
financial performance.

IF THE SOCIAL  ACCEPTABILITY  OF OUR  PRODUCTS  DECLINES  OR  GOVERNMENTS  ADOPT
POLICIES AGAINST BEVERAGE ALCOHOL,  OUR REVENUES COULD DECREASE AND OUR WINE AND
SPIRITS BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED.

Our ability to market and sell our alcohol beverage  products depends heavily on
both society's  attitudes  toward drinking and  governmental  policies that flow
from those  attitudes.  In recent  years,  there has been  increased  social and
political  attention  directed  at the  beverage  alcohol  industry.  The recent
attention  has focused  largely over public health  concerns  related to alcohol
abuse, including drunk driving,  underage drinking, and health consequences from
the  misuse  of  beverage  alcohol.  Alcohol  critics  in the  U.S.  and  Europe
increasingly seek governmental measures to make beverage alcohol more expensive,
less  available,  and more  difficult  to advertise  and promote.  If the social
acceptability  of beverage alcohol were to decline  significantly,  sales of our
products could materially  decrease.  Our sales would also suffer if governments
sought to ban or restrict advertising or promotional activities,  to limit hours
or  places  of sale,  or took  other  actions  designed  to  discourage  alcohol
consumption.

                                       6


LITIGATION  RELATING TO ALCOHOL  ABUSE AND  ILLEGAL  ALCOHOL  CONSUMPTION  COULD
ADVERSELY IMPACT OUR BUSINESS.

A number of beverage alcohol producers have been sued over allegations  relating
to their advertising  practices. A law firm has filed nine class action lawsuits
against several spirits,  beer, and wine manufacturers,  including us. The suits
allege that our marketing causes illegal consumption of alcohol by persons under
the legal  drinking  ages.  To date,  the first five  courts to  consider  those
lawsuits have dismissed them.  Plaintiffs have appealed,  or have time remaining
to appeal,  those  dismissals.  Another of the cases was voluntarily  dismissed.
Three  others have pending  motions to dismiss.  We dispute the  allegations  in
these lawsuits and intend to continue to defend these cases vigorously. However,
adverse  developments  in these or similar  lawsuits could  materially  hurt our
beverage business and the overall industry generally.

OUR WINE BUSINESS MAY BE ADVERSELY AFFECTED BY PRODUCTION COSTS.

Our California-based  wine operations have entered into long-term contracts with
various   growers  and   wineries  to  supply   portions  of  our  future  grape
requirements.  Most of the contracts  call for prices to be determined  based on
market  conditions,  within a certain range, and most of the contracts also have
minimum tonnage  requirements.  Although these contracts provide some protection
in times of rising grape prices,  the  contracts  result in  above-market  costs
during times of declining  prices.  In today's  environment of historically  low
grape  prices due to a world over  supply of grapes,  Fetzer  pays  above-market
costs for some of its raw  materials,  which can result in a reduction  in gross
margins.  There can be no assurances as to the future  prevailing  market prices
for grapes or our ability,  relative to our  competitors,  to take  advantage of
oversupply conditions.

FURTHER  CONSOLIDATION  AMONG SPIRITS  PRODUCERS OR WHOLESALERS COULD HINDER THE
DISTRIBUTION OF OUR SPIRITS PRODUCTS.

We use a number  of  different  business  models to market  and  distribute  our
products.  However, we rely largely on other spirits producers to distribute and
market our products in international  markets.  In the United States we sell our
products to wholesalers through the mandatory three-tier system. Distributor and
wholesaler  consolidations have not in the past negatively affected our wine and
spirits business.  Nevertheless,  further  consolidation among spirits producers
overseas or  wholesalers in the United States could hinder the  distribution  of
our products as a result of reduced  attention  and resource  allocation  to our
brands,  due to our brands  representing  a smaller  portion  of their  business
and/or a changing competitive environment.

OUR  ACQUISITION  STRATEGIES AND  INTEGRATION OF ACQUIRED  BUSINESSES MAY NOT BE
SUCCESSFUL.

From time to time,  we  acquire  additional  businesses  that we believe to be a
strategic fit, such as our recent purchase of Chambord  Liqueur.  Integration of
acquired  businesses  into our  existing  business  may prove  challenging,  and
involve  significant  devotion of expenses and management time and disruption of
our  business.  Additionally,  business  acquisitions  may  expose us to unknown
liabilities.  We cannot assure you that our  acquisitions  will not involve such
risks.

Item 1B.  Unresolved Staff Comments

None.

                                       7


Item 2.  Properties

Significant properties are as follows:

Owned facilities:
   - Office facilities:
        - Corporate offices (including renovated historic structures)
          - Louisville, Kentucky

   - Production and warehousing facilities:
        - Lynchburg, Tennessee
        - Louisville, Kentucky
        - Collingwood, Ontario
        - Shively, Kentucky
        - Woodford County, Kentucky
        - Frederiksted, St. Croix, U.S. Virgin Islands
        - Hopland, California
        - Paso Robles, California
        - Windsor, California
        - Livorno, Italy
        - Pedemonte, Italy
        - Soave, Italy
        - Albany, Kentucky
        - Waverly, Tennessee
        - Lebanon, Tennessee
        - Blois, France (effective May 31, 2006)

Leased facilities:
   - Production and bottling facility in Dublin, Ireland
   - Warehousing facility in Mendocino County, California
   - Stave and heading mill in Jackson, Ohio
   - Retail stores:
        - 7 Hartmann luggage outlet stores in 6 states.

The lease terms expire at various dates and are generally renewable.

We believe that the facilities are in good condition and are adequate for the
business.

                                       8


Item 3.  Legal Proceedings

Brown-Forman Corporation and many other manufacturers of spirits, wine, and beer
are defendants in a series of essentially  similar class action lawsuits seeking
damages and  injunctive  relief for  alleged  marketing  of beverage  alcohol to
underage  consumers.  Nine  lawsuits  have been filed to date,  the first  three
against eight defendants, including Brown-Forman: Hakki v. Adolph Coors Company,
et.al.,  District of Columbia  Superior  Court No. CD 03-9183  (November  2003);
Kreft v. Zima Beverage Co., et.al., District Court, Jefferson County,  Colorado,
No. 04cv1827 (December 2003); and Wilson v. Zima Company,  et.al., U.S. District
Court for the  Western  District  of North  Carolina,  Charlotte  Division,  No.
3:04cv141  ( January  2004).  Two  virtually  identical  suits with  allegations
similar to those in the first three  lawsuits were filed in Cleveland,  Ohio, in
April and June,  2004,  respectively,  against the original eight  defendants as
well as an  additional  nine  manufacturers  of  spirits  and beer,  and are now
consolidated  as  Eisenberg  v.  Anheuser-Busch,  U.S.  District  Court  for the
District of Northern  Ohio,  No.  1:04cv1081.  Five similar  suits were filed in
2005:  Elizabeth H.  Sciocchette v. Advanced  Brands,  Albany  County,  New York
Supreme Court No.  102205  (February  16,  2005);  Roger and Kathy  Bertovich v.
Advanced  Brands,  Hancock  County,  West Virginia,  Circuit Court No.  05-C-42M
(February 17, 2005);  Jacquelin Tomberlin v. Adolph Coors, Dane County (Madison,
Wisconsin) Circuit Court,  (February 23, 2005); Viola Alston v. Advanced Brands,
Wayne County,  Michigan,  Circuit Court No.  05-509294,  (March,  30, 2005), and
Craig Konhauzer v. Adolph Coors Company,  Broward County, Florida Circuit Court,
No. 05004875 (March 30, 2005). In addition,  Brown-Forman  received in February,
2004,  a  pre-lawsuit  notice  under  the  California  Consumer  Protection  Act
indicating  that the same lawyers  intend to file a lawsuit  there  against many
industry defendants,  including  Brown-Forman,  presumably on the same facts and
legal theories.

The suits  allege  that the  defendants  have  engaged  in  deceptive  marketing
practices and schemes targeted at underage consumers, negligently marketed their
products to the underage, and fraudulently concealed their alleged misconduct.

Plaintiffs  seek class action  certification  on behalf of: (a) a guardian class
consisting  of all persons who were or are parents of children  whose funds were
used to purchase beverage alcohol marketed by the defendants which were consumed
without their prior  knowledge by their  children under the age of 21 during the
period 1982 to present;  and (b) an injunctive  class  consisting of the parents
and guardians of all children currently under the age of 21.

The lawsuits seek: (1) a finding that defendants  engaged in a deceptive  scheme
to market alcoholic beverages to underage persons and an injunction against such
alleged  practices;  (2)  disgorgement  and refund to the guardian  class of all
proceeds  resulting  from sales to the underage  since 1982; and (3) judgment to
each  guardian  class  member for a trebled  award of actual  damages,  punitive
damages, and attorneys fees. The lawsuits,  either collectively or individually,
if ultimately successful, represent significant financial exposure.

Brown-Forman,  in coordination  with other defendants,  is vigorously  defending
itself in these cases.  Brown-Forman and the other defendants have  successfully
obtained  orders to dismiss  five of the  pending  cases:  Kreft  (Colorado)  in
October 2005;  Eisenberg  (Ohio) in February 2006; and Tomberlin  (Wisconsin) in
March 2006,  Hakki (D.C.) in March 2006,  and Alston  (Michigan) in May 2006. In
addition,  plaintiff Konhauzer (Florida) has voluntarily dismissed that lawsuit.
Each involuntarily dismissal is being appealed by the respective plaintiffs.


Item 4.  Submission of Matters to a Vote of Security Holders

None.


                                        9



Executive Officers of the Registrant


                                                Principal Occupation and
     Name                         Age             Business Experience
     ----                         ---       ---------------------------------

Owsley Brown II                    63       Chairman of the Board of the Company
                                            since 1995. Chief Executive Officer
                                            of the Company from 1993 to July
                                            2005.

Paul C. Varga                      42       President and Chief Executive
                                            Officer of the Company since August
                                            2005. President and Chief Executive
                                            Officer of Brown-Forman Beverages
                                            (a division of the Company) since
                                            August 2003. Global Chief Marketing
                                            Officer for Brown-Forman Beverages
                                            from 2000 to July 2003.

Phoebe A. Wood                     53       Executive Vice President and Chief
                                            Financial Officer of the Company
                                            since 2001.

Michael B. Crutcher                62       Vice Chairman, General Counsel, and
                                            Secretary since August 2003. Senior
                                            Vice President, General Counsel, and
                                            Secretary from 1989 to August 2003.

James S. Welch, Jr.                47       Vice Chairman, Strategy and Human
                                            Resources since August 2003. Senior
                                            Vice President and Executive
                                            Director of Human Resources from
                                            1999 to August 2003.

James L. Bareuther                 60       Executive Vice President and Chief
                                            Operating Officer of Brown-Forman
                                            Beverages since August 2003.
                                            President of Brown-Forman Spirits
                                            Americas from 2001 to August 2003.

Jane C. Morreau                    47       Vice President and Controller since
                                            August 2002. Director of Business
                                            Planning & Analysis from 1997 to
                                            July 2002.


                                       10


                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder
         Matters

Our Class A and Class B Common  Stock is traded on the New York  Stock  Exchange
(symbols "BFA" and "BFB," respectively).

Holders of record of Common Stock at April 30, 2006:
         Class A Common Stock (Voting)               3,436
         Class B Common Stock (Nonvoting)            4,145

For the other  information  required by this item, refer to the section entitled
"Quarterly  Financial  Information"  at the front of the 2006  Annual  Report to
Stockholders, which information is incorporated into this report by reference.

Item 6.  Selected Financial Data

For the  information  required  by this  item,  refer  to the  section  entitled
"Selected  Financial Data" on page 37 of the 2006 Annual Report to Stockholders,
which information is incorporated into this report by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

For the  information  required  by this  item,  refer  to the  section  entitled
"Management's Discussion and Analysis" on pages 38 through 50 of the 2006 Annual
Report to  Stockholders,  and the section  entitled  "Important  Information  on
Forward-Looking   Statements"   on  page  70  of  the  2006  Annual   Report  to
Stockholders, which information is incorporated into this report by reference.

Impact of Inflation and Changing Prices

Inflation  affects  the way we market  and price our  products  in many  markets
around the world.  In general,  and with respect to the most recent three fiscal
years,  we  believe  that  over time we have  been  able to  increase  prices to
counteract the majority of the  inflationary  effects on our net sales,  revenue
and income from continuing operations.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

For the information required by this item, refer to the section entitled "Market
Risks"  beginning on page 48 of the 2006 Annual  Report to  Stockholders,  which
information is incorporated into this report by reference.

Item 8.  Financial Statements and Supplementary Data

For the information  required by this item, refer to the Consolidated  Financial
Statements,  Notes to Consolidated Financial Statements,  Reports of Management,
and Report of Independent  Registered Public Accounting Firm on pages 51 through
67 of the 2006 Annual Report to Stockholders,  which information is incorporated
into this report by reference.

                                       11


Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

None.


Item 9A.  Controls and Procedures

The Chief Executive  Officer ("CEO") and the Chief Financial  Officer ("CFO") of
Brown-Forman  (its principal  executive and principal  financial  officers) have
evaluated  the   effectiveness  of  the  company's   "disclosure   controls  and
procedures" (as defined in Rule 13a-15(e)  under the Securities  Exchange Act of
1934 (the  "Exchange  Act")) as of the end of the period covered by this report.
Based  on  that  evaluation,  the  CEO  and CFO  concluded  that  the  company's
disclosure  controls and  procedures:  are effective to ensure that  information
required to be disclosed by the company in the reports  filed or submitted by it
under the Exchange Act is recorded,  processed,  summarized, and reported within
the time periods  specified in the SEC's rules and forms;  and include  controls
and procedures  designed to ensure that information  required to be disclosed by
the company in such reports is  accumulated  and  communicated  to the company's
management,  including  the CEO and the CFO,  as  appropriate,  to allow  timely
decisions  regarding  required  disclosure.  There  has  been no  change  in the
company's  internal  control  over  financial  reporting  during the most recent
fiscal  quarter  that  has  materially  affected,  or is  reasonably  likely  to
materially affect, the company's internal control over financial reporting.

For the other information  required by this item, refer to "Management's  Report
on  Internal  Control  over  Financial  Reporting"  and  "Report of  Independent
Registered  Public Accounting Firm" on pages 66 and 67 of the 2006 Annual Report
to  Stockholders,   which  information  is  incorporated  into  this  report  by
reference.


Item 9B.  Other Information

None.


                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

For the information  required by this item,  refer to the following  sections of
our definitive proxy statement for the Annual Meeting of Stockholders to be held
July 27, 2006, which  information is incorporated into this report by reference:
(a) "Election of Directors" on pages 6 through 8 (for information on directors);
(b) "Corporate  Governance"  on page 9 (for  information on our Code of Ethics);
(c) the last  paragraph on page 18 (for  information  on  delinquent  Section 16
filings);  and (d) "Audit  Committee"  on pages 19  through  21.  Also,  see the
information with respect to "Executive  Officers of the Registrant" under Part I
of this report, which information is incorporated herein by reference.

We will post any  amendments  to our Code of Ethics  that  applies  to our chief
executive  officer,  principal  financial  officer,   controller  and  principal
accounting  officer,  and any waivers  that are  required to be disclosed by the
rules of either the SEC or NYSE on our Web site.

                                       12


We filed  during the fiscal  year ended  April 30, 2006 with the NYSE the Annual
CEO Certification  regarding the Company's  compliance with the NYSE's Corporate
Governance  listing  standards  as  required by Section  303A-12(a)  of the NYSE
Listed Company  Manual.  In addition,  the Company has filed as exhibits to this
annual report and to the annual report on Form 10-K for the year ended April 30,
2005, the applicable certifications of its Chief Executive Officer and its Chief
Financial Officer required under Section 302 of the  Sarbanes-Oxley Act of 2002,
regarding the quality of the company's public disclosures.


Item 11.  Executive Compensation

For the information  required by this item,  refer to the following  sections of
our definitive proxy statement for the Annual Meeting of Stockholders to be held
July 27, 2006, which  information is incorporated into this report by reference:
(a)  "Executive  Compensation"  on pages 22  through  31; (b)  "Retirement  Plan
Descriptions" on page 32; and (c) "Director Compensation" on page 33.


Item 12.  Security Ownership of Certain Beneficial Owners and Management and
          Related Stockholder Matters

                      Equity Compensation Plan Information

In July 2004,  shareholders  approved the 2004 Omnibus  Compensation Plan as the
successor to both the 1994 Omnibus  Compensation Plan providing equity awards to
employees and the Non-Employee Directors ("NED") Plan providing equity awards to
non-employee  directors.  At the time the NED Plan was discontinued,  it had not
been submitted to  shareholders.  The following  table  provides  information on
these plans as of the end of the most recently completed fiscal year:



                                                                                                  Number of securities
                                 Number of securities to be     Weighted-average exercise         remaining available
                                  issued upon exercise of         price of outstanding            for future issuance
                                    outstanding options,          options, warrants and        under equity compensation
Plan category                       warrants and rights                 rights(1)                      plans(2)
                                                                                      
Equity compensation plans
approved by security holders             4,492,498                        $40.58                        5,094,788

Equity compensation plans not
approved by security holders               164,908                        $32.30                            --   (3)
                                         ---------                        ------                        ---------
Total                                    4,657,406                        $40.28                        5,094,788
                                         =========                        ======                        =========

   (1) The difference in weighted-average exercise price between plans is primarily due to a premium-priced, broad-based grant made
       to employees under the stockholder-approved plan. In all other instances, grant prices were equal to the fair market value
       of the stock at the time of grant.

   (2) Securities available for issuance under the 2004 Omnibus Compensation Plan include stock, stock options, stock appreciation
       rights, market value units, and performance units.

   (3) No further awards can be made under the NED plan.



                                       13


For the other  information  required by this item, refer to the section entitled
"Stock  Ownership" on pages 14 through 18 of our definitive  proxy statement for
the Annual Meeting of Stockholders to be held July 27, 2006,  which  information
is incorporated into this report by reference.

Item 13.  Certain Relationships and Related Transactions

For the  information  required  by this  item,  refer  to the  section  entitled
"Transactions  with Management" on page 35 of our definitive proxy statement for
the Annual Meeting of Stockholders to be held July 27, 2006,  which  information
is incorporated into this report by reference.

Item 14.  Principal Accountant Fees and Services

For the information  required by this item,  refer to the section entitled "Fees
Paid to Independent  Auditor" on page 20 of our definitive  proxy  statement for
the Annual Meeting of Stockholders to be held July 27, 2006,  which  information
is incorporated into this report by reference.

                                       14


                                     PART IV

Item 15.  Exhibits and Financial Statement Schedules

(a)  1 and 2 - Index to Consolidated Financial Statements and Schedule:


                                                                                                        Reference
                                                                                                                     Annual
                                                                                            Form 10-K               Report to
                                                                                          Annual Report            Stockholders
                                                                                              Page                   Page(s)
                                                                                                             
        Incorporated by reference to our Annual Report to
           Stockholders for the year ended April 30, 2006:

           Consolidated Statements of Operations for the
              years ended April 30, 2004, 2005, and 2006*                                         --                   51
           Consolidated Balance Sheets at April 30, 2005 and 2006*                                --                   52
           Consolidated Statements of Cash Flows for the
              years ended April 30, 2004, 2005, and 2006*                                         --                   53
           Consolidated Statements of Stockholders' Equity
              for the years ended April 30, 2004, 2005, and 2006*                                 --                   54
           Notes to Consolidated Financial Statements*                                            --                 55 - 65
           Reports of Management*                                                                 --                   66
           Report of Independent Registered Public Accounting Firm*                               --                   67
           Important Information on Forward-Looking Statements                                    --                   70

        Consolidated Financial Statement Schedule:
           Report of Independent Registered Public Accounting Firm
            on Financial Statement Schedule                                                       S-1                  --
           II - Valuation and Qualifying Accounts                                                 S-2                  --



All other  schedules for which  provision is made in the  applicable  accounting
regulations of the Securities and Exchange  Commission  have been omitted either
because  they are not  required  under the  related  instructions,  because  the
information  required is included in the consolidated  financial  statements and
notes thereto, or because they are inapplicable.

*  Incorporated by reference to Item 8 in this report.

                                       15


(a)    3 - Exhibits: Filed with this report:

Exhibit Index
- -------------

     10(k)   Asset Purchase Agreement, dated as of March 15, 2006, among Chatham
             International Incorporated, Charles Jacquin et Cie., Inc., the
             Selling Stockholders and Brown-Forman Corporation.

     10(l)   Amendment and Restatement Agreement dated as of April 10, 2006 in
             respect of the Five-Year Credit Agreement dated as of July 30,
             2004, among Brown-Forman Corporation; Brown-Forman Beverages Europe
             Ltd.; the Lenders party thereto; and JPMorgan Chase Bank, N.A., as
             Administrative Agent.

     13      Brown-Forman Corporation's Annual Report to Stockholders for the
             year ended April 30, 2006, but only to the extent set forth in
             Items 1, 5, 6, 7, 7A, 8 and 9A of this Annual Report on Form 10-K
             for the year ended April 30, 2006.

     21      Subsidiaries of the Registrant.

     23      Consent of PricewaterhouseCoopers LLP independent registered public
             accounting firm.

     31.1    CEO Certification pursuant to Section 302 of Sarbanes-Oxley Act of
             2002.

     31.2    CFO Certification pursuant to Section 302 of Sarbanes-Oxley Act of
             2002.

     32      CEO and CFO Certification pursuant to 18 U.S.C. Section 1350, as
             adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
             (not considered to be filed).

Previously Filed:
 Exhibit Index
- -------------
    3(i)     Restated Certificate of Incorporation of registrant, which is
             incorporated into this report by reference to Brown-Forman
             Corporation's Form 10-Q filed on March 4, 2004.

    3(ii)    By-laws of Registrant, as amended on May 26, 2005, which is
             incorporated into this report by reference to Brown-Forman
             Corporation's Form 8-K filed on May 27, 2005.

      4      Form of Indenture dated as of March 1, 1994 between Brown-Forman
             Corporation and The First National Bank of Chicago, as Trustee,
             which is incorporated into this report by reference to Brown-Forman
             Corporation's Form S-3 (Registration  No. 33-52551) filed on
             March 8, 1994.

    10(a)    Brown-Forman Corporation Supplemental Executive Retirement Plan,
             which is incorporated into this report by reference to Brown-Forman
             Corporation's Form 10-K filed on July 23, 1990.

    10(b)    A description of the Brown-Forman Savings Plan, which is
             incorporated into this report by reference to page 10 of
             Brown-Forman's definitive proxy statement filed on June 27, 1996
             in connection with its 1996 Annual Meeting of Stockholders.

    10(c)    The description of the terms of $250,000,000 of 2-1/8% Notes due
             2006 and $350,000,000 of 3% Notes due 2008, which description is
             incorporated by reference into this report by reference to the
             Indenture filed with Brown-Forman Corporation's Form S-4
             (Registration No. 333-104657) on April 21, 2003.

                                       16


    10(d)    Brown-Forman Corporation 2004 Omnibus Compensation Plan, which is
             incorporated into this report by reference to Brown-Forman's
             definitive proxy statement filed on June 30, 2004 in connection
             with its 2004 Annual Meeting of Stockholders.

    10(e)    Five-Year Credit Agreement, dated as of July 30, 2004, among
             Brown-Forman Corporation, the Lenders named therein, Bank of
             America, N.A., as Syndication Agent, Citibank, N.A., HSBC Bank USA
             and National City Bank of Kentucky, as Documentation Agents, and
             JPMorgan Chase Bank, as Administrative Agent, which is incorporated
             into this report by reference to Brown-Forman Corporation's
             Form 10-Q filed on September 2, 2004.

    10(f)    Form of Restricted Stock Agreement, as amended.

    10(g)    Form of Employee Stock Appreciation Right Award.

    10(h)    Form of Non-Qualified Stock Option Award.

    10(i)    Form of Non-Employee Director Stock Appreciation Right Award.

    10(j)    Form of Non-Employee Director Non-Qualified Stock Option Award.

    14       Code of Ethics, which is incorporated into this report by reference
             to Brown-Forman Corporation's Form 10-K filed on July 2, 2004.

                                       17


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                            BROWN-FORMAN CORPORATION
                                                 (Registrant)



                                            /s/ Paul C. Vargs
Date:  June 29, 2006                        By: Paul C. Varga
                                                Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities on June 29, 2006 as indicated:


/s/ Ina Brown Bond                            /s/ Richard P. Mayer
By: Ina Brown Bond                            By: Richard P. Mayer
    Director                                      Director



/s/ Barry D. Bramley                          /s/ Jane C. Morreau
By: Barry D. Bramley                          By: Jane C. Morreau
    Director                                      Vice President and Controller
                                                  (Principal Accounting Officer)


/s/ Geo. Garvin Brown IV                      /s/ Stephen E. O'Neil
By: Geo. Garvin Brown IV                      By: Stephen E. O'Neil
    Director                                      Director



/s/ Martin S. Brown, Jr.                      /s/ William M. Street
By: Martin S. Brown, Jr.                      By: William M. Street
    Director                                      Director, Former President,
                                                  Brown-Forman Corporation


/s/ Owsley Brown II                           /s/ Paul C. Varga
By: Owsley Brown II                           By: Director, Chief Executive
    Director, Chairman of the Board               Officer



/s/ Donald G. Calder                          /s/ Phoebe A. Wood
By: Donald G. Calder                          By: Phoebe A. Wood
    Director                                      Executive Vice President and
                                                  Chief Financial Officer
                                                  (Principal Financial Officer)

/s/ Sandra A. Frazier
By: Sandra A. Frazier
    Director



                                       18


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                        ON FINANCIAL STATEMENT SCHEDULE


To the Board of Directors
of Brown-Forman Corporation:

Our audits of the consolidated financial statements,  of management's assessment
of the  effectiveness  of internal  control over financial  reporting and of the
effectiveness  of internal control over financial  reporting  referred to in our
report dated June 22, 2006  appearing in the 2006 Annual Report to  Stockholders
of Brown-Forman Corporation (which report, consolidated financial statements and
assessment  are  incorporated  by reference in this Annual  Report on Form 10-K)
also  included  an audit of the  financial  statement  schedule  listed  in Item
15(a)(1) and (2) of this Form 10-K.  In our opinion,  this  financial  statement
schedule  presents fairly, in all material  respects,  the information set forth
therein  when  read in  conjunction  with  the  related  consolidated  financial
statements.




/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Louisville, Kentucky
June 22, 2006

                                      S-1



                    BROWN-FORMAN CORPORATION AND SUBSIDIARIES
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
               For the Years Ended April 30, 2004, 2005, and 2006
                            (Expressed in thousands)




                      Col. A                           Col. B                Col. C                Col. D           Col. E
                      ------                           ------                ------                ------           ------
                                                                           Additions
                                                     Balance at            Charged to                              Balance at
                                                     Beginning                Costs                                    End
                   Description                       of Period            and Expenses           Deductions         of Period
                   -----------                       ----------           ------------           ----------        ----------
                                                                                                         

2004
    Allowance for Doubtful Accounts                    $5,560                 $754                $833(1)            $5,481

2005
    Allowance for Doubtful Accounts                    $5,481                 $286                $207(1)            $5,560

2006
    Allowance for Doubtful Accounts                    $5,560                 $274                $122(1)            $5,712



 (1) Doubtful accounts written off, net of recoveries.

                                      S-2



                                                                   Exhibit 10(k)



                            ASSET PURCHASE AGREEMENT

                                      among

                       CHATAM INTERNATIONAL INCORPORATED,

                         CHARLES JACQUIN ET CIE., INC.,

                            THE SELLING STOCKHOLDERS

                                       and

                            BROWN-FORMAN CORPORATION

                           Dated as of March 15, 2006






This ASSET PURCHASE  AGREEMENT,  dated as of March 15, 2006 (this  "Agreement"),
among Chatam International Incorporated,  a Delaware corporation (the "Seller"),
Charles  Jacquin  et  Cie.,  Inc.,  a  Pennsylvania  corporation  (the  "Selling
Subsidiary") and Brown-Forman Corporation, a Delaware corporation (the "Buyer"),
and,  solely for purposes of Articles IV, VIII,  IX and X and Section 6.9,  N.J.
"Sky" Cooper, John A. Cooper and Robert J. Cooper (the "Selling Stockholders").

WHEREAS, the Seller and its Subsidiaries are, among other things, engaged in the
worldwide  business of producing,  marketing,  distributing and selling a luxury
liqueur under the trade name  "Chambord"  (as conducted as of the date hereof or
as of the Closing Date, as the case may be, by the Seller and its  Subsidiaries,
the "Business";  the Business excluding the Chambord Business (as defined in the
R&J Sale Agreement), the "Transferred Business"); and

WHEREAS,  Chambord  et Cie  SARL,  a French  societe  a  responsabilite  limitee
("Chambord"),  a company  indirectly  controlled by the Seller,  is, among other
things,  engaged  in the  business  of  producing  principally  for the  Selling
Subsidiary and selling  principally  to the Selling  Subsidiary a luxury liqueur
under  the  trade  name  "Chambord"  (the  "Product")  and  producing,  selling,
marketing  and  distributing  the  Product in certain  countries  outside of the
United States; and

WHEREAS, the Selling Subsidiary is, among other things,  engaged in the business
of distributing, marketing and selling the Product to distributors and end-users
principally in the United States; and

WHEREAS,  the Seller is, among other things,  engaged in the business of holding
certain Intellectual Property relating to the Product; and

WHEREAS, the Buyer, the Seller and the Selling Subsidiary desire to make certain
representations,  warranties and  agreements in connection  with the purchase by
the Buyer from the Seller and the Selling Subsidiary, and the sale by the Seller
and the Selling Subsidiary to the Buyer, of the Transferred  Business,  and also
to prescribe various conditions to the purchase and sale of the Business; and

WHEREAS,  the Seller is currently the sole  shareholder  of R&J Liqueurs EURL, a
French  enterprise  unipersonnelle  a  responsabilite  limitee ("R&J") and, as a
consequence  of a  contribution  in kind (apport  partiel  d'actif place sous le
regime des  scissions)  by  Chambord,  on the  Closing  Date (as defined in this
Agreement)  the Seller and Chambord  will  together  hold 100% of the shares and
voting rights of R&J ;and

WHEREAS,   the  Buyer,   Chambord   and  the  Seller   desire  to  make  certain
representations,  warranties and  agreements in connection  with the purchase by
the Buyer and sale by Chambord and the Seller of the  outstanding  capital stock
of R&J and also to prescribe certain  conditions to the purchase and sale of the
outstanding  capital stock of R&J, as set forth in the Share Purchase Agreement,
dated the date of this  Agreement (the "R&J Sale  Agreement"),  by and among the
Buyer, Chambord and the Seller, attached to this Agreement as Exhibit I.

NOW, THEREFORE, in consideration of the premises and the mutual representations,
warranties,  covenants and  agreements set forth in this Agreement and for other
good and valuable consideration,  the receipt and sufficiency of which is hereby
acknowledged, the parties to this Agreement agree as follows:

                                   ARTICLE I

                       DEFINITIONS; RULES OF CONSTRUCTION

     SECTION 1.1.  Definitions.  As used in the Agreement,  the following  terms
shall have the following meanings:

     "Action" shall mean any claim, suit, action, arbitration,  hearing, charge,
complaint, claim, demand, investigation, inquiry or other proceeding.

     "Affiliate"  shall mean, with respect to any Person,  any other Person that
directly  or  indirectly,  through  one or  more  intermediaries,  controls,  is
controlled by or is under common control with, such Person.

     "Agreement"  shall  have  the  meaning  set  forth in the  heading  of this
Agreement.

     "Allocation" shall have the meaning set forth in Section 2.1(g).

     "Applicable Law" shall mean, with respect to any Person,  any U.S. federal,
state,  local  or  foreign  statute,   law,  ordinance,   rule,   administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Entity applicable to such Person or any
of its properties or assets.

     "Assigned  Contracts" shall have the meaning set forth in the definition of
"Transferred Assets".

     "Assumed  Liabilities"  shall mean all of the following  Liabilities (other
than the Retained  Liabilities) of the Seller or, where applicable,  the Selling
Subsidiary  solely to the  extent  that they  arise out of,  result  from or are
related to the Transferred Business:

(a)  Liabilities  From and After the Closing.  All  Liabilities and any Taxes to
     the  extent  that they  arise out of,  result  from or are  related  to the
     Buyer's  ownership  of  the  Transferred  Assets  or the  operation  of the
     Transferred Business from and after the Closing;

(b)  Actions.  All  Liabilities  of the Seller or the  Selling  Subsidiary  with
     respect to all  Actions to the extent  arising  out of,  resulting  from or
     related to the  Transferred  Business  or the  Transferred  Assets from and
     after the Closing;

(c)  Transferred Assets. All Liabilities of the Seller or the Selling Subsidiary
     to the  extent  arising  out of,  resulting  from or  related to any of the
     Transferred Assets from and after the Closing; and

(d)  Returned Products. Subject to Section 2.1(c), all Liabilities of the Seller
     or the Selling Subsidiary to the extent that they arise out of, result from
     or are related to the Product  returned for credit,  refund or  replacement
     after the Closing Date.

(e)  Suntory  Distribution  Agreement.  All  Liabilities  of the  Seller  or the
     Selling Subsidiary to the extent arising on or after the Closing in respect
     of the Sole  Distribution  Agreement,  dated as of August 29,  2001,  among
     Chambord,  the Selling Subsidiary and Suntory (Aust) Pty Ltd. (the "Suntory
     Distribution  Agreement"),  in respect of which notice of  termination  was
     given on September 16, 2005 and pursuant to which the obligation to provide
     product to Suntory  will  terminate  effective  as of October 1, 2006,  but
     excluding for all purposes under this paragraph (e) all Liabilities arising
     as a  result  of or in  connection  with  the  termination  of the  Suntory
     Distribution Agreement.

     "Average Return Rate" means the product of (a) a fraction, the numerator of
which is the  average  daily  returns in the United  States for the last  twelve
months and the  denominator  of which is the  average  daily  gross sales in the
United States for the latest twelve months, and (b) 60.

     "Business"  shall  have  the  meaning  set  forth in the  recitals  of this
Agreement.

     "Business Day" shall mean any day that is not a Saturday, a Sunday, a legal
holiday in France  (within the  meaning of article L. 222-1 of the French  Labor
Code) or any other day on which banks are  required or  authorized  by law to be
closed in The City of New York.

     "Buyer" shall have the meaning set forth in the heading of this Agreement.

     "Buyer Material Adverse Effect" shall mean any change or effect that is, or
would  reasonably  be expected to be,  materially  adverse to the ability of the
Buyer to timely consummate the transactions contemplated by this Agreement.

     "Chambord"  shall  have  the  meaning  set  forth in the  recitals  of this
Agreement.

     "Chambord Business" shall have the meaning assigned to such term in the R&J
Sale Agreement.

     "Charter Documents" shall have the meaning set forth in Section 4.2.

     "Closing" shall have the meaning set forth in Section 3.1(a).

     "Closing Date" shall have the meaning set forth in Section 3.1(a).

     "Code" shall mean the Internal Revenue Code of 1986, as amended.

     "Confidentiality Agreement" shall mean the confidentiality agreement, dated
as of November 11, 2005, between the Seller and the Buyer.

     "Consent" shall mean any consent, approval, qualification, license, permit,
order or authorization.

     "Contract"   shall  have  the  meaning  set  forth  in  the  definition  of
"Transferred Assets".

     "Controlling Party" shall have the meaning set forth in the Section 8.6(c).

     "DOJ" shall have the meaning set forth in Section 6.3(b).

     "Excluded  Taxes"  shall mean (a) any Taxes of, or  required to be paid by,
Seller,  the Selling  Subsidiary or any of their Affiliates (other than Taxes of
R&J which shall be covered solely by the R&J Sale Agreement) for any period, (b)
any Taxes relating to the Transferred  Business or the Transferred Assets for or
applicable to the Pre-Closing Period,  including any Property Taxes, and (c) any
Transfer  Taxes.  For  purposes of this  Agreement,  in the case of any Straddle
Period,  (1)  Property  Taxes for the  Pre-Closing  Period shall be equal to the
amount of such Property  Taxes for the entire  Straddle  Period  multiplied by a
fraction,  the  numerator  of which is the number of days  during  the  Straddle
Period that are in the  Pre-Closing  Period and the  denominator of which is the
number of days in the entire Straddle Period, and (2) Taxes (other than Property
Taxes) for the  Pre-Closing  Period shall be computed as if such taxable  period
ended as of the close of business on the Closing Date.

     "Filing" shall mean any registration, declaration, notification or filing.

     "FIRPTA Certificate" shall have the meaning set forth in Section 3.2(c).

     "Foreign Governmental Consents" shall have the meaning set forth in Section
6.3(d).

     "FTC" shall have the meaning set forth in Section 6.3(b).

     "GAAP" shall mean those generally  accepted  accounting  principles used in
the United States and recognized as such by the American  Institute of Certified
Public Accountants or by the Financial Accounting Standards Board.

     "Global  Trademark  Assignments"  shall have the  meaning  set forth in the
definition of "Related Agreements".

     "Governmental  Entity"  shall  mean  any  U.S.  federal,   state  or  local
government or  governmental  entity or any foreign  government  or  governmental
authority or any political or other subdivision, department or branch thereof or
any regulatory,  administrative  or other agency or any court or tribunal of any
of the foregoing.

     "HSR Act" shall mean the  Hart-Scott-Rodino  Antitrust  Improvements Act of
1976, as amended.

     "Intellectual Property" shall mean all intellectual property, including (i)
patents,   inventions,   and  industrial  designs,  including  any  applications
therefor, continuations,  divisionals,  continuations-in-part,  re-examinations,
provisionals,  and reissues;  (ii) all registered and  unregistered  trademarks,
service marks, trade names, brand names,  fictitious or assumed names, corporate
names,  domain names, URLs, logos,  designs,  slogans,  labels, and trade dress,
indicia of origin and other source indicators, all registrations,  applications,
pending applications,  and renewals relating thereto, together with the goodwill
of the business associated therewith or symbolized thereby; (iii) copyrights and
copyrightable  works, and any  registrations,  applications or renewals relating
thereto ("Copyrights");  (iv) trade secrets, technology, know-how, ways of doing
business and confidential  information and proprietary  information,  processes,
drawings,  plans and files used in the  production of any bottles and packaging,
formulae,  customer lists and data, technical  information,  process technology,
recipes,  methodologies and all other similar proprietary or industrial property
rights in any of the  foregoing,  whether such rights are now known or hereafter
discovered,  whether  patentable or unpatentable,  registrable or unregistrable;
(v) all moral  rights,  to the  extent  assignable;  (vi) all  bottle or package
designs,  the  protectible  features  of bottle  caps,  all  design  rights  and
registered and unregistered designs;  (vii) all rights or forms of protection of
a similar  nature or having  equivalent or similar  effect to any of those which
subsist anywhere in the world); and (viii) and all other  intellectual  property
rights.

     "Inventory  Purchase  Price"  shall have the  meaning  set forth in Section
2.1(b).

     "Knowledge" shall mean (i) with respect to the Seller, the knowledge of the
persons set forth on Schedule 1.1(a) after due inquiry; and (ii) with respect to
the Buyer,  the knowledge of the persons set forth on Schedule  1.1(b) after due
inquiry.

     "Liabilities"  shall mean any and all debts,  liabilities,  commitments and
obligations,  whether  fixed,  contingent  or  absolute,  matured or  unmatured,
liquidated or unliquidated,  accrued or not accrued, known or unknown,  whenever
or however  arising and whether or not the same would be required by GAAP or any
other accounting principles or standards to be reflected in financial statements
or disclosed in the notes thereto.

     "Liens"   shall   mean,   collectively,   any  liens,   mortgage,   pledge,
hypothecation,  assignment,  preference,  claims,  security interests,  options,
rights of first refusal, charges or other encumbrances.

     "Material Adverse Effect" shall mean any change or effect that is, or would
reasonably  be  expected  to be,  materially  adverse to the  Purchased  Assets,
Transferred  Liabilities,  financial  condition or results of  operations of the
Business,  in each case with  respect to the  Transferred  Assets,  the  Assumed
Liabilities and the Chambord Business taken as a whole, other than any change or
effect to the extent as a result of,  arising from or relating  to,  directly or
indirectly,  (a) changes in prevailing  interest  rates,  (b) changes in general
economic or market conditions that do not have a disproportionate  effect on the
Business as compared to other  businesses  in the industry in which the Business
operates,  (c) changes or  developments  in the  industry in which the  Business
operates that do not have a disproportionate  effect on the Business as compared
to other  businesses  in the  industry in which the Business  operates,  (d) any
action  required  to be taken  pursuant  to. or any  omission  required  by, the
express terms of this Agreement, and (e) changes in Applicable Law or accounting
regulations  or  principles  or  interpretations  thereof  that  do  not  have a
disproportionate  effect on the Business as compared to other  businesses in the
industry in which the Business operates.

     "Non-Controlling Party" shall have the meaning set forth in Section 8.6(c).

     "Normal  Business Hours" shall mean the hours Monday through Friday between
9:00  a.m.  and 5:00  p.m.,  local  time,  on any  business  day in the place in
question.

     "Permitted   Liens"  shall  mean,   collectively,   (a)  Liens  for  Taxes,
assessments and other  governmental  charges not yet due and payable or, if due,
not delinquent or being contested in good faith by appropriate proceedings,  (b)
mechanics',  workmen's,  repairmen's,  warehousemen's,  landlord's, carriers' or
other like Liens,  including  all  statutory  Liens,  arising or incurred in the
ordinary course of business and with respect to which the underlying obligations
are not  delinquent  or are being  contested  in good  faith and by  appropriate
proceedings,  (c)  original  purchase  price  conditional  sales  contracts  and
equipment  leases with third  parties  entered  into in the  ordinary  course of
business as long as such  contracts and leases have been  disclosed to the party
to whom the applicable  representation  is made, (d) Liens disclosed on Schedule
1.1(c),  (e)  Liens  that  do not  materially  affect  the  value  or use of the
underlying asset (provided,  however,  that any Lien under this clause (e) shall
not  constitute a Permitted  Lien for all  purposes  under this  Agreement  with
respect to any Transferred  Intellectual Property), and (f) restrictions imposed
by Applicable Law.

     "Person" shall mean any individual, corporation, limited liability company,
partnership,  joint venture,  trust, estate,  association,  organization,  labor
union, Governmental Entity or other entity.

     "Pre-Closing  Period" means any taxable period (or portion  thereof) ending
on or prior to the Closing Date.

     "Property  Taxes" means real,  personal and intangible ad valorem  property
taxes.

     "Purchase Price" shall have the meaning set forth in Section 2.1(a).

     "Purchased  Assets" means the  Transferred  Assets and the R&J  Transferred
Assets, taken as a whole.

     "R&J" shall have the meaning set forth in the recitals of this Agreement.

     "R&J Assumed  Liabilities" shall mean the Included  Liabilities (as defined
in the R&J Sale  Agreement)  and the Taxes of R&J other than those for which the
Buyer is entitled to indemnification under the R&J Sale Agreement.

     "R&J  Retained  Assets"  shall  mean all  assets of R&J other  than the R&J
Transferred Assets.

     "R&J Retained Liabilities" shall mean all liabilities of R&J other than the
R&J Assumed Liabilities.

     "R&J Sale  Agreement"  shall have the meaning set forth in the  recitals of
this Agreement.

     "R&J Transferred Assets" shall mean all of the assets, properties,  rights,
privileges,  claims and agreements of every kind and nature,  real and personal,
tangible and intangible,  absolute or contingent,  wherever located, that are to
be acquired by Buyer  pursuant to, and in accordance  with the terms of, the R&J
Sale Agreement.

     "Records" shall have the meaning set forth in Section 6.4(c).

     "Related Agreements" shall mean the following:

(a)  Global Intellectual  Property  Assignment.  The Global Trademark Assignment
     and Global Domain Name Assignment  from Seller and Selling  Subsidiary that
     shall  transfer  title to Buyer at  Closing  to all  Intellectual  Property
     included in the Transferred  Assets,  substantially in the form attached to
     this Agreement as Exhibit II (the "Global Trademark Assignments");

(b)  Trademark License and Know-How  Agreement.  An exclusive (even as to Buyer)
     worldwide,  fully paid up license  granting  Seller and its  Affiliates the
     right  to  use  the  "Chambord"  name  and  mark  in  connection  with  the
     manufacturing,  distribution,  offer to sell, sale, advertising,  marketing
     and promotion of preserves,  conserves and jams,  substantially in the form
     attached  to this  Agreement  as Exhibit  III (the  "Trademark  License and
     Know-How Agreement"); and

(c)  Bill of Sale.  Bill(s) of sale,  substantially in the form attached to this
     Agreement as Exhibit IV.

(d)  Transition   Services   Agreement.   A   Transition   Services   Agreement,
     substantially in the form attached to this Agreement as Exhibit V, pursuant
     to which the Seller will and will cause its  Affiliates to assist the Buyer
     in managing the  transition  of certain  relationships  with  distributors,
     customers, suppliers,  advertising agencies and promotional agencies of the
     Business (the "Transition Services Agreement").

(e)  Escrow Agreement. The Escrow Agreement.

     "Retained Assets" shall mean all assets,  properties,  rights,  privileges,
claims and agreements of every kind and nature, real and personal,  tangible and
intangible,  absolute or contingent which are held directly or indirectly by the
Seller or its Subsidiaries other than R&J (expressly excluding the capital stock
of R&J) not otherwise expressly included in the definition of Transferred Assets
or transferred  from Chambord to R&J as a result of the Contribution (as defined
in the R&J Sale Agreement), including the following:

(a)  This  Agreement.  The  consideration  delivered  to the  Seller  and/or the
     Selling Subsidiary,  as the case may be, pursuant to this Agreement and the
     R&J  Sale  Agreement  and all  rights  of the  Seller  and/or  the  Selling
     Subsidiary,  as the  case  may be,  under  this  Agreement,  the  R&J  Sale
     Agreement and the Related Agreements and any instruments delivered pursuant
     to or in  connection  with this  Agreement,  the R&J Sale  Agreement or any
     Related Agreement;

(b)  Cash and Cash  Equivalents.  All cash and cash equivalents or similar types
     of investments,  such as certificates of deposit,  Treasury bills and other
     marketable securities;

(c)  Tax Refunds. Any refund of Taxes paid by the Seller or its Subsidiaries for
     any Pre-Closing Period;

(d)  Insurance   Policies.   All  insurance  policies  of  the  Seller  and  its
     Subsidiaries  and all rights of the Seller  and its  Subsidiaries  of every
     nature and description under or relating out of such insurance policies;

(e)  Intellectual  Property.  All  Intellectual  Property  not  included  in the
     definition of Transferred Assets;

(f)  Other Assets. Those items set forth on Schedule 1.1(d).

     "Retained  Liabilities"  shall mean all Liabilities of the Seller or any of
its  Subsidiaries  (other  than  the  R&J  Assumed  Liabilities)  of any  nature
whatsoever,  whether  accrued,  absolute,  contingent or otherwise,  asserted or
unasserted, known or unknown, not otherwise expressly included in the definition
of Assumed  Liabilities or  transferred  from Chambord to R&J as a result of the
Contribution (as defined in the R&J Sale Agreement), including the following:

(a)  Indebtedness.  All  indebtedness  for borrowed  money and any guarantees in
     respect thereof of the Seller or the Selling Subsidiary;

(b)  Retained  Assets.  All Liabilities of the Seller or the Selling  Subsidiary
     arising out of,  resulting  from or to the extent  related to the  Retained
     Assets;

(c)  Excluded Taxes. All Liabilities for Excluded Taxes;

(d)  This  Agreement.  All  liabilities  and  obligations  of the Seller and the
     Selling Subsidiary  pursuant to this Agreement,  the Related Agreements and
     the R&J Sale Agreement and all  liabilities  and  obligations of the Seller
     and the Selling  Subsidiary under this Agreement,  the Related  Agreements,
     the R&J Sale  Agreement  and any  instruments  delivered  pursuant to or in
     connection  with this  Agreement,  the Related  Agreements and the R&J Sale
     Agreement;

(e)  Pre-Closing  Liabilities.  All  Liabilities  of the  Seller or the  Selling
     Subsidiary  to the extent  existing at the time of, or arising out of acts,
     events or  ommissions  to act that  occurred  prior to,  the  Closing or in
     connection with the conduct by the Seller or any of its Subsidiaries of the
     Business prior to the Closing,  whether in violation of any Applicable Law,
     Contracts or fiduciary duties or otherwise; and

(f)  Termination Expense and Compensation.  All compensation,  fees, expenses or
     damages  incurred,  due or payable  (including  "good will," "lost profit,"
     "value of franchise," or any other statutory,  legal or equitable theory of
     recovery) to any  distributor of the Seller or the Selling  Subsidiary as a
     result of the  termination  or  non-renewal  of any  distribution  or other
     agreement between the Seller or any of its affiliates, on the one hand, and
     the distributor  and its affiliates,  on the other hand (including any such
     compensation,  fee,  expense or damage payable under the Sole  Distribution
     Agreement,  dated as of  August  29,  2001,  among  Chambord,  the  Selling
     Subsidiary  and  Suntory  (Aust) Pty Ltd.,  in  respect of which  notice of
     termination  was given on  September  16,  2005 and  pursuant  to which the
     obligation  to provide  product to Suntory will  terminate  effective as of
     October 1, 2006), or as a result of the  transactions  contemplated by this
     Agreement or the R&J Sale Agreement.

     "Seller" shall have the meaning set forth in the heading of this Agreement.

     "Selling  Subsidiary"  shall have the  meaning  set forth in the heading of
this Agreement.

     "Straddle  Period"  means any taxable  period  beginning on or prior to and
ending after the Closing Date.

     "Subsidiary" shall mean, as to any Person, any corporation,  partnership or
other  entity of which  shares of  capital  stock or other  ownership  interests
having  ordinary  voting power (other than capital stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect  a  majority  of  the  board  of  directors  or  other  managers  of  such
corporation,  partnership  or  other  entity  are  at  the  time  owned,  or the
management of which is otherwise controlled,  directly or indirectly through one
or more intermediaries, or both, by such Person.

     "Tax"  or  "Taxes"  shall  mean  all  federal,  state,  provincial,  local,
territorial and foreign income, profits, franchise,  license, capital, transfer,
ad  valorem,  wage,  severance,  occupation,  import,  custom,  gross  receipts,
payroll,  sales,  employment,  use, property,  real estate, excise, value added,
estimated, stamp, alternative or add-on minimum, environmental,  withholding and
any other taxes,  duties,  levies,  imposts,  assessments  or  governmental  tax
charges  of any kind  whatsoever,  together  with all  interest,  penalties  and
additions  imposed with respect to such amounts,  or imposed as a consequence of
any  failure to file any Tax  Return or make any  payment  with  respect to such
amount.

     "Tax Authority" shall mean any domestic, foreign, federal, national, state,
provincial,  county or municipal  or other local  government,  any  subdivision,
agency,   commission  or  authority  thereof,  or  any  quasi-governmental  body
exercising any taxing authority or any other authority exercising Tax regulatory
authority.

     "Tax Claim" shall have the meaning set forth in Section 8.6(c).

     "Tax Return" shall mean all returns,  declarations,  reports, forms, claims
for refund or  information  returns or statements  relating to Taxes (whether in
tangible or electronic form),  including any schedule or attachment thereto, and
including any  amendment  thereof filed or to be filed with any Tax Authority in
connection with the determination, assessment or collection of Taxes.

     "Trademark License and Know-How Agreement" shall have the meaning set forth
in the definition of "Related Agreements".

     "Transfer Taxes" means all transfer, documentary, sales, use, registration,
value-added and other similar Taxes (including interest, penalties and additions
to Tax).

     "Transferred  Assets" shall mean all of the following  assets,  properties,
rights,  privileges,  claims and  agreements of every kind and nature,  real and
personal,  tangible and intangible,  absolute or contingent,  wherever  located,
which  are held  directly  by the  Seller  or,  where  applicable,  the  Selling
Subsidiary  to the extent  related  to,  and  forming  part of, the  Transferred
Business as of the Closing Date:

(a)  Inventory.  All  finished  goods  and  bulk  inventory  of the  Transferred
     Business  of  the  Seller,  the  Selling  Subsidiary  or  their  respective
     co-packers  (including  the  Product)  and all  packaging  and  promotional
     materials of the Seller or the Selling Subsidiary to be used exclusively in
     connection with the Transferred  Business  (collectively,  the "Transferred
     Inventory");

(b)  Business Records.  All Records, if any, in the possession or control of the
     Seller or the  Selling  Subsidiary  relating to the  Transferred  Business,
     subject to the provisions of Section 6.4 hereof;

(c)  Contracts.  All agreements,  commitments,  contracts,  leases,  indentures,
     licenses,   undertakings   and  other   arrangements,   written   and  oral
     ("Contracts"),  to which the Seller or the Selling Subsidiary is a party or
     by which  any of them is bound to the  extent  related  to the  Transferred
     Business (collectively, the "Assigned Contracts");

(d)  Intellectual Property. All the Intellectual Property owned or controlled by
     Seller,  the Seller  Subsidiary or any of their  Affiliates  (including the
     Selling  Stockholders but excluding R&J) and now or formerly used primarily
     in connection  with the Business and  Transferred  Business,  including the
     "Chambord"  name and mark, the recipes,  formulae and know-how used to make
     the "Chambord" brand liqueur and the other Intellectual  Property listed on
     Schedule 4.11(a);  provided,  however,  that the foregoing does not include
     Intellectual  Property  to the extent  that is or has been  licensed by the
     Seller or the Selling Subsidiaries,  or otherwise used with permission, for
     use  in  connection   with  the  Seller's  or  the  Selling   Subsidiaries'
     advertising,  promotional  and  other  marketing  materials,  including  on
     websites,  in each case that would  otherwise  be  considered  included  in
     Copyrights  or moral rights  (collectively  the  "Transferred  Intellectual
     Property");

(e)  Actions.  All rights,  claims and causes of action  (including any damages,
     judgments,  fees or  awards  that  become  payable  after  the date of this
     Agreement) in favor of the Seller or the Selling  Subsidiary  against other
     Persons to the extent relating to the Transferred Assets or the Transferred
     Business, other than any Retained Asset;

(f)  Goodwill. The goodwill and going concern value of the Transferred Business;
     and

(g)  Other  Assets.  All  other  businesses,  assets  and  properties  (real and
     personal,  tangible and  intangible)  necessary to conduct the  Transferred
     Business as currently conducted.

     "Transferred  Business" shall have the meaning set forth in the recitals of
this Agreement.

     "Transferred Intellectual Property" shall have the meaning set forth in the
definition of "Transferred Assets".

     "Transferred  Inventory" shall have the meaning set forth in the definition
of "Transferred Assets".

     "Transferred Liabilities" means the Assumed Liabilities and the R&J Assumed
Liabilities, taken as a whole.

     "Transition  Services  Agreement"  shall have the  meaning set forth in the
definition of "Related Agreements".

     SECTION 1.2.  Rules of  Construction.  References in this  Agreement to any
gender include references to all genders, and references to the singular include
references to the plural and vice versa.  The words  "include",  "includes"  and
"including"  when used in this  Agreement  shall be deemed to be followed by the
phrase "without limitation".  Unless the context otherwise requires,  references
in this Agreement to Articles,  Sections, Exhibits and Schedules shall be deemed
references  to Articles and Sections  of, and  Exhibits and  Schedules  to, this
Agreement.  Unless the context otherwise requires, the words "hereof",  "hereby"
and "herein" and words of similar  meaning when used in this Agreement  refer to
this  Agreement in its entirety and not to any  particular  Article,  Section or
provision of this Agreement.

                                   ARTICLE II
                  PURCHASE, SALE AND ASSUMPTION OF LIABILITIES

     SECTION 2.1.  Purchase and Sale of Transferred  Assets.  (a) Upon the terms
and subject to the conditions of this Agreement,  at the Closing, the Seller and
the Selling Subsidiary shall sell and/or cause to be sold,  conveyed,  assigned,
transferred and delivered to the Buyer, and the Buyer shall purchase and acquire
from the Seller and the Selling Subsidiary, all of the right, title and interest
of  the  Seller  and  the  Selling  Subsidiary,  as  applicable,  in  and to the
Transferred  Assets.  In consideration  for such sale,  conveyance,  assignment,
transfer and delivery,  the Buyer shall (A) assume on and as of the Closing Date
the Assumed Liabilities and (B) pay to the Seller an aggregate purchase price of
(i) US$241,000,000,  plus (ii) the Final  Inventory  Purchase  Price (as defined
below,  which amount shall not exceed  US$1,600,000)  (together,  the  "Purchase
Price").  Of the  Purchase  Price,  the  Buyer  shall  deliver  at  the  Closing
(i) US$48,600,000 into escrow, as provided in Section 2.2 (the "Escrow Amount"),
and (ii) an amount equal to the sum of US$192,400,000  and the Closing Inventory
Purchase Price (as defined below, which amount shall not exceed US$1,600,000) to
Seller,  as  provided  in Section  3.3(a)  (the  "Closing  Consideration").  Any
difference  between the Closing Inventory Purchase Price and the Final Inventory
Purchase Price shall be paid after the Closing, as provided in Section 2.1(f).

     (b) Five Business Days prior to the Closing  Date,  the Selling  Subsidiary
shall  deliver  to  the  Buyer  its  good-faith  estimate  of the  value  of the
Transferred Inventory, which shall be prepared based on (i) (A) a physical count
of the inventory at each of the locations at which the Selling  Subsidiary holds
such inventory  (which,  at the request of the Buyer, the Buyer may observe) and
(B) the reports of third parties holding  inventory in warehouses on the Selling
Subsidiary's  behalf,  all of which  finished  goods  inventory  referred  to in
clauses (A) and (B) shall be valued at its cost (provided that,  notwithstanding
anything in this Section 2.1 to the contrary,  for purposes of  calculating  the
Closing  Inventory  Purchase Price,  the Final  Inventory  Purchase Price or any
inventory  under this Section  2.1, no value shall be ascribed to any  inventory
that is not in good and  saleable  condition,  more  than one year of age  since
production or not of a quality that is  substantially  similar to the historical
quality  of  the  finished  goods  of the  Transferred  Business)  and of  which
packaging and promotional  materials referred to in clauses (A) and (B) shall be
valued at its cost,  (ii) records  evidencing  the inventory in transit  between
Chambord and the Selling  Subsidiary,  all of which inventory shall be valued at
its cost plus the cost of all applicable excise and freight costs required to be
paid on such inventory prior to its delivery to the Selling Subsidiary and (iii)
a reasonable  estimate of the amount of  inventory  that would be expected to be
sold prior to the Closing Date (the value of which  inventory  shall deducted in
calculating the value of the Transferred Inventory). At the close of business on
the Business Day immediately  prior to the Closing Date, the Selling  Subsidiary
shall deliver to Buyer its  calculation  of the actual value of the  Transferred
Inventory  as of such date using the same  criteria as those  referred to in the
previous sentence (with any cost components denominated in Euros being converted
to U.S.  dollars based on the exchange rate in effect at 9:00 a.m. New York time
on the Business Day immediately  prior to the Closing Date), with such aggregate
amount being the "Closing Inventory Purchase Price"); provided that in the event
that the Closing  Inventory  Purchase Price  calculated in accordance  with this
Section 2.1(b) shall exceed  US$1,600,000,  the Closing Inventory Purchase Price
shall be deemed to be US$1,600,000 for all purposes hereunder.

     (c) If the Buyer shall disagree with the Selling  Subsidiary's  calculation
of the actual value of the Transferred  Inventory  and/or the number of Products
returned for credit,  refund or  replacement  on or after the Closing and on and
prior to the sixtieth (60th) calendar day following the Closing Date exceeds the
Average Return Rate (such excess,  the "Excess  Returns"),  the Buyer shall have
the right to deliver,  within ninety (90)  calendar  days  following the Closing
Date (the "Review  Period"),  a notice (the "Dispute  Notice") setting forth its
calculation  of (i) the  actual  value of the  Transferred  Inventory  as of the
Closing,  using the same  criteria as those  referred to in the last sentence of
Section 2.1(b), less, if applicable, (b) the actual value of the Excess Returns,
which  shall be valued at its cost (such  difference,  the  "Adjusted  Inventory
Purchase Price").

     (d) If the Buyer delivers to the Selling  Subsidiary a Dispute Notice,  the
parties to this Agreement  shall negotiate in good faith to resolve any disputes
in such Dispute  Notice.  If the parties to this Agreement agree on all disputes
in such Dispute Notice,  then the Closing Inventory  Purchase Price, as modified
by such  agreement  of the  parties to this  Agreement,  shall be and become the
agreed-upon  calculation of the actual value of the  Transferred  Inventory less
the actual  value of Excess  Returns  (the "Final  Inventory  Purchase  Price");
provided that in the event that such amount shall exceed US$1,600,000, the Final
Inventory  Purchase  Price shall be deemed to be  US$1,600,000  for all purposes
hereunder.  If the  parties  are unable to resolve  all  disputed  items in such
Dispute Notice within  fifteen (15) calendar days after the Buyer's  delivery of
the Dispute  Notice,  the parties shall,  within twenty (20) calendar days after
the Buyer's delivery of such Dispute Notice, jointly retain KPMG LLP, or if such
Person is unwilling or unable to serve,  then to another  accountant  reasonably
agreed to by the parties (the "Accountant"),  to resolve the issues set forth in
the Dispute Notice.  The Accountant shall conduct its review of such issues, any
related  work papers of the parties and any  supporting  documentation  and hear
such presentations by the parties as the Accountant deems necessary.

     (e) The parties to this  Agreement  shall use their  respective  reasonable
best efforts to  cooperate  with one another and the  Accountant  to resolve the
issues set forth in the Dispute  Notice no later than  forty-five  (45) calendar
days following the date of the Accountant's retention so that the Accountant may
deliver to the  parties a report (the  "Adjustment  Report")  setting  forth the
adjustments,  if any,  that should be made to the  disputed  calculation  of the
actual  value of the  Transferred  Inventory  and,  if  applicable,  the  Excess
Returns.  The  fees,  expenses  and  costs of the  Accountant  for the  services
described  herein shall be borne equally by the Buyer,  on the one hand, and the
Seller and the Selling  Subsidiary,  on the other hand.  The  calculation of the
actual value of the Transferred Inventory, less, if applicable, the actual value
of the  Excess  Returns,  as set forth in the  Adjustment  Report,  shall be and
become the Final Inventory Purchase Price;  provided that in the event that such
amount shall exceed  US$1,600,000,  the Final Inventory  Purchase Price shall be
deemed to be US$1,600,000 for all purposes hereunder.  The Adjustment Report and
the Final Inventory  Purchase Price shall be final and binding upon the parties,
and shall be deemed a final  arbitration  award that is enforceable in any court
having jurisdiction.

     (f)  Promptly  and,  in any event,  no later than three (3)  Business  Days
following  (x) the end of the Review Period (if a timely  Dispute  Notice is not
delivered), or (y) the resolution of all matters set forth in the Dispute Notice
by agreement of the parties or by the  issuance of the  Adjustment  Report (if a
timely Dispute Notice is delivered),

          (i)  if the Final Inventory Purchase Price is greater than the Closing
               Inventory  Purchase Price, then Buyer shall pay to the Seller the
               difference  (together with interest  thereon at five percent (5%)
               per annum  calculated  from the Closing  Date  through the actual
               payment date) by wire transfer of immediately  available funds in
               U.S.  dollars to one or more  accounts as shall be  designated by
               the Seller prior to such date of payment; and

          (ii) if the Closing Inventory Purchase Price is greater than the Final
               Inventory  Purchase Price, then Seller shall pay to the Buyer the
               difference  (together with interest  thereon at five percent (5%)
               per annum  calculated  from the Closing  Date  through the actual
               payment date) by wire transfer of immediately  available funds in
               U.S.  dollars to one or more  accounts as shall be  designated by
               the Buyer prior to such date of payment.

     (g) The  Seller,  the  Selling  Subsidiary  and the  Buyer  agree  that the
Purchase Price (plus the Assumed  Liabilities)  shall be allocated in accordance
with the rules under  Section 1060 of the Code and the  regulations  promulgated
thereunder in accordance  with Schedule 2.1(g) (the  "Allocation").  The Seller,
the  Selling   Subsidiary  and  the  Buyer  agree  to  report  the  transactions
contemplated by this Agreement for all Tax purposes in a manner  consistent with
the Allocation (except to the extent otherwise required by law) and will provide
the other promptly with any other  information  reasonably  required to complete
Internal  Revenue  Service Form 8594. The Buyer, on the one hand, and the Seller
and the Selling  Subsidiary,  on the other hand, will each notify the other, and
will provide the other with reasonably requested cooperation, in the event of an
examination,  audit,  or other  proceeding  regarding any of the allocations set
forth in the Allocation.  The Seller, the Selling Subsidiary and the Buyer agree
that, to the extent permitted by law, any indemnification payments made pursuant
to Article VIII shall be treated as  adjustments  to the Purchase  Price for Tax
purposes.

     SECTION 2.2. Escrow.  (a) The Seller and the Selling  Subsidiary direct the
Buyer to deliver  in escrow,  at the  Closing  and for the  benefit of the Buyer
Indemnitees,  to Citigroup Inc. or one of its Affiliates engaged in the business
of providing escrow services, or if such Person is unwilling or unable to serve,
to another escrow agent reasonably agreed to by the parties hereto,  pursuant to
an  agreement  in  the  form  attached   hereto  as  Exhibit  VII  (the  "Escrow
Agreement"),  an  amount  of cash in U.S.  dollars  equal to the  Escrow  Amount
(together with the aggregate  amount to be delivered into the escrow pursuant to
the R&J Sale  Agreement and any earnings,  dividends or interest on such amounts
delivered hereunder and under the R&J Sale Agreement, the "Escrow Fund").

     (b) The Escrow Fund, including any earnings, dividends or interest thereon,
shall be held and  disbursed  as provided in the Escrow  Agreement,  which shall
provide, among other things, that (i) any fees or expenses payable to the escrow
agent under the Escrow Agreement on account of, in connection with or related to
the  Escrow  Fund  (the  "Escrow  Costs")  shall  be paid  out of the  earnings,
dividends  and  interest  on the  Escrow  Fund,  and,  to the  extent  that such
earnings,  dividends and interest are insufficient to pay the Escrow Costs, paid
equally by the  Seller  and the  Selling  Subsidiary,  on the one hand,  and the
Buyer,  on the other hand;  (ii) the Escrow Fund shall be disbursed to the Buyer
Indemnitees  to satisfy any  obligation of the Seller or the Selling  Subsidiary
under  Section 8.2 when the  conditions  for  indemnification  set forth in this
Agreement have been satisfied; (iii) any earnings,  dividends or interest on the
Escrow Fund (net of any amounts under clause (i) above) shall be  distributed to
the Seller as  provided  in the Escrow  Agreement  and  (iv) as of the  18-month
anniversary of the Closing Date, any amount of cash remaining in the Escrow Fund
(other than any amount of cash  required  to satisfy  the maximum  amount of the
aggregate  of any  unresolved  claims  for  indemnification  as of  such  time),
including  any accrued  earnings,  dividends  or  interest  thereon but less any
Escrow  Costs and less any amounts  then due and payable from the Escrow Fund to
any Buyer  Indemnitee  pursuant  to Section  8.2,  shall be  distributed  to the
Seller.  The Seller shall be treated as the owner of the Escrow Fund for all tax
purposes.

     SECTION 2.3. Required  Consents.  Notwithstanding  anything to the contrary
contained in this Agreement, to the extent that the sale, conveyance,  transfer,
assignment or delivery or attempted sale,  conveyance,  transfer,  assignment or
delivery  to the  Buyer  of  any  Transferred  Assets,  including  any  Assigned
Contract,  would  require any Consent of any third party and such Consent  shall
not have been obtained prior to the Closing, this Agreement shall not constitute
a sale,  conveyance,  transfer,  assignment or delivery,  or an attempted  sale,
conveyance,  transfer, assignment or delivery thereof, to such extent. Following
the Closing,  the Seller and the Selling  Subsidiary  shall use their reasonable
best  efforts,  and the Buyer  shall  cooperate  with the Seller and the Selling
Subsidiary,  to obtain  promptly  any such  Consent;  provided  that none of the
Seller or the Buyer or any of their  respective  Affiliates shall be required to
pay any consideration or other amount in connection therewith other than filing,
recordation or similar fees payable to any Governmental Entity, which fees shall
be paid by the Buyer  unless  relating to amounts due prior to the Closing  Date
(other than any Transfer Taxes,  which shall be paid by the Seller).  Pending or
in the absence of any such Consent,  the parties shall cooperate with each other
in any reasonable and lawful  arrangements  designed to provide to the Buyer the
benefits and Liabilities of such Transferred  Assets.  Following the Closing, if
any such Consent for the sale, conveyance,  transfer,  assignment or delivery of
any such Transferred Assets is satisfied or obtained,  the Seller or the Selling
Subsidiary,   as  the  case  may  be,  shall  promptly  cause  to  be  conveyed,
transferred, assigned and delivered to the Buyer such Transferred Assets.

                                   ARTICLE III
                                   THE CLOSING

     SECTION 3.1. Closing Date. The closing of the transactions  contemplated by
this  Agreement  (hereinafter  called  the  "Closing")  shall  take place at the
offices of the Buyer,  850 Dixie Highway,  Louisville,  Kentucky 40210, at 10:00
a.m.,  local time, on (a) the later of (i) the tenth  Business Day following the
satisfaction  or  waiver of the  conditions  set  forth in  Article VII  and the
conditions  precedent set forth in Article 4 of the R&J Sale Agreement,  in each
case other than such conditions which by their nature are to be satisfied on the
Closing Date (provided that the condition set forth in Section 4.1(c) to the R&J
Sale Agreement  shall be capable of satisfaction on such third Business Day) and
(ii) the first  Business Day  following  the  expiration  of a one-month  period
starting when the signed reports of the  contribution  appraiser shall have been
delivered to Chambord and the Seller pursuant to the R&J Sale Agreement,  or (b)
at such other time, date and place as shall be fixed by agreement of the parties
to  this  Agreement  (the  date on  which  the  Closing  actually  occurs  being
hereinafter referred to as the "Closing Date");  provided, that the Closing Date
shall be the same date as the Closing Date under the R&J Sale Agreement, and the
closing hereunder and thereunder shall be deemed to occur simultaneously.

     SECTION 3.2. Seller's and Selling  Subsidiary's  Deliveries at Closing.  At
the Closing, the Seller and the Selling Subsidiary shall deliver, or cause to be
delivered, to the Buyer, as applicable, the following items:

(a)  Closing Conditions. The documents specified in Section 7.2.

(b)  FIRPTA  Certificate.  An affidavit  from each of the Seller and the Selling
     Subsidiary  that Seller or the Selling  Subsidiary,  as the case may be, is
     not a "foreign  person"  within the meaning of Section  1445 of the Code (a
     "FIRPTA Certificate"). If Seller or the Selling Subsidiary fails or refuses
     to furnish a FIRPTA  Certificate,  the Buyer  shall be entitled to withhold
     from the  consideration  otherwise  payable  pursuant to this  Agreement at
     Closing,  the amount required to be so withheld pursuant to Section 1445(a)
     of the Code.

(c)  Inventory.   Possession  of  the  Transferred   Inventory  (in  any  manner
     reasonably  requested by the Buyer at least ten (10) Business Days prior to
     the Closing,  the cost of the delivery of which  inventory  shall be at the
     Buyer's expense).

(d)  Business Records. Possession of the Business Records.

(e)  Assigned  Contracts.  Possession of originals (to the extent  available) or
     authentic copies of all of the Assigned Contracts.

(f)  Manufacturing Documentation.  Possession of a true and complete copy of the
     manufacturing instructions for the Product.

     SECTION 3.3. Buyer's Deliveries at Closing. At the Closing, the Buyer shall
deliver  (i) the  Escrow Amount to the escrow agent,  as provided for in Section
2.2 and  pursuant  to the terms and subject to the  conditions  set forth in the
Escrow  Agreement;  and (ii) the  following  items to the Seller and the Selling
Subsidiary:

(a)  The Purchase  Price.  The Closing  Consideration  paid by wire  transfer of
     immediately  available  funds in U.S.  Dollars to one or more  accounts  as
     shall be designated by the Seller prior to the Closing; and

(b)  Closing Conditions. The documents specified in Section 7.3.

                                   ARTICLE IV
  REPRESENTATIONS AND WARRANTIES OF THE SELLER, THE SELLING SUBSIDIARY AND THE
                              SELLING STOCKHOLDERS

     The Seller and the Selling  Subsidiary  hereby represent and warrant to the
Buyer (and the Selling Stockholders hereby represent and warrant with respect to
Section  4.3,  4.4 and 4.5 to the Buyer  solely  with  respect  to such  Selling
Stockholder),  except as set forth on the applicable  Schedule  attached to this
Agreement  (provided that the listing of an item on one Schedule shall be deemed
to be a listing on each other Schedule and to apply to any other  representation
and warranty of the Seller or the Selling Subsidiary in this Agreement solely to
the extent that it is clearly  apparent from a reading of such  disclosure  item
that it would also qualify or apply to such other  Schedule,  representation  or
warranty), as follows:

     SECTION 4.1. Due Organization,  Good Standing and Power. Each of the Seller
and the Selling  Subsidiary  is duly  organized,  validly  existing  and, to the
extent  applicable,  in good  standing  under  the laws of its  jurisdiction  of
organization,  and has all corporate or other organizational power and authority
necessary to own the portion of the Transferred  Assets owned by it and to carry
on the  Transferred  Business as  currently  conducted  by it and to execute and
deliver this  Agreement and any Related  Agreement to which it is a party and to
consummate the transactions contemplated hereby and thereby. With respect to the
Transferred  Business,  each of the Seller and the  Selling  Subsidiary  is duly
qualified and in good standing to do business as a foreign  corporation  in each
jurisdiction  in which the  ownership of the portion of the  Transferred  Assets
owned  by it and the  conduct  of the  Transferred  Business  by it  makes  such
qualification  or good  standing  necessary,  except  for any  failure  to be so
qualified or in good standing that would not,  individually or in the aggregate,
have a Material Adverse Effect. The Selling Subsidiary is a direct  wholly-owned
Subsidiary of the Seller.

     SECTION 4.2. Organizational Documents. Prior to the date hereof, the Seller
has  made   available  to  the  Buyer  or  its   affiliates   or  its  or  their
representatives  a complete and correct copy of the certificate of incorporation
and  by-laws  or  other   comparable   charter  and   organizational   documents
(collectively,  "Charter Documents") of the Seller and of the Selling Subsidiary
as in effect as of the date hereof. Such Charter Documents are in full force and
effect and neither the Seller nor the Selling Subsidiary are in violation of any
provision of its respective Charter  Documents,  except for any failure to be in
full force or effect or any  violation  which would not have a Material  Adverse
Effect.

     SECTION 4.3. Authorization. The execution, delivery and performance by each
of the Seller,  the Selling  Subsidiary  and the  Selling  Stockholders  of this
Agreement  and  any  Related  Agreements  to  which  it  is  a  party,  and  the
consummation by the Seller, the Selling Subsidiary and the Selling  Stockholders
of the transactions  contemplated hereby and thereby,  have been duly authorized
by all necessary corporate action on the part of each of the Seller, the Selling
Subsidiary and the Selling Stockholders,  as applicable. This Agreement has been
duly and validly  executed  and  delivered  by each of the  Seller,  the Selling
Subsidiary  and the Selling  Stockholders  and, as of the  Closing,  each of the
Related  Agreements  will have been duly and validly  executed and  delivered by
each of the Seller, the Selling Subsidiary and the Selling Stockholders,  as the
case may be.  Assuming  the due  authorization,  execution  and delivery of this
Agreement and the Related  Agreements by the Buyer, this Agreement  constitutes,
and each of the Related  Agreements upon execution and delivery will constitute,
a legal,  valid  and  binding  obligation  of each of the  Seller,  the  Selling
Subsidiary and the Selling Stockholders, as the case may be, enforceable against
the Seller and/or the Selling Subsidiary, as the case may be, in accordance with
its terms.

     SECTION  4.4.  Consents.  No Consent of, or Filing with,  any  Governmental
Entity or third  party is  required  for or in  connection  with the  execution,
delivery and  performance by the Seller,  the Selling  Subsidiary or the Selling
Stockholders, of this Agreement or any Related Agreement to which either of them
is a party and the sale of the Transferred Assets or the Transferred Business or
the other  transactions  contemplated  hereby and thereby,  in each case, except
(a) compliance  with any applicable  provisions of the HSR Act; (b) as set forth
on Schedule 4.4, (c) as may be required solely by reason of the jurisdictions in
which Buyer's business or operations are located, or (d) Filings with applicable
trademark offices where necessary to consummate the transactions contemplated by
this Agreement or any Related Agreement, which Filings are set forth on Schedule
4.4.

     SECTION 4.5. Noncontravention.  The execution,  delivery and performance by
the Seller the Selling Subsidiary and the Selling  Stockholders,  as applicable,
of this Agreement and any Related  Agreements to which either of them is a party
do not, and the consummation by each of the Seller,  the Selling  Subsidiary and
the Selling Stockholders,  as applicable,  of the sale of the Transferred Assets
or the Transferred  Business or the other transactions  contemplated  hereby and
thereby  will not,  (a) subject  to  obtaining  or making  the  Consents  and/or
Filings,  as the case may be, referred to in Section 4.4,  contravene,  conflict
with or violate any Applicable Law, (b) contravene, conflict with or violate any
provision of the Charter  Documents of the Seller or the Selling  Subsidiary  or
(c) subject to obtaining or making the Consents and/or Filings,  as the case may
be,  referred  to in  Section 4.4,  contravene,  conflict  with  or  violate  or
constitute a default  under any provision  of, or result in the  termination  or
acceleration  of, or entitle any party to terminate or accelerate any obligation
under, or entitle any party to exercise any right of first offer, right of first
refusal, option or other similar right to acquire any portion of the Transferred
Assets or the Transferred Business, or result in the imposition of any Lien upon
the  Transferred  Assets  pursuant  to, or give any  person the right to cancel,
terminate,  or  modify  any  mortgage,  lease,  license,  permit,  agreement  or
instrument  relating to the Transferred  Assets or the  Transferred  Business to
which the Seller,  the Selling  Subsidiary or any the Selling  Stockholders is a
party  or by which  any of the  Seller,  the  Selling  Subsidiary  or any of the
Selling Stockholders is bound, except (i) in each case, as set forth on Schedule
4.5 or (ii),  in the case of clause (c), for any such  contravention,  conflict,
violation,   default,   termination,   acceleration,   Lien,   cancellation   or
modification which would not, individually or in the aggregate,  have a Material
Adverse Effect.

     SECTION 4.6. Title; Sufficiency; Inventory; Assigned Contracts.

     (a)  Transferred  Assets.  At the  Closing,  subject to Section  2.3 and as
otherwise disclosed in Schedule 4.6(a)(i) or (ii), as applicable,  the Seller or
the Selling Subsidiary,  as the case may be, will have, and will transfer to the
Buyer,  good and valid title to (i) the  Transferred  Intellectual  Property and
(ii) the other Transferred  Assets, in the case of each of clauses (i) and (ii),
free and clear of any Liens (other than Permitted  Liens),  provided that Seller
shall not be in breach of this  representation  and  warranty to the extent that
title to any transferred trademarks, domain names or other Transferred Assets is
affected  or  impaired  by  Buyer's  failure  to  make  all  timely  and  proper
recordations pursuant to Section 6.7(a).

     (b)  Business  Assets.  Except  (i) for the  corporate  services  currently
provided to the Business by or at the direction of the Seller or its  Affiliates
(other than R&J),  a  description  of which  services  are set forth on Schedule
4.6(b),  (ii) as  contemplated  by Section 2.3 or (iii) as set forth on Schedule
4.6(b),  as of the  Closing  Date,  upon the  consummation  of the  transactions
contemplated  by this  Agreement  and the R&J Sale  Agreement,  the Buyer or its
Affiliates will have all right, title and interest to the businesses, assets and
properties (real and personal, tangible and intangible) necessary to conduct the
Business  as  currently  conducted.  The  Transferred  Assets do not include any
shares of corporate stock, partnership or limited liability company interests or
any other equity interest in any entity nor is any Transferred Asset required to
be treated as such for federal income Tax purposes.

     (c)  Inventory.  Except as set forth in Schedule  4.6(c),  all  Transferred
Inventory constituting finished goods is in good and saleable condition and will
be a quality  that is  substantially  similar to the  historical  quality of the
finished goods of the Transferred Business.

     (d)  Assigned  Contracts.  Schedule  4.6(d)(i)  sets  forth  a list of each
Assigned Contract, indicating which Assigned Contracts would require the consent
or approval of any person in order for the Seller or the Selling  Subsidiary  to
assign such  Assigned  Contract  to the Buyer.  The Seller has  previously  made
available  to the Buyer  true,  correct  and  complete  copies of each  Assigned
Contract  and all  amendments,  annexes,  supplements,  schedules  and  exhibits
thereto.  Each party to any  Assigned  Contract  has  performed  in all material
respects  its  obligations  thereunder  to the extent that such  obligations  to
perform have accrued,  and no party is in default under such Assigned  Contract.
Each Assigned Contract  constitutes the legal,  valid and binding  obligation of
the Seller and/or the Selling  Subsidiary,  as applicable,  and, to the Seller's
Knowledge,  each other party thereto,  and is enforceable in accordance with its
terms subject to those exceptions with respect to enforcement  under bankruptcy,
insolvency, fraudulent conveyance, reorganization,  moratorium and other similar
laws relating to or affecting  creditors' rights generally and general equitable
principles  (whether  considered in a proceeding in equity or at law). Except as
set forth on Schedule 4.6(d)(ii), no Assigned Contract, and no other part of the
Transferred  Assets or the Assumed  Liabilities,  contains any  non-competition,
non-solicitation  or exclusive  dealing  agreements,  or any other agreements or
obligations that purports to limit or restrict in any respect (i) the ability of
the  Seller  or any of its  Subsidiaries  or  the  Transferred  Business  or the
Business (or,  following  the Closing,  the Buyer or any of its  Affiliates)  to
solicit customers or employees or (ii) the manner in which, or the localities in
which,  all or any  portion of the  Transferred  Business or the  Business  (or,
following  the Closing,  the business and  operations of the Buyer or any of its
Affiliates) is or could be conducted.

     SECTION 4.7. Financial Statements; Internal Operating Reports. (a) Schedule
4.7(a)(i) sets forth the combined net sales, gross profit and contribution after
marketing  and  promotion  ("CAMP") of the  Business  for the fiscal years ended
September  30,  2005,  2004,  2003,  2002 and 2001  and for the  quarters  ended
December 31, 2005 and 2004 (the  "Financial  Statements").  Each of the combined
net sales, gross profit and CAMP line items included in the Financial Statements
fairly  presents in all material  respects the combined net sales,  gross profit
and CAMP, respectively,  of the Business for the periods presented therein. Each
of the  combined  net sales,  gross  profit and CAMP line items  included in the
Financial  Statements  has been prepared and  presented in  accordance  with the
principles and policies of GAAP consistently applied with respect thereto during
the periods involved,  except for the currency translation adjustments set forth
on Schedule  4.7(a)(ii).  No auditor or  accountant  of the Seller,  the Selling
Subsidiary,  the Business or the  Transferred  Business has issued any report or
opinion in connection with the audit of the financial  statements of the Seller,
the Selling Subsidiary,  the Business or the Transferred Business (including the
Financial  Statements)  that  contains  any  qualification  or exception to such
report or opinion  that  questions  in any  material  respect the  treatment  or
classification  of any item in such financial  statements  related to or arising
from  the  Business  or  the  Transferred   Business  (including  the  Financial
Statements).

     (b) The Seller and the Selling Subsidiary maintain in all material respects
internal  controls over  financial  reporting  ("Internal  Controls") to provide
reasonable  assurance  regarding the reliability of financial  reporting and the
preparation of financial  statements in accordance with GAAP with respect to the
Business,  including policies and procedures that (i) pertain to the maintenance
of  records  that  in  reasonable  detail  accurately  and  fairly  reflect  the
transactions  and  dispositions  of the  assets of the  Business,  (ii)  provide
reasonable assurance that transactions with respect to the Business are recorded
as necessary to permit  preparation of financial  statements in accordance  with
GAAP, and that receipts and  expenditures of the Business are being made only in
accordance with authorizations of management and directors of the Seller and the
Selling Subsidiary and (iii) provide reasonable  assurance regarding  prevention
or timely  detection of  unauthorized  acquisition,  use or  disposition  of the
assets of the  Business  that  could  have a  material  effect on the  financial
statements of the Business.

     SECTION 4.8.  Absence of Certain  Changes.  Since  September 30, 2005,  (a)
there  has not been any  Material  Adverse  Effect,  (b)  there has not been any
action or event that, if it had occurred on or after the date hereof, would have
resulted  in any breach in any  material  respect  of clauses  (vi) or (viii) of
Section  6.1 or any breach of clauses  (ix) or (x) of Section 6.1 (nor has there
been any agreement by the Seller or the Selling  Subsidiary  with respect to any
of the foregoing) without the prior written consent of the Buyer; and (c) except
as set forth on Schedule 4.8, the Transferred Business has been conducted in all
material  respects  in the  ordinary  course of  business  consistent  with past
practice.

     SECTION 4.9.  Litigation.  (a) There are no Actions before any Governmental
Entity or  arbitration  panel  against  the  Seller  or any of its  Subsidiaries
arising  out of or  relating  to the  Transferred  Business  or the  Transferred
Assets,  in each case,  pending or, to the Knowledge of the Seller,  threatened,
except as set forth on  Schedule  4.9(a).  There are no  judgments,  decrees  or
orders  against or  binding  upon the  Seller or any of its  Subsidiaries  which
prohibit or restrict the Transferred Business as currently conducted,  except as
set forth on Schedule 4.9(a).

     (b) There are no Actions against the Seller or its Subsidiaries pending or,
to the Knowledge of the Seller, threatened, which seek to, and the Seller is not
subject to any judgments, decrees or orders which, enjoin, prevent or rescind or
may  reasonably  be  expected  to have the effect of  enjoining,  preventing  or
rescinding in any material  respect,  or of awarding  damages in respect of, the
transactions  contemplated  by  this  Agreement  or  any  Related  Agreement  or
otherwise  prevent the Seller or the  Selling  Subsidiary  from,  or restrict or
impede  the Seller or the  Selling  Subsidiary  in,  complying  in any  material
respect  with  the  terms  and  provisions  of  this  Agreement  or any  Related
Agreement.

     SECTION 4.10.  Compliance with Applicable Laws;  Consents and Filings.  (a)
Compliance. Except as set forth on Schedule 4.10(a), the Transferred Business is
being conducted in compliance in all material respects with all Applicable Laws.

     (b) Consents and Filings.  Except as set forth on Schedule 4.10(b)(i),  the
Seller  and its  Subsidiaries  have  all  Consents  and have  made  all  Filings
necessary  to conduct the  Transferred  Business  as  currently  conducted  (the
"Necessary  Consents").  All of the  Necessary  Consents  are in full  force and
effect and, to the Seller's Knowledge,  no violations are outstanding or uncured
(and no suspension or  cancellation  has been  threatened)  with respect to with
respect to any Necessary Consent.

     SECTION  4.11.  Intellectual  Property.  (a) Schedule  4.11(a) sets forth a
true,  complete and correct list of all applications and  registrations  for the
Transferred  Intellectual  Property  owned  by  the  Seller  and/or  any  of its
Affiliates which are used in the Transferred Business as currently conducted. To
the Knowledge of the Seller,  all of such  registrations  and  applications  are
unexpired and  subsisting,  and have not been abandoned or cancelled,  except as
set forth on Schedule 4.11(a).

     (b)  Except  as  set  forth  on  Schedule  4.11(b),   (A) the   Transferred
Intellectual  Property is all of the Intellectual  Property necessary to conduct
the  Transferred  Business  in all  material  respects as  currently  conducted,
(B) the Seller or the Selling  Subsidiary  possesses or otherwise own all right,
title and interest in and to the Transferred  Intellectual Property, free of all
Liens  (other  than  Permitted  Liens),  (C) the  operation  of the  Transferred
Business by the Seller and its Affiliates does not infringe,  misappropriate  or
violate (and,  within the past 3 years,  has not infringed,  misappropriated  or
violated)  the  Intellectual  Property  of any  third  party,  (D) no  Person is
infringing,  misappropriating  or  violating  (and  within the past 3 years,  no
Person has infringed,  misappropriated or violated) the Transferred Intellectual
Property,  (E) none of the Transferred  Intellectual  Property is subject to any
outstanding injunction,  judgment,  order, decree or ruling that would challenge
the  ownership  or use  thereof,  (F) no  Action is pending or, to the  Seller's
Knowledge,   has  been  threatened  that  challenges  the  legality,   validity,
enforceability,  use or  ownership  of the  Transferred  Intellectual  Property,
(G) no claim is pending or, to the Seller's  Knowledge,  has been  threatened to
the effect  that the  present or past  operations  of the  Seller,  the  Selling
Subsidiary,  the Business or the Transferred  Business infringe or conflict with
the asserted rights of others in respect of any  Intellectual  Property.  At the
Closing and thereafter, the Buyer or a designee of the Buyer will (i) own all of
the trademarks,  service marks, trade names, brand names,  fictitious or assumed
names,  corporate names, logos, labels, and trade dress included the Transferred
Intellectual  Property  and  (ii)  own  or  have  the  right  to use  all  other
Transferred  Intellectual  Property,  in each  case  free and clear of all Liens
(other than Permitted Liens).

     (c)  The  Transferred   Intellectual  Property  includes  complete  written
instructions as are currently in use by the Seller, the Selling Subsidiary,  the
Business or the  Transferred  Business of all  formulae  and  processes  for the
manufacture of the Product,  copies of which  instructions  will be delivered to
the Buyer at Closing. The formula and processes for the Product will be provided
in accordance with Section 7.2(g) of this Agreement.  Such  instructions for the
Product shall include a list and complete specifications of all ingredients, the
name and address of each  manufacturer  and each supplier (if different) of such
ingredients,  and each vendor from whom the Seller, the Selling Subsidiary,  the
Business or the Transferred Business purchases each ingredient, a description of
any special  requirements  for storage of ingredients,  and a description of all
processes  for  the  manufacturing  of  the  Product,   including  fermentation,
distillation, aging, rectifying,  processing, handling, storing and bottling the
Product.

     SECTION 4.12. Brokers and Intermediaries.  None of the Seller or any of its
Subsidiaries  has  employed  any  broker,  finder,  investment  banker  or other
intermediary in connection with the transactions  contemplated by this Agreement
or any Related  Agreement  which  would be  entitled  to a  broker's,  finder's,
investment  banker's  or  similar  fee or  commission  in  connection  with such
transactions,  except for any such fees or  commissions  which shall be the sole
responsibility of the Seller.

     SECTION 4.13.  Tax Matters.  Except as set forth in Schedule  4.13, (a) the
Seller and the Selling  Subsidiary have filed all material Tax Returns  required
to be filed by them with respect to the Transferred Business and the Transferred
Assets;  (b) the Seller and the Selling  Subsidiary have paid all material Taxes
due  and  payable  (except  for any  sales  Tax  obligations  arising  from  the
transactions  described  by  this  Agreement)  that  may  or  could  follow  the
Transferred  Assets or  otherwise  affect the Buyer  after  consummation  of the
transactions  contemplated by this Agreement,  (c) there are no Tax liens on any
of the Transferred  Assets (other than Permitted  Liens),  and (d) no claims for
material  Taxes have been asserted in writing  against the Seller or the Selling
Subsidiary,  other than with respect to Excluded  Taxes being  contested in good
faith or Taxes for which payment is not due.

     SECTION 4.14.  Trade Loading and Advertising and Promotion  Expense.  Since
September 30, 2005,  each of the Seller and the Selling  Subsidiary (i) has sold
finished  Products  to  wholesalers  and  distributors  in  quantities  that are
consistent  with past  practices,  and (ii) except for the price increase on the
Products sold in the United States implemented on February 1, 2006, has not made
any material  change to any pricing,  discounts or promotions  applicable to the
Products.  Schedule  4.14 sets forth a true,  complete  and correct  list of all
discounts and  promotions  applicable to the Products that were in effect during
the  twelve-month  period  ended  February  28,  2006.  No discount or promotion
applicable to the Products  requires or would purport to require the Buyer, R&J,
the Business or the Transferred  Business to honor it as of or after the Closing
Date.

     SECTION  4.15.  Product  Liability.  Neither  the  Seller  nor the  Selling
Subsidiary  has received or has  Knowledge  of any notice  relating to any claim
involving  use of or exposure to any of the products (or any part or  component)
designed,  manufactured,  serviced  or  sold,  or  services  performed,  by  the
Transferred  Business,  including for negligence,  strict  liability,  design or
manufacturing  defect,  conspiracy,  failure  to warn,  or breach of  express or
implied warranties or merchantability or fitness for any purpose or use, or from
any alleged  breach of implied  warranties  or  representations,  or any alleged
noncompliance with any Applicable Laws pertaining to products liability matters.

     SECTION 4.16. No Other  Representations.  It is the explicit intent of each
 party to this Agreement that neither the Seller nor the Selling Subsidiary is
making any  representation  or warranty with regard to any Transferred  Asset or
Assumed  Liability  other than as set forth in this Agreement or as set forth in
the R&J Sale Agreement.

                                   ARTICLE V
                   REPRESENTATIONS AND WARRANTIES OF THE BUYER

     The Buyer  hereby  represents  and  warrants  to the Seller and the Selling
Subsidiary,  except as set forth on the  applicable  Schedule  attached  to this
Agreement  (provided that the listing of an item on one Schedule shall be deemed
to be a listing on each other Schedule and to apply to any other  representation
and  warranty  of the Buyer in this  Agreement  solely to the extent  that it is
clearly  apparent  from a reading  of such  disclosure  item that it would  also
qualify or apply to such other Schedule, representation or warranty, as follows:

     SECTION 5.1. Due  Organization,  Good Standing and Power. The Buyer is duly
organized,  validly existing and in good standing under the laws of Delaware and
has all power and authority  necessary to execute and deliver this Agreement and
the Related  Agreements and to consummate the transactions  contemplated  hereby
and thereby.

     SECTION 5.2. Authorization. The execution, delivery and performance of this
Agreement and the Related  Agreements by the Buyer and the  consummation  by the
Buyer of the  transactions  contemplated  hereby  and  thereby  have  been  duly
authorized by all necessary  corporate  and other  organizational  action by the
Buyer.  This  Agreement has been duly and validly  executed and delivered by the
Buyer and, as of the Closing, each of the Related Agreements will have been duly
and validly executed and delivered by the Buyer. Assuming the due authorization,
execution  and  delivery of this  Agreement  and the Related  Agreements  by the
Seller and/or the Selling Subsidiary, as applicable, this Agreement constitutes,
and each of the Related  Agreements upon execution and delivery will constitute,
a legal,  valid and binding  obligation  of the Buyer,  enforceable  against the
Buyer, in accordance with its terms.

     SECTION  5.3.  Consents and  Filings.  No Consent of, or Filing  with,  any
Governmental  Entity or third party is required  for or in  connection  with the
execution,  delivery and performance of this Agreement or any Related  Agreement
by the Buyer and the consummation by the Buyer of the transactions  contemplated
hereby or  thereby,  in each case,  except  (a) compliance  with any  applicable
provisions  of the HSR Act;  (b) as may be  required  solely  by  reason  of the
jurisdictions  in  which  Seller's  or the  Selling  Stockholder's  business  or
operations are located, or (c) as set forth on Schedule 5.3.

     SECTION 5.4. Noncontravention.  The execution,  delivery and performance by
the  Buyer  of  this  Agreement  and the  Related  Agreements  do  not,  and the
consummation by the Buyer of the  transactions  contemplated  hereby and thereby
will not, (a) subject to obtaining or making the Consents and/or Filings, as the
case may be,  referred to in Section 5.3,  contravene,  conflict with or violate
any Applicable  Law,  (b) contravene,  conflict with or violate any provision of
the Charter  Documents  of the Buyer or  (c) subject  to obtaining or making the
Consents  and/or  Filings,  as the  case  may be,  referred  to in  Section 5.3,
contravene, conflict with or violate or constitute a default under any provision
of, or result in the  termination  or  acceleration  of, or entitle any party to
terminate or accelerate any obligation under, or result in the imposition of any
Lien upon the assets of the Buyer  pursuant  to, or give any person the right to
cancel,  terminate or modify any mortgage,  lease, license, permit, agreement or
instrument to which the Buyer or any of its  Subsidiaries is a party or by which
the Buyer or any of its  Subsidiaries is bound,  except (i) in each case, as set
forth  on  Schedule  5.4 or  (ii) in the  case  of  clause  (c),  for  any  such
contravention,  conflict, violation, default, termination,  acceleration,  Lien,
cancellation or modification which would not,  individually or in the aggregate,
have a Buyer Material Adverse Effect.

     SECTION  5.5.  Litigation.  There  are  no  actions  or  suits  before  any
Governmental  Entity  or  arbitration  panel  against  the  Buyer  or any of its
Subsidiaries  pending or, to the Knowledge of the Buyer,  threatened in writing,
which seek to, and the Buyer is not subject to any judgments,  decrees or orders
which,  enjoin or prevent or may  reasonably  be  expected to have the effect of
enjoining,  preventing  or  rescinding,  in any  material  respect,  or awarding
damages in respect of, the  transactions  contemplated  by this Agreement or any
Related Agreement or otherwise prevent the Buyer from, or restrict or impede the
Buyer in,  complying in any material  respect with the terms and  provisions  of
this Agreement or any Related Agreement.

     SECTION 5.6.  Brokers and  Intermediaries.  None of the Buyer or any of its
Subsidiaries  has  employed  any  broker,  finder,  investment  banker  or other
intermediary in connection with the transactions  contemplated by this Agreement
or any Related  Agreement  which  would be  entitled  to a  broker's,  finder's,
investment  banker's  or  similar  fee or  commission  in  connection  with such
transactions,  except for any such fees or  commissions  which shall be the sole
responsibility of the Buyer.

     SECTION 5.7.  Financing.  The Buyer has, and on the Closing Date will have,
sufficient  funds to pay the Purchase  Price  hereunder  and the purchase  price
under the R&J Sale Agreement and all related fees and expenses and to effect all
other transactions contemplated by this Agreement, the R&J Sale Agreement or any
Related Agreement.

     SECTION 5.8. No Other  Representations.  It is the explicit  intent of each
party to this Agreement that the Buyer is making no  representation  or warranty
with respect to the payment for the  Transferred  Assets other than as set forth
in this Agreement or as set forth in the R&J Sale Agreement.

                                   ARTICLE VI
                                    COVENANTS

     SECTION  6.1.  Conduct  of the  Business.  From the date  hereof  until the
Closing  Date,  except  (a) as  otherwise  contemplated  or  permitted  by  this
Agreement,  the R&J  Agreement  or any  Related  Agreement,  (b) as  required by
Applicable  Law,  (c) as  previously  consented to in writing by the Buyer (such
consent not to be  unreasonably  withheld) or (d) as set forth on  Schedule 6.1,
the Seller and the Selling Subsidiary (A) shall operate the Transferred Business
in the  ordinary  course of  business  in all  material  respects  and shall use
reasonable  best  efforts  consistent  with past  practices  to  preserve in all
material respects their  relationships with customers,  suppliers,  distributors
and others with whom they deal in connection with the Transferred Business;  and
(B) shall not:

     (i) sell,  lease or  dispose  of, or place or permit to be placed  any Lien
(other than any Permitted Lien) upon, any of the Transferred  Assets (other than
the sale of inventory in the ordinary course consistent with past practice);

     (ii) amend,  modify or  terminate  in any  material  respect  any  Assigned
Contract,  except as required by its existing  terms, or enter into any Contract
related to the Transferred Business or that will be an Assigned Contract;

     (iii)  release,  compromise or waive any claim or right that is part of the
Transferred Assets;

     (iv) grant any license or  sublicense,  or dispose of, any rights  under or
with respect to any Transferred Intellectual Property;

     (v) enter into or accept any material  purchase orders or otherwise ship or
sell or commit to ship or sell any Products  other than in the  ordinary  course
consistent with past practice;

     (vi)  fail  to  perform  on any  promotions  or  obligations  for  refunds,
adjustments,   allowances,   exchanges  and  returns,  advertising  commitments,
coupons, sampling and account specific programs related to the Products;

     (vii) sell finished  Products to wholesalers or  distributors in quantities
that are not consistent with past practice;

     (viii) fail to  maintain in effect at least the same level of  expenditures
for, and quality of, advertising and promotional  support for the Products as it
did for the comparable period in the prior year;

     (ix) make any  material  change to any  pricing,  discounts  or  promotions
applicable to the Products or enter into or provide any promotions or discounts;

     (x) make any change in  accounting  methods,  practices  or policies in any
material  respect,  except as  required by GAAP or any  official  interpretation
thereof,  and not  make  changes  in any of its  Internal  Controls  or in other
factors that could adversely affect any of its Internal Controls; or

     (xi) agree to do any of the foregoing.

     SECTION 6.2. Access to Information;  Advices of Changes.  (a) From the date
of this Agreement until the Closing Date, the Seller and the Selling  Subsidiary
will, during Normal Business Hours and upon reasonable prior notice,  subject to
Applicable  Law,  (i) provide  to or cause to be  provided  to the Buyer and its
authorized representatives reasonable access to the offices,  properties,  books
and records of the Transferred  Business  (provided that Buyer acknowledges that
it would not be reasonable to visit either the  manufacturing  facilities or the
administrative  offices of Seller and its  Subsidiaries  more than twice  during
such period), (ii) coordinated through an employee designated by the Seller and,
if  requested  by the Seller,  in the  presence of a  designated  officer of the
Seller  and   representatives   of  the   Seller,   permit  the  Buyer  and  its
representatives to discuss the affairs, finances and accounts of the Transferred
Business with the officers,  employees and independent public accountants of the
Seller, Chambord, R&J or the Selling Subsidiary, (iii) furnish to the Buyer such
financial  and  operating  data  and  other  information  with  respect  to  the
Transferred Business as the Buyer may reasonably request;  provided that none of
the actions taken by the Buyer under clauses (i), (ii) or (iii) shall  interfere
with the normal  operations  of the  Transferred  Business,  and (iv) as soon as
practicable  following the end of each month, provide the Buyer with a report of
sales  revenues,  volumes  and average  selling  price by UPC for each month and
year-to-date, and for the comparable periods in the preceding year and with such
other  reports  about  Chambord  sales and customer  information  that the Buyer
reasonably  requests,  to the extent that the  information can be produced using
the Seller or R&J's existing systems without additional cost to the Seller.

     (b) Any information heretofore or hereafter obtained from the Seller or any
of its Affiliates or  representatives by the Buyer shall be subject to the terms
of the Confidentiality Agreement and such information shall be held by the Buyer
and its  representatives  in accordance  with the terms of such  Confidentiality
Agreement.

     SECTION  6.3.  Further  Action;  Efforts.  (a)  Subject  to the  terms  and
conditions of this Agreement, each party will use its reasonable best efforts to
take,  or cause to be taken,  all  actions  and to do, or cause to be done,  all
things  necessary,  proper or advisable to  consummate  and make  effective  the
transactions  contemplated  by  this  Agreement  or any  Related  Agreement.  In
furtherance and not in limitation of the foregoing, each party to this Agreement
agrees to make (i) an  appropriate  filing of a  Notification  and  Report  Form
pursuant to the HSR Act with respect to the  transactions  contemplated  by this
Agreement or any Related  Agreement as promptly as practicable  and in any event
within 15 days of the date hereof and to supply as promptly as  practicable  any
additional  information and documentary  material that may be requested pursuant
to the HSR Act and to take all other actions  necessary,  proper or advisable to
cause the expiration or termination of all applicable  waiting periods under the
HSR Act as soon as  practicable,  and (ii)  appropriate  filings  with any other
Governmental Entity in accordance with applicable  competition,  merger control,
antitrust,  investment or similar laws as promptly as practicable  and to supply
as promptly as practicable any additional  information and documentary  material
that may be requested by the appropriate  Governmental  Entities and to take all
other  actions  necessary,  proper  or  advisable  to cause  the  expiration  or
termination of any applicable waiting periods instituted under such laws.

     (b) Each  party  shall,  in  connection  with  the  efforts  referenced  in
Section 6.3(a)   to  obtain   all   requisite   approvals,   notifications   and
authorizations  for  the  transactions  contemplated  by this  Agreement  or any
Related  Agreement  under  the HSR  Act,  use its  reasonable  best  efforts  to
(i) cooperate  in all respects with each other in connection  with any filing or
submission and in connection with any investigation or other inquiry,  including
any proceeding initiated by a private party,  (ii) keep the other party informed
of any communication received by such party from, or given by such party to, the
Federal Trade Commission (the "FTC"),  the Antitrust  Division of the Department
of Justice (the "DOJ") or any other Governmental Entity and of any communication
received or given in connection  with any proceeding by a private party, in each
case  regarding any of the  transactions  contemplated  by this Agreement or any
Related  Agreement  and  (iii) permit  the other  party to review in advance any
communication  to be given by it to, and  consult  with each other in advance of
any meeting or conference with, the FTC, the DOJ or any such other  Governmental
Entity or, in connection with any proceeding by a private party,  with any other
person, and to the extent permitted by the FTC, the DOJ or such other applicable
Governmental  Entity or other person,  give the other party the  opportunity  to
attend and participate in such meetings and conferences.

     (c) In  furtherance  and not in  limitation of the covenants of the parties
contained in Sections  6.3(a) and (b), each party shall use its reasonable  best
efforts to resolve such  objections,  if any, as may be asserted with respect to
the transactions  contemplated by this Agreement or any Related  Agreement under
any applicable  competition,  merger control,  antitrust,  investment or similar
laws. In connection with the foregoing, if any administrative or judicial action
or proceeding,  including any  proceeding by a private party,  is instituted (or
threatened to be instituted)  challenging any  transaction  contemplated by this
Agreement  or any Related  Agreement as  violative  of any  competition,  merger
control,  antitrust,  investment or similar laws,  each party shall cooperate in
all respects with each other and use its respective  reasonable  best efforts to
contest and resist any such action or proceeding  and to have  vacated,  lifted,
reversed or overturned any decree, judgment,  injunction or other order, whether
temporary,  preliminary  or  permanent,  that is in effect  and that  prohibits,
prevents or restricts  consummation  of the  transactions  contemplated  by this
Agreement or any Related  Agreement  (provided that, for the avoidance of doubt,
the Buyer shall not be required to institute any Action against any Governmental
Entity hereunder).  Notwithstanding  anything to the contrary in this Agreement,
the  Buyer  shall  not be  required  to hold  separate  (including  by  trust or
otherwise)  or to  divest  any of its  businesses,  the  business  of any of its
Subsidiaries or Affiliates or the Transferred  Business,  or to take or agree to
take any action  with  respect to, or agree to any  limitation  on, any of these
businesses in order to satisfy its obligations  under this Agreement,  including
under this Section 6.3.

     (d) The Seller shall (i) assist, and provide reasonable  cooperation to the
Buyer,  if  requested  by it,  with  respect to the  Buyer's  efforts to contact
suppliers of raw materials and of the processed ingredients and extracts for the
Chambord product and to visit their plants prior to the Closing and (ii) use its
reasonable  best  efforts  to obtain by the  Closing a release  by each of Jules
Robin and Claude Kistner, in the form set forth on Exhibit VI, prior to Closing.

     (e) Promptly  following  the date hereof,  the Seller shall arrange for the
procurement  of gift boxes and  glassware  for use as gift sets  during the 2006
holiday season in the following amounts:  20,000 cases of the 375ml gift set and
2,000 cases of the 750ml gift set.   Seller  shall pay the  supplier of the gift
boxes and glassware  referred to in the previous  sentence,  and will submit the
invoices  therefor  to the  Buyer.   Within  60 days of  Buyer's  receipt of the
invoices  referred to in the previous sentence or, if later, on the Closing Date
(but in any event subject to the consummation of the  transactions  contemplated
by this  Agreement),  the Buyer shall  reimburse  Seller for the  amounts  shown
thereon.  The Seller shall provide the Buyer with access to the historical costs
of gift boxes and  glassware,  and shall  provide  reasonable  assistance to the
Buyer in  connection  with  arranging  access to the  supplier of gift boxes and
glassware after the Closing in the future.

     SECTION 6.4. Post-Closing  Cooperation;  Records. (a) The parties shall use
reasonable  best efforts to cooperate with each other,  and shall use reasonable
best efforts to cause their respective officers, employees, agents, auditors and
representatives  to  cooperate  with each  other,  for a period of not less than
twelve (12) months after the Closing Date,  to ensure the orderly  transition of
the Transferred Business from the Seller and the Selling Subsidiary to the Buyer
and to minimize any  disruption to the  respective  businesses of the Seller and
its  Affiliates  and the Buyer and its  Affiliates,  including  the  Transferred
Business,  that might result from the transition of ownership of the Transferred
Business contemplated hereby.

     (b) After the Closing,  upon reasonable  written notice,  the Buyer, on the
one hand, and the Seller and the Selling  Subsidiary,  on the other hand,  shall
furnish or cause to be  furnished  to each other and their  employees,  counsel,
auditors and  representatives  access,  during Normal  Business  Hours,  to such
information  and assistance  relating to the  Transferred  Business prior to the
Closing as is  reasonably  necessary  for  financial  reporting  and  accounting
matters. Each party shall reimburse the other party for reasonable out-of-pocket
costs  and  expenses   incurred  in  assisting   the  other   pursuant  to  this
Section 6.4(b).  No party shall be required by this  Section 6.4(b)  to take any
action that would  unreasonably  interfere  with the conduct of its  business or
unreasonably disrupt its normal operations.

     (c) On the Closing Date, or as soon thereafter as  practicable,  the Seller
and the Selling  Subsidiary  shall deliver or cause to be delivered to the Buyer
all agreements, documents, books, records and files, including records and files
stored on computer  disks or tapes or any other  storage  medium  (collectively,
"Records"),  if any,  of the Seller or the  Selling  Subsidiary  which  would be
reasonably  necessary  to  conduct  the  Transferred  Business,  subject  to the
following exceptions:

          (i)  the  Seller or the  Selling  Subsidiary,  as the case may be, may
               retain all Records which relate to  Subsidiaries  or divisions of
               the Seller other than those exclusively  constituting part of the
               Transferred  Business  and shall  provide  copies of the relevant
               portions  thereof which are  reasonably  necessary to conduct the
               Transferred Business to the Buyer;

          (ii) the  Seller or the  Selling  Subsidiary,  as the case may be, may
               retain all  Transferred  Records  prepared in connection with the
               sale of the Transferred  Business or any part thereof,  including
               bids  received  from other  parties and analyses  relating to the
               Transferred Business; and

          (iii)the Seller or the  Selling  Subsidiary,  as the case may be,  may
               retain any Tax Returns, reports or forms.

The Seller and the Selling Subsidiary shall, if requested by the Buyer,  enforce
for the benefit of the Buyer, all confidentiality and similar agreements between
the  Seller or the  Selling  Subsidiary  and any  other  party  relating  to the
Transferred Assets or the Records.

     (d) The Buyer shall, and shall cause its Subsidiaries to, preserve and keep
the Records of the Transferred Business actually delivered to the Buyer pursuant
to this  Agreement  for a period of five years from the Closing Date, or for any
longer periods required by any Governmental  Entity or ongoing  litigation,  and
the Buyer shall, or shall cause its Subsidiaries to, make such Records available
to the Seller, its Affiliates and representatives as may be reasonably requested
by the Seller  for any  purpose,  including  for  purposes  of  determining  any
liability or obligation under this Agreement.  The Seller shall, and shall cause
its Subsidiaries  to, preserve and keep the Records of the Transferred  Business
actually  retained by the Seller pursuant to this Agreement for a period of five
years  from  the  Closing  Date,  or for  any  longer  periods  required  by any
Governmental Entity or ongoing litigation,  and the Seller shall, or shall cause
its Subsidiaries to, make such Records (other than any Tax Returns) available to
the Buyer, its Affiliates and representatives as may be reasonably  requested by
the Buyer for any purpose,  including for purposes of determining  any liability
or obligation under this Agreement.

     (e) The Seller shall use its reasonable  best efforts to calculate the most
recent twelve months of sales data (in 9 liter cases)  available from all of its
distributors  and the  estimated  inventory on hand at such  distributors  (in 9
liter cases) on or about the Closing Date. The Seller shall deliver to the Buyer
on the Closing Date a written statement setting forth its good faith calculation
of such sales data and estimated inventory.  The target level of inventory shall
be the  aggregate  of such sales data  divided by six.   To the extent  that the
actual inventory is less than or equal to the target inventory,  no amounts will
be payable  under this  Section.   To the extent the actual  inventory is higher
than the target inventory, the Seller shall promptly thereafter pay to the Buyer
an  amount  equal  to the  product  of (1) the  difference  between  the  actual
inventory and the target inventory and (2) $80.

     (f) If any moral rights that would have be assigned to the Buyer  hereunder
as Transferred Intellectual Property are inalienable under the copyright laws of
any  country in which such rights are  exploited,  such  inalienable  rights are
hereby  waived by the Seller,  the Selling  Subsidiary  and their  Affiliates in
favor of the Buyer,  and such  exploitation  is hereby be  consented  to by such
Persons, so that the purposes of this Agreement may be fully realized.

     SECTION 6.5.  Public  Announcements.  The parties agree that, from the date
hereof  through the Closing Date, no public release or  announcement  concerning
the transactions contemplated hereby shall be issued by either party without the
prior  consent  of the other  party  (which  consent  shall not be  unreasonably
withheld),  except as such release or announcement may be required by Applicable
Law or the rules or regulations of any  securities  exchange,  in which case, to
the extent  practicable,  the party required to make the release or announcement
shall allow the other party  reasonable  time  (taking  into  consideration  the
alacrity with which such party is required to make such release or announcement)
to comment on such release or announcement in advance of such issuance.

     SECTION 6.6. Dealings with  Distributors and Brokers.  From the date hereof
through the Closing Date,  and for a period of up to 12 months after the Closing
Date,  upon the Buyer's  request,  the Seller and the Selling  Subsidiary  shall
advise and provide reasonable  cooperation in connection with the Buyer securing
agreements or  arrangements  with  distributors  and brokers with respect to the
Transferred Business.

     SECTION 6.7.  Intellectual Property Rights. (a) At Closing, the Seller, the
Selling  Subsidiary  and the Buyer  shall  each  execute  the  Global  Trademark
Assignments.  Thereafter,  at the Buyer's request and expense, the Seller or its
designee shall execute and deliver such additional documents and shall take such
further actions as may be reasonably  required to allow the Buyer to record with
all applicable  Governmental  Entities its ownership of all patent and trademark
registrations  and  applications  and domain names  included in the  Transferred
Assets.  The Buyer shall be solely  responsible  for all filing,  attorney's  or
other  fees  incurred  in  connection   with  such   additional   documents  and
recordations.

     (b) The Seller  and the  Selling  Subsidiary  acknowledge  that,  after the
Closing, the marks set forth on Schedule 4.11(a) and all goodwill arising out of
the use thereof shall inure to the sole benefit of the Buyer.

     (c) If, after the Closing,  the Seller or the Selling  Subsidiary is issued
or for any reason is deemed to be the owner, in any country, of any right, title
or interest in any  registration  covering any of the  Transferred  Intellectual
Property,  or any mark that is confusingly  similar to, or a translation  and or
transliteration  of, the marks on Schedule 4.11(a)  (collectively,  the "Related
Marks"),  the Seller or the Selling Subsidiary,  as applicable,  shall so notify
the  Buyer  and  agrees  that it has  acted  or will  act as an agent on and for
Buyer's behalf,  and further agrees to execute any and all instruments deemed by
the Buyer,  its attorneys or  representatives,  to be necessary to transfer such
right, title or interest in or to the Related Marks to the Buyer.  Related Marks
shall  thereafter  be  considered  included  in  the  defined  term  Transferred
Intellectual Property for all purposes of this Section 6.7.

     (d) Each of the Seller and the Selling  Subsidiary  further  covenants  and
agrees that, after the Closing, it shall not, directly or indirectly through any
agent,  employee,  affiliate or  representative,  and except as set forth in the
Trademark & Know-How License:

          (i)  use  anywhere  in  the  world,  for  any  purpose,   any  of  the
               Transferred   Intellectual   Property,  or  anything  confusingly
               similar thereto;

          (ii) make any attempt, file any document with any Governmental Entity,
               or take  any  other  action  to  challenge,  attack,  contest  or
               adversely affect the full and exclusive  ownership or validity of
               the Buyer's rights in the Transferred Intellectual Property;

          (iii)make use of, in connection with any  other beverage product,  any
               imagery, packaging,  bottles, trade dress or advertising that are
               confusingly similar to those used by the Transferred  Business or
               the Product;

          (iv) disparage the Business,  the Transferred Business,  the Purchased
               Assets,   the  Transferred   Liabilities,   the  Product  or  the
               Transferred Intellectual Property; or

          (v)  aid or abet anyone else in doing any of the foregoing acts.

     SECTION 6.8. Seller  Non-Compete.  (a)  During the period  beginning on the
Closing  Date and  ending  on the tenth  anniversary  of the  Closing  Date (the
"Non-Compete  Period")  neither the Seller nor any of its  Subsidiaries nor N.J.
"Sky"  Cooper  shall,  directly or  indirectly,  produce,  market,  manufacture,
distribute or sell (for itself or a third party):  (i) any new products that use
imagery,  packaging,  bottles,  trade dress or  advertising  that imitates or is
confusingly  similar  to that of the  Chambord  products  or  (ii) any  products
containing or marketed,  advertised,  distributed or sold as containing  liqueur
flavored with berries,  currants or other fruits (it being  understood that this
restriction would preclude in all cases the Seller or any of its Affiliates from
selling any  products  with  advertising  that  refers to or compares  itself to
Chambord).

     (b)  Notwithstanding  the foregoing,  Section 6.8(a)(ii) shall not prohibit
the Seller or any of its Affiliates  from,  directly or  indirectly,  producing,
marketing, manufacturing,  distributing or selling (for itself or a third party)
(i) the  liqueur  product  called  Royal  Montaine  and (ii) the  following  new
products:  a  strawberry-vanilla  flavored Irish liqueur and liqueurs containing
any of the following fruits: apple, pomegranate,  orange, pineapple,  tangerine,
lemon,  grapefruit,  apricot,  peach or banana or from  continuing  to  produce,
market,  manufacture,  distribute or sell fruit-based liqueurs which any of them
currently,  and continue to, make,  which include  Blackberry  Brandy,  Boulaine
Blackberry Liqueur, Boulaine Creme de Strawberry, Bartenders Raspberry Mudslide,
Bartenders Raspberry Party Pak and Creme de Cassis;  provided that none of these
products shall be positioned or repositioned to a super-premium price category.

     (c) The Seller and the Selling  Subsidiary  understand and acknowledge that
(i) it would be  difficult to calculate  damages to the Buyer from any breach of
the  obligations  of Park under this Section 6.8,  (ii) injury to the Buyer from
any such breach would be  irreparable  and  impossible  to measure and (iii) the
remedy at law for any  breach or  threatened  breach of this  Section  6.8 would
therefore be an inadequate remedy and, accordingly, the Buyer shall, in addition
to all other available remedies  (including,  without  limitation,  seeking such
damages  as it can show it has  sustained  by reason of such  breach  and/or the
exercise of all other rights it has under this  Agreement),  be entitled to seek
injunctive relief, specific performance and other equitable remedies without the
necessity of showing actual damages or posting bond.

     (d) The  parties  understand  and  acknowledge  that  that the  restrictive
covenants  and other  agreements  contained in this Section 6.8 are an essential
part  of  this  Agreement  and  the  Related  Agreements  and  the  transactions
contemplated by this Agreement and the Related  Agreements.  It is the intention
of the parties that, if any of the  restrictions or covenants  contained in this
Agreement are held to cover a geographic area or to be for a length of time that
is not permitted by Applicable Law, or is in way construed to be too broad or to
any extent  invalid,  such provision shall not be construed to be null, void and
of no  effect,  but to the  extent  that such  provision  would then be valid or
enforceable  under  Applicable  Law,  such  provision  shall  be  construed  and
interpreted  or  reformed to provide for a  restriction  or covenant  having the
maximum  enforceable  geographic area, time period and other provisions as shall
be valid and enforceable  under  Applicable Law. The parties also understand and
acknowledge  that nothing in this Section 6.8 shall limit,  diminish or abrogate
any obligation of the Seller or the Selling  Subsidiary  under this Agreement or
any Related Agreement from limiting,  infringing or violating any of the Buyer's
right, title and interest in, to and under the Transferred Intellectual Property
or the Marks or Related Marks.

     SECTION 6.9. Release; Other Matters.

     (a) Each of Seller,  the Selling  Subsidiary  and the Selling  Stockholders
hereby releases, on behalf of itself and each of its Affiliates,  successors and
assigns,  all of such Persons' rights with respect to any and all claims,  known
or unknown, which the Seller or the Selling Subsidiary could assert against R&J,
the Business,  the Transferred  Business,  the Transferred Assets or the Assumed
Liabilities  and arising  out of,  related to or in  connection  with any act or
omission of the Seller, the Selling Subsidiary or any Selling  Stockholder on or
before the  Closing  or arising  out of,  related to or in  connection  with the
Seller's or the Selling  Subsidiary's  status as the direct or indirect owner of
R&J, the Business,  the  Transferred  Business,  the  Transferred  Assets or the
Assumed  Liabilities  on or before the  Closing  and any  dealings  between  the
Seller, any of its Subsidiaries or any Selling Stockholder, on the one hand, and
R&J, the Business,  the  Transferred  Business,  the  Transferred  Assets or the
Assumed Liabilities, on the other hand.

     (b) At Closing,  the Seller and the Selling  Subsidiary  shall  provide the
Buyer  with Tax  clearance  certificates  (to the extent  available)  reasonably
satisfactory to the Buyer.

                                  ARTICLE VII
                              CONDITIONS TO CLOSING

     SECTION 7.1.  Conditions  Precedent  to  Obligations  of the  Parties.  The
respective obligations of the parties to consummate the transaction contemplated
by this  Agreement  are subject to the  satisfaction  (or waiver) by each of the
parties, at or prior to the Closing, of each of the following conditions:

     (a) No Injunctions.  No preliminary or permanent injunction or other order,
decree or ruling issued by any  Governmental  Entity of any jurisdiction nor any
statute,  rule,  regulation  or executive  order  promulgated  or enacted by any
Governmental  Entity  of  any  jurisdiction  shall  be in  effect  enjoining  or
otherwise materially impairing the consummation of the transactions contemplated
by this Agreement.

     (b)  Governmental  Approvals.  (i) All waiting  periods  applicable  to the
transactions  contemplated by this Agreement and by the R&J Sale Agreement under
the HSR Act shall  have  been  terminated  or shall  have  expired  and (ii) any
antitrust approvals necessary for consummation of the transactions  contemplated
by this Agreement and the R&J Sale Agreement in any of the territories set forth
on Schedule 7.1(b) shall have been obtained.

     (c) R&J Sale  Agreement.  The  Closing  (as such term is defined in the R&J
Sale Agreement) shall have occurred simultaneously with the Closing hereunder.

     SECTION  7.2.  Conditions   Precedent  to  Obligation  of  the  Buyer.  The
obligation  of the Buyer to consummate  the  transactions  contemplated  by this
Agreement is subject to the satisfaction (or waiver by the Buyer) at or prior to
the Closing of each of the following additional conditions:

     (a)  Accuracy  of   Representations   and   Warranties.   (i) Each  of  the
representations  and  warranties of the Seller,  the Selling  Subsidiary and the
Selling  Stockholders  set forth in this  Agreement (in each case without giving
effect,  other than in the case of Sections 4.7(a) and 4.8(a), to any qualifiers
or exceptions in the text of the relevant representation or warranty relating to
materiality  or  Material  Adverse  Effect)  shall  be true and  correct  in all
respects on and as of the Closing Date, with the same force and effect as though
made on and as of the Closing  Date,  except,  solely in the case of this clause
(i), (1) to the extent that any such  representation or warranty is made as of a
specified date, in which case such  representation  or warranty shall be so true
and correct as of such date;  and (2) where the failure of such  representations
and warranties to be so true and correct,  individually or in the aggregate with
all  other  such  failures  to be so true and  correct  (together  with all such
failures of the representations  and warranties of the Seller,  Chambord and the
Selling  Stockholders  set forth in the R&J  Agreement to be true and correct in
all respects (in each case without giving effect to any qualifiers or exceptions
in the text of the relevant  representation  or warranty relating to materiality
or  Material  Adverse  Effect) on and as of the Closing  Date),  has not had and
would not  reasonably be expected to result in a Material  Adverse  Effect,  and
(ii) the  representations  and warranties set forth in Section 4.6(a)(i) of this
Agreement and the  representations  and  warranties in Sections 7.3 and 7.7.1 of
the R&J Sale Agreement shall be true and correct in all material respects on and
as of the Closing Date,  with the same force and effect as though made on and as
of the Closing Date.

     (b) Performance of Agreements.  The Seller and the Selling Subsidiary shall
have performed in all material respects all obligations and agreements set forth
in this  Agreement  required to be  performed by each of them prior to or on the
Closing Date.

     (c) Certificate. The Buyer shall have received a certificate of each of the
Seller and the Selling  Subsidiary,  dated as of the Closing  Date,  executed on
behalf  of the  Seller  or the  Selling  Subsidiary,  as the case may be,  by an
authorized officer of the Seller or the Selling Subsidiary,  as the case may be,
to the effect that the conditions  specified in paragraphs  (a),  (b) and (f) of
Section 7.2 have been fulfilled.

     (d)  Related  Agreements.  The Buyer  shall  have  received  duly  executed
counterparts by the Seller and/or the Selling Subsidiary, as applicable, of each
of the Related Agreements.

     (e) Release of Liens.  Seller shall deliver UCC-3 partial  releases  and/or
termination statements and such other instruments as are required to release all
Liens of the lenders to and other  creditors of the Seller and its  Subsidiaries
on the Transferred Assets and the capital stock of R&J.

     (f) No Material Adverse Effect. No event, occurrence,  change,  development
or  effect  shall  have  occurred  since  the  date  of  this  Agreement   that,
individually  or in the  aggregate,  has  constituted  or resulted  in, or would
reasonably be expected to constitute or result in, a Material Adverse Effect.

     (g)  Manufacturing  Review. A designated  representative of the Buyer shall
have (i) received  from the Seller or the Selling  Subsidiary  at Closing a true
and complete copy of the manufacturing instructions for the Product and shall be
reasonably  satisfied as to the completeness and correctness  thereof;  and (ii)
the  opportunity to witness an overview of the production  process by the Seller
or its subsidiaries of a batch of the Product.

     SECTION 7.3.  Conditions  Precedent to the Obligation of the Seller and the
Selling  Subsidiary.  The obligation of the Seller and the Selling Subsidiary to
consummate  the  transactions  contemplated  by this Agreement is subject to the
satisfaction (or waiver by the Seller and the Selling Subsidiary) at or prior to
the Closing of each of the following additional conditions:

     (a) Accuracy of Representations  and Warranties.  The  representations  and
warranties of the Buyer set forth in this Agreement (in each case without giving
effect  to  any   qualifiers   or   exceptions  in  the  text  of  the  relevant
representation  or warranty  relating to materiality  or Buyer Material  Adverse
Effect)  shall be true and  correct in all  respects,  on and as of the  Closing
Date,  with the same  force and effect as though  made on and as of the  Closing
Date, except (1) to the extent that any such  representation or warranty is made
as of a specified date, in which case such  representation  or warranty shall be
so true  and  correct  as of  such  date;  and (2)  where  the  failure  of such
representations and warranties to be so true and correct, individually or in the
aggregate with all other such failures to be so true and correct  (together with
all such failures of the  representations  and warranties of the Buyer set forth
in the R&J  Agreement  to be true and  correct  in all  respects  (in each  case
without  giving  effect  to any  qualifiers  or  exceptions  in the  text of the
relevant  representation  or warranty  relating to materiality or Buyer Material
Adverse  Effect)  on and as of the  Closing  Date),  has not had and  would  not
reasonably be expected to result in a Buyer Material Adverse Effect.

     (b)  Performance  of  Agreements.  The Buyer  shall have  performed  in all
material  respects all  obligations  and agreement  set forth in this  Agreement
required to be performed by it prior to or on the Closing Date.

     (c) Certificate.  The Seller and the Selling Subsidiary shall have received
a certificate of the Buyer, dated as of the Closing Date,  executed on behalf of
the  Buyer  by an  authorized  officer  of the  Buyer,  to the  effect  that the
conditions  specified  in  paragraphs  (a) and  (b) of  Section  7.3  have  been
fulfilled.

     (d) Related  Agreements.  The Seller and the Selling  Subsidiary shall have
received  duly  executed  counterparts  by the  Buyer  of  each  of the  Related
Agreements.

                                  ARTICLE VIII
                                 INDEMNIFICATION

     SECTION 8.1.  Survival of  Representations,  Warranties and Covenants.  The
representations  and warranties  contained in this  Agreement  shall survive the
Closing for a period of eighteen (18) months  following the Closing Date,  other
than (a) the  representations and warranties contained in Sections 4.12 (Brokers
and  Intermediaries) and 5.6 (Brokers and  Intermediaries),  each of which shall
survive forever,  (b) the  representations and warranties  contained in Sections
4.13 (Tax  Matters),  each of which shall survive until the date that is 60 days
following  the  expiration of the  applicable  statutory  period of  limitations
(including any extensions thereof),  and (c) the  representations and warranties
contained in Section 4.6(a)(i) (Title), which shall survive for a period of five
(5) years  following  the Closing  Date;  provided that in the event that, on or
prior to the  expiration  of such five (5) year  period,  any party shall become
aware  of  or  otherwise  receive  notice  of  any  inaccuracy  or  breach  of a
representation or warranty contained in Section 4.6(a)(i),  such survival period
shall be extended until the expiration of the applicable  statute of limitations
with respect to any claim that may arise  therefrom  (provided that the survival
period under this clause (c) shall not in any event exceed ten (10) years).  The
covenants and agreements  contained in this Agreement  shall survive the Closing
without  limitation (except for those which by their terms contemplate a shorter
survival time).

     SECTION  8.2.   Obligation  of  Seller,   Selling  Subsidiary  and  Selling
Stockholders.  Subject to the other  provisions of this Article VIII, the Seller
and the Selling Subsidiary shall, jointly and severally,  indemnify,  defend and
hold harmless (and the Selling  Stockholders shall severally  indemnify,  defend
and hold  harmless,  solely with respect to (i) an  inaccuracy  or breach of any
representation  and warranty set forth in Section  4.6(a)(i)  (Title) or Section
4.13 (Tax) of this  Agreement,  in each case that  would give rise to  liability
pursuant to Section 8.2(a),  or (ii) the matters provided in Section 8.2(c),  in
each case in proportion to their ownership of the Seller as of the Closing Date;
provided  that  all  indemnification  obligations  of the  Selling  Stockholders
pursuant to this Agreement shall cease upon the fifth anniversary of the Closing
Date other than with respect to any pending but unresolved  claim) the Buyer and
its Affiliates, predecessors and successors, stockholders,  employees, officers,
directors,  agents  and  representatives  (the  "Buyer  Indemnitees")  from  and
against,  and pay or  reimburse  Buyer  Indemnitees  for,  any and all  damages,
liabilities,  losses, claims, obligations, Liens, assessments,  judgments, fines
and penalties ("Losses") that any of them may suffer, incur or sustain, directly
or indirectly, arising out of, attributable to, relating to or resulting from:

     (a) any inaccuracy in or breach of any representation and warranty (without
giving  effect,  other than in the case of Sections  4.7(a) and  4.8(a),  to any
qualifiers or exceptions relating to Knowledge,  materiality or Material Adverse
Effect) made by the Seller or the Selling  Subsidiary  in this  Agreement or any
certificate,  instrument  or  agreement  to be  delivered  by the  Seller or the
Selling  Stockholder  pursuant  to this  Agreement  or in  connection  with  the
transactions contemplated hereby by virtue of its failure to be true and correct
(1) on and as of the Closing  Date with the same effect as though made on and as
of the Closing Date (other than any such  representation or warranty that speaks
as of a specific  date or time other than the Closing  Date) or (2) on and as of
the date or time when made, in the case of any  representation  or warranty that
speaks as of a specific date or time other than the Closing Date;

     (b)  any  breach  or  nonperformance  of  any  of the  covenants  or  other
agreements  made and to be  performed  by the Seller or the  Selling  Subsidiary
pursuant to this Agreement or any certificate, instrument or agreement delivered
by the  Seller  or the  Selling  Subsidiary  pursuant  to this  Agreement  or in
connection  with the  transactions  contemplated  hereby (i) in the case of this
clause (i),  performed  or to be  preformed  prior to the Closing or (ii) in the
case of this clause (ii),  performed or to be performed on or after the Closing;
or

     (c) any Retained Asset or Retained Liability.

Any  indemnification  obligation  of the Seller,  the Selling  Subsidiary or the
Selling  Stockholders  under this Section 8.2 shall be satisfied  first from the
Escrow  Fund and only by any such party to the extent  that the Escrow  Fund has
been exhausted;  provided,  however,  that no such limitation shall apply to any
claim for  indemnification  under (1) Section  8.2(a) solely with respect to any
inaccuracy  or breach  of a  representation  or  warranty  set forth in  Section
4.6(a)(i)  or Section  4.13 of this  Agreement,  (2) Section  8.2(b)(ii)  or (3)
Section 8.2(c),  each of which claims the Buyer Indemnitees may recover from the
Seller, the Selling Subsidiary or any Selling Stockholder,  as applicable and as
and to the extent  provided in this  Agreement,  without any obligation to first
claim against or otherwise exhaust the Escrow Fund.

     SECTION 8.3.  Obligations of the Buyer.  Subject to the other provisions of
this  Article  VIII,  the Buyer  hereby  agrees to  indemnify,  defend  and hold
harmless the Seller,  the Selling  Subsidiary and their  respective  Affiliates,
predecessors and successors, and stockholders,  employees,  officers, directors,
agents and representatives (the "Seller  Indemnitees") from and against, and pay
or  reimburse  Seller  Indemnitees  for, any and all Losses that any of them may
suffer, incur, or sustain, directly or indirectly,  arising out of, attributable
to, relating to or resulting from:

     (a) any inaccuracy in or breach of any representation and warranty (without
giving effect to any qualifiers or exceptions relating to Knowledge, materiality
or Buyer  Material  Adverse  Effect) made by the Buyer in this  Agreement or any
certificate,  instrument  or agreement to be delivered by the Buyer  pursuant to
this Agreement or in connection  with the  transactions  contemplated  hereby by
virtue of its failure to be true and  correct (1) on and as of the Closing  Date
with the same effect as though  made on and as of the  Closing  Date (other than
any such  representation  or warranty  that speaks as of a specific date or time
other than the Closing  Date) or (2) on and as of the date or time when made, in
the case of any  representation or warranty that speaks as of a specific date or
time other than the Closing Date;

     (b)  any  breach  or  nonperformance  of  any  of the  covenants  or  other
agreements  made and to be performed by the Buyer  pursuant to this Agreement or
in any certificate,  instrument or agreement  delivered by the Buyer pursuant to
this Agreement or in connection with the transactions contemplated hereby (i) in
the case of this clause (i),  performed or to be performed  prior to the Closing
and (ii) in the case of this clause  (ii),  performed  or to be  performed on or
after the Closing;

     (c) any Transferred Asset or Assumed Liability.

     SECTION 8.4. Minimum Losses.

     (a) Except  with  respect to  breaches of  representations  and  warranties
contained in Sections 4.6(a)(i) (Title),  4.12 (Brokers and  Intermediaries) and
4.13 (Tax Matters) of this  Agreement and in Sections 7.3, 7.7.1 and 7.16 (Title
and Tax) of the R&J Sale Agreement,  no Buyer Indemnitee shall have any right to
indemnification  under  Section  8.2(a)  or  8.2(b)(i)  until  aggregate  Losses
incurred by all Buyer Indemnitees (together with all indemnification pursuant to
Section 9.1.1 of the R&J Agreement,  other than Section  9.1.1(b) thereof to the
extent  relating  to any breach or  nonperformance  of a covenant  or  agreement
thereunder  on or after the Closing)  would exceed  US$500,000  (the  "Indemnity
Threshold"),  after which time all Losses in excess of such  threshold  shall be
recoverable in accordance with the terms hereof.

     (b) Except  with  respect to  breaches of  representations  and  warranties
contained  in Section 5.6  (Brokers and  Intermediaries),  no Seller  Indemnitee
shall have any right to indemnification  under Section 8.3(a) or 8.3(b)(i) until
aggregate Losses incurred by all Seller  Indemnitees  would exceed the Indemnity
Threshold,  after  which  time all Losses in excess of such  threshold  shall be
recoverable in accordance with the terms hereof.

     SECTION 8.5. Maximum  Indemnification.  (a) Except with respect to breaches
of representations and warranties contained in Sections 4.6(a)(i) (Title),  4.12
(Brokers and  Intermediaries),  and 4.13 (Tax Matters) of this  Agreement and in
Sections 7.3,  7.7.1 and 7.16 (Title and Tax) of the R&J Sale  Agreement,  in no
event shall the Seller,  the Selling  Subsidiary or the Selling  Stockholders be
obligated  to provide  indemnification  pursuant to Section  8.2(a) or 8.2(b)(i)
exceeding,  in the  aggregate  (together  with all  indemnification  pursuant to
Section 9.1.1 of the R&J Agreement,  other than Section  9.1.1(b) thereof to the
extent  relating  to any breach or  nonperformance  of a covenant  or  agreement
thereunder on or after the Closing), US$50,000,000 (the "Cap").

     (b) Except  with  respect to  breaches of  representations  and  warranties
contained in Section 5.6 (Brokers and  Intermediaries),  in no event shall Buyer
be obligated to provide indemnification  pursuant to Section 8.3(a) or 8.3(b)(i)
exceeding, in the aggregate, the Cap.

     SECTION 8.6.  Notice;  Procedure  for  Third-Party  Claims.  (a) Any Person
entitled to  indemnification  under this Agreement (an "Indemnified  Party") may
seek  indemnification for any Loss or potential Loss by giving written notice to
the  applicable  party or  parties  from whom  indemnification  is  sought  (the
"Indemnifying  Party")  before,  if  applicable,  the expiration of the relevant
period  specified in Section 8.1. Written notice to such  Indemnifying  Party of
the  existence  of a claim  shall be given by the  Indemnified  Party as soon as
practicable  after the Indemnified  Party first receives notice of the potential
claim;  provided that any failure to provide such prompt notice of the existence
of a claim to the applicable Indemnifying Party shall not affect the Indemnified
Party"s right to seek  indemnification  pursuant to this Article VIII except and
only to the extent that such failure results in such Indemnifying Party actually
incurring an expense or otherwise being prejudiced as a result of such delay. In
the case of a claim not involving a Third-Party Claim, if the Indemnifying Party
does not notify the Indemnified Party within thirty (30) calendar days following
its receipt of such notice that the indemnifying party disputes its liability to
the  indemnified  party  under   Article VIII,   such  claim  specified  by  the
Indemnified Party in such notice shall be conclusively deemed a liability of the
Indemnifying  Party under  Article VIII and the Indemnifying Party shall pay the
amount of such liability to the  Indemnified  Party on demand or, in the case of
any  notice  in which  the  amount of the  claim  (or any  portion  thereof)  is
estimated,  on such later  date when the  amount of such claim (or such  portion
thereof) becomes finally determined.

     (b) In the case of any claim  asserted  by a Person  that is not a party to
this  Agreement  against  an  Indemnified  Party (a  "Third-Party  Claim"),  the
Indemnified  Party shall permit the  Indemnifying  Party (at the expense of such
Indemnifying  Party) to assume  the  defense of such  Third-Party  Claim and any
litigation or Proceeding resulting therefrom;  provided that (i) counsel for the
Indemnifying  Party who shall  conduct the  defense of such claim or  litigation
shall  be  reasonably  satisfactory  to  the  Indemnified  Party  and  (ii)  the
Indemnified  Party may participate in such defense at such  Indemnified  Party's
expense.  Notwithstanding  the  election  of the  Indemnifying  Party to  assume
control of such defense,  the  Indemnified  Party shall be entitled to retain or
assume the  defense of such  Third-Party  Claims  (at such  Indemnified  Party's
expense)  if  (A) the  amount of Losses  from such  claim  could  reasonably  be
expected to exceed,  when  aggregated  with all other pending  claims and unpaid
claims for  indemnification  from such Indemnifying Party (together with, in the
case of any of the Seller, the Selling Subsidiary or the Selling Stockholders as
the  Indemnifying  Party,  pending claims and unpaid claims for  indemnification
from each such other Person),  the Escrow Fund or otherwise may not, in the good
faith judgment of the  Indemnified  Party, be capable of being satisfied in full
by such Indemnifying Party as provided herein; (B) the claim for indemnification
relates  to or  arises  in  connection  with any  criminal  proceeding,  action,
indictment,  allegation or  investigation  that could  reasonably be expected to
adversely affect the Business;  or (C) the Indemnified Party has been advised in
writing by counsel that a conflict of interest  exists between the  Indemnifying
Party and the  Indemnified  Party  with  respect to such  claim  (including  the
defense  thereof).  No  Indemnifying  Party,  in the defense of any  Third-Party
Claim,  shall  consent to entry of any  judgment  or enter  into any  settlement
without the consent of the Indemnified  Party,  which consent may be withheld in
the Indemnified  Party's sole  discretion  (unless the terms of such judgment or
settlement  include an unconditional  full release of the Indemnified Party from
all liability with respect to such  Third-Party  Claim and solely the payment of
money and all such moneys shall be paid by the Indemnifying Party, in which case
such  consent  shall  not be  unreasonably  withheld).  In the  event  that  the
Indemnifying  Party does not accept the defense of any matter as above provided,
the  Indemnified  Party shall have the right to defend against any such claim or
demand,  and shall be  entitled  to settle or agree to pay in full such claim or
demand.  In any event,  the parties to this  Agreement  shall  cooperate  in the
defense of any Third-Party Claim subject to this Article VIII and the records of
each  shall be made  reasonably  available  to the other  with  respect  to such
defense.

     (c)  Anything to the  contrary in this  Section 8.6  notwithstanding,  if a
Third-Party  Claim  includes or could  reasonably  be expected to include both a
claim  for Taxes  that are  Excluded  Taxes  and a claim for Taxes  that are not
Excluded  Taxes,  and  such  claim  for  Taxes  that are  Excluded  Taxes is not
separable  from such a claim for Taxes that are not Excluded  Taxes,  Seller (if
the claim for Taxes  that are  Excluded  Taxes  exceeds or  reasonably  could be
expected to exceed in amount the claim for Taxes that are not Excluded Taxes) or
otherwise the Buyer (Seller or the Buyer,  as the case may be, the  "Controlling
Party"),  shall be entitled to control  the  defense of such  Third-Party  Claim
(such Third-Party  Claim, a "Tax Claim").  In such case, the other party (Seller
or the Buyer, as the case may be, the "Non-Controlling Party") shall be entitled
to  participate  fully (at the  Non-Controlling  Party's  sole  expense)  in the
conduct of such Tax Claim and the  Controlling  Party  shall not settle such Tax
Claim without the consent of such Non-Controlling Party (which consent shall not
be unreasonably  withheld).  The costs and expenses of conducting the defense of
such Tax Claim shall be reasonably  apportioned based on the relative amounts of
the Tax Claim that are  Excluded  Taxes and the Tax Claim that are not  Excluded
Taxes.

     SECTION 8.7. Survival of Indemnity. Any matter as to which a claim has been
asserted by formal notice satisfying the requirements of Section 8.6, and within
the time limitation  applicable under Section 8.1, that is pending or unresolved
at the end of any  applicable  limitation  period,  under Section 8.1, by law or
otherwise shall continue to be covered by this Article VIII notwithstanding such
limitation  (which  the  parties  hereby  waive  solely  with  respect  to  such
circumstances), until such matter is finally terminated or otherwise resolved by
the parties under this  Agreement,  by an arbitration or by a court of competent
jurisdiction and any amounts payable hereunder are finally determined and paid.

     SECTION 8.8.  Subrogation.  The rights of any  Indemnifying  Party shall be
subrogated  to any right of action that the  Indemnified  Party may have against
any  other  person  with  respect  to any  matter  giving  rise to a  claim  for
indemnification hereunder.

     SECTION  8.9.  Exclusive  Remedy.  Except as  specifically  set forth in or
contemplated by this Agreement,  the R&J Sale Agreement or any Related Agreement
or in any certificate,  instrument or agreement to be delivered pursuant to this
Agreement, the R&J Sale Agreement or any Related Agreement or in connection with
the transactions  contemplated  hereby or thereby,  effective as of the Closing,
(a) the Buyer  waives any rights and claims for  monetary  damages the Buyer may
have against the Seller,  the Selling  Subsidiary  and the Selling  Stockholders
relating to the Transferred  Business or the  transactions  contemplated by this
Agreement  other  than any  rights or claims  relating  to any  Retained  Asset,
Retained Liability,  R&J Retained Asset or R&J Retained Liability, to which such
waiver shall not apply;  and (b) each of the Seller,  the Seller  Subsidiary and
each Selling  Stockholder waives any rights and claims for monetary damages such
Person may have against the Buyer  relating to the  Transferred  Business or the
transactions  contemplated  by this  Agreement.  The rights  and  claims  waived
pursuant to the immediately  foregoing  sentence  include,  without  limitation,
claims for breach of contract,  breach of representation or warranty,  negligent
misrepresentation  and all other  claims for breach of duty.  After the Closing,
Section  8.2 will  provide the  exclusive  remedy for  monetary  damages for any
misrepresentation,  breach of  warranty,  covenant or other  agreement  or other
claim in each case to the extent arising out of this Agreement.  Notwithstanding
the foregoing  provisions of this Section 8.9, nothing herein will limit (i) any
claim  based  upon  fraud or  willful  breach,  (ii) any claim  relating  to any
Retained  Asset,  Retained  Liability,   R&J  Retained  Asset  or  R&J  Retained
Liability,  or (iii) any claim in equity (including for specific  performance or
injunctive relief).

                                   ARTICLE IX
                        TERMINATION, AMENDMENT AND WAIVER

     SECTION 9.1. Termination.  (a) Notwithstanding  anything to the contrary in
this  Agreement,   this  Agreement  may  be  terminated  and  the   transactions
contemplated hereby abandoned at any time prior to the Closing:

     (i) by mutual written consent of the parties to this Agreement;

     (ii)  automatically upon the termination of the R&J Sale Agreement pursuant
to its terms;

     (iii) by the Seller and the  Selling  Subsidiary,  on the one hand,  or the
Buyer, on the other hand, if the Closing does not occur on or prior to September
30, 2006;  provided that the right to terminate this Agreement  pursuant to this
clause  (iii) shall  not be available to any party whose  failure to fulfill any
obligation  under  this  Agreement,  or whose  breach of any  representation  or
warranty by it set forth in this  Agreement,  has been the cause of, or resulted
in, the failure of the Closing to have occurred on or before such date;

     (iv) by the  Seller and the  Selling  Subsidiary,  on the one hand,  or the
Buyer,  on the other hand, by written  notice to the other party or parties,  as
applicable, if:

          (A)  the other  party  (including,  in the case of the  Seller and the
               Selling  Subsidiary,   any  Selling  Stockholder)  has  (and  the
               terminating  party  shall not have)  failed to perform and comply
               with in all material respects all material agreements,  covenants
               and conditions hereby required to have been performed or complied
               with by such  party  prior to the time of such  termination,  and
               such failure  shall not have been cured within 20 days  following
               notice of such  failure;  provided  that this 20-day period shall
               automatically  be  extended to 40 days  following  notice of such
               failure if such party shall have used good-faith  efforts to cure
               such failure during such 20-day period and  notwithstanding  such
               efforts  shall not have  cured such  failure  to so  perform  and
               comply; or

          (B)  any event  shall occur after the date hereof that shall have made
               it impossible to satisfy a condition precedent to the terminating
               party's  obligations to consummate the transactions  contemplated
               by this  Agreement,  unless the occurrence of such event shall be
               due to the failure of the terminating  party to perform or comply
               with any of the agreements,  covenants or conditions hereof to be
               performed or complied with by such party prior to the Closing.

     (b) If this  Agreement  is  terminated  and the  transactions  contemplated
hereby are  abandoned as described in this  Section 9.1,  this  Agreement  shall
become null and void and shall have no further force and effect,  except for the
provisions  of this  Section 9.1  and Sections  6.2(b) and 6.5 and Article X and
provided that the  Confidentiality  Agreement  shall  continue in full force and
effect.  Nothing in this  Section 9.1  shall be deemed to release any party from
any liability for any willful  breach by such party of the terms and  provisions
of this Agreement.

     SECTION 9.2.  Amendments  and Waivers.  This  Agreement  may not be amended
except by an  instrument  in writing  signed on behalf of each of the parties to
this Agreement.  Compliance by the Seller, the Selling Subsidiary or the Selling
Stockholders, on the one hand, or the Buyer, on the other hand, with any term or
provision of this  Agreement  that such party was or is obligated to comply with
or perform may be waived by an instrument  in writing  signed by the other party
to this Agreement.

                                   ARTICLE X
                                  MISCELLANEOUS

     SECTION  10.1.  Notices.  All notices,  requests  and other  communications
hereunder shall be in writing and shall be sent, delivered or mailed,  addressed
or telefaxed:

(a)   if to the Buyer, to:

        Brown-Forman Corporation
        850 Dixie Highway
        Louisville, Kentucky 40210
        Attention:  Chief Executive Officer
                       fax: (502) 774-6648
                    General Counsel
                       fax: (502) 774-6650
                    Vice President/Director Corporate Development
                       fax (502) 774-7416
      with a copy to:

        Wachtell, Lipton, Rosen & Katz
        51 West 52nd Street
        New York, NY 10019
        Attention: David A. Katz, Esq. and Joshua R. Cammaker, Esq.
        Fax: (212) 403-2000


(b)   if to the Seller, the Selling Subsidiary or any Selling Stockholder, to:

        Chatam International Incorporated
        104 Springer Building
        3411 Silverside Road
        Wilmington, Delaware  19810
        Attention:  N.J. "Sky" Cooper, Chief Executive Officer and
                    Mark Small, Chief Financial Officer
        Fax: (302) 478-3667

        and

        Charles Jacquin et Cie., Inc.
        2633 Trenton Avenue
        Philadelphia, New York  19125
        Attention:  N.J. "Sky" Cooper, Chief Executive Officer and
                    Mark Small, Chief Financial Officer
        Fax:  (215) 425-9438

      with a copy to:

        Simpson Thacher & Bartlett LLP
        425 Lexington Avenue
        New York, NY  10017
        Attention:  Patrick J. Naughton
        Fax: (212) 455-2502

Each such  notice,  request or other  communication  shall be given  (i) by mail
(postage  prepaid,  registered or certified  mail,  return  receipt  requested),
(ii) by hand delivery, (iii) by nationally recognized courier service or (iv) by
telefax, receipt confirmed (provided that, in the case of this clause (iv), that
notice also be given by a method  described in clauses (i) through (iii)).  Each
such notice, request or communication shall be effective (x) if mailed, ten days
after mailing at the address  specified in this  Section 10.1  (or in accordance
with the latest unrevoked written direction from such party) or (y) if delivered
by hand or by  nationally  recognized  courier  service,  when  delivered at the
address  specified  in this  Section 10.1  (or in  accordance  with  the  latest
unrevoked written direction from the receiving party).

     SECTION 10.2. Schedules. Inclusion of any matter or item in any Schedule to
this  Agreement  does not  imply  that  such  matter  or item  would,  under the
provisions  of this  Agreement,  have to be  included  in any  Schedule to  this
Agreement or that such matter or term is otherwise material.

     SECTION  10.3.  Severability.  The  provisions  of this  Agreement  and the
Related   Agreements   shall  be  deemed   severable   and  the   invalidity  or
unenforceability  of any particular  provision  shall not affect the validity or
enforceability  of the other  provisions of this Agreement or any of the Related
Agreements in which such invalid or unenforceable provision shall appear. If any
provision of this Agreement or any Related Agreement, or the application thereof
to any Person or any  circumstance,  is found to be invalid or  unenforceable in
any  jurisdiction,  (a) a suitable and equitable  provision shall be substituted
therefor  in order to carry  out,  so far as may be valid or  enforceable,  such
provision and (b) the remainder of this Agreement or such Related Agreement,  as
applicable,   and  the  application  of  such  provision  to  other  Persons  or
circumstances shall not be affected by such invalidity or unenforceability,  nor
shall such invalidity or unenforceability  affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.

     SECTION 10.4.  Counterparts.  This Agreement may be executed in one or more
counterparts,  each of which shall be deemed an original and all of which shall,
taken together, be considered one and the same agreement.

     SECTION  10.5.  Entire  Agreement;  No  Third  Party  Beneficiaries.   This
Agreement,  together with the Related Agreements, the R&J Sale Agreement and the
Confidentiality  Agreement,  (i) constitutes the entire agreement and supersedes
all prior  agreements  and  understandings,  both  written  and oral,  among the
parties with respect to the subject  matter hereof and  (ii) except as otherwise
provided in Article  VIII,  is not intended to confer upon any Person other than
the parties to this Agreement any rights or remedies hereunder.  Nothing in this
Agreement  shall  be  construed  to  modify  or  supersede  the  Confidentiality
Agreement, it being understood that the Confidentiality Agreement shall continue
to be in full force and effect  notwithstanding  the execution or termination of
this Agreement.

     SECTION  10.6.  Governing  Law.  This  Agreement  shall be  governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any of such state's  conflicts of laws rules and, to the extent
applicable,  the federal statutory,  regulatory and decisional law of the United
States.

     SECTION 10.7. Consent to Arbitration. ALL DISPUTES, CONTROVERSIES OR CLAIMS
ARISING OUT OF OR IN  CONNECTION  WITH THIS  AGREEMENT OR ANY RELATED  AGREEMENT
SHALL BE FINALLY  SETTLED UNDER THE RULES OF  ARBITRATION  OF THE  INTERNATIONAL
CHAMBER OF COMMERCE  BY THREE  ARBITRATORS  APPOINTED  IN  ACCORDANCE  WITH SAID
RULES.  THE PLACE OF ARBITRATION  SHALL BE THE CITY OF NEW YORK. THE LANGUAGE OF
THE ARBITRATION SHALL BE ENGLISH.  THE AWARD SHALL BE FINAL AND BINDING UPON THE
PARTIES.  THE PARTIES  UNDERTAKE TO CARRY OUT THE AWARD WITHOUT DELAY, AND WAIVE
THEIR  RIGHT  TO ANY  FORM OF  APPEAL  OR  RECOURSE  TO A COURT  OF LAW OR OTHER
JUDICIAL  AUTHORITY,  INSOFAR  AS SUCH  WAIVER  MAY  VALIDLY  BE MADE  UNDER THE
APPLICABLE LAW.

     SECTION 10.8.  Assignment.  None of this Agreement or any Related Agreement
or any of the rights or obligations hereunder or thereunder shall be assigned by
any of the parties  hereto or thereto  without the prior written  consent of the
Seller, in the case of any assignment by the Buyer, or the Buyer, in the case of
any assignment by the Seller or the Selling Subsidiary; provided that the rights
of the Buyer  hereunder  may be assigned to one or more  Affiliates of the Buyer
without the consent of the Seller;  provided,  further, that any such assignment
shall not relieve the Buyer of any of its obligations hereunder.  Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective  successors and permitted
assigns. Any attempted assignment in violation of the terms of this Section 10.8
shall be null and void, ab initio.

     SECTION  10.9.  Expenses.  (a)  Except as  otherwise  specified  in Section
10.9(b) or  elsewhere  in this  Agreement,  all costs and  expenses  incurred in
connection with this Agreement and the Related  Agreements and the  transactions
contemplated by this Agreement and the Related  Agreements  shall be paid by the
party incurring such cost or expense.

     (b) The Seller shall be responsible  for the payment of all Transfer Taxes,
if  any,  which  may  be  payable  with  respect  to  the  consummation  of  the
transactions  contemplated by this Agreement and the Related  Agreements and, to
the extent any exemptions from such taxes are available,  the Buyer,  the Seller
and the Selling  Subsidiary shall cooperate to prepare any certificates or other
documents  necessary  to claim such  exemptions.  The Seller  shall make due and
timely payment of any Transfer Taxes to the applicable  Governmental Entity. The
Seller and the Buyer shall  cooperate with respect to the preparation and filing
of any Transfer Tax Returns.

     SECTION 10.10. Bulk Transfer Laws. The parties hereby waive compliance with
the  provision  of  any  bulk  transfer  laws  applicable  to  the  transactions
contemplated by this Agreement or any Related Agreement.



     IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be duly
executed as of the day and year first above written.


                                           CHATAM INTERNATIONAL INCORPORATED

                                           By:    /s/ N.J. "Sky" Cooper
                                           Name:  N.J. "Sky" Cooper
                                           Title: Chairman


                                           CHARLES JACQUIN ET CIE., INC.

                                           By:    /s/ N.J. "Sky" Cooper
                                           Name:  N.J. "Sky" Cooper
                                           Title: Chairman


                                           SELLING STOCKHOLDERS

                                                  /s/ N.J. "Sky" Cooper
                                                  N.J. "SKY" COOPER


                                                  /s/ John A. Cooper
                                                  JOHN A. COOPER

                                                  /s/ Robert J. Cooper
                                                  ROBERT J. COOPER



                                           BROWN-FORMAN CORPORATION

                                           By:    /s/ Paul C. Varga
                                           Name:  Paul C. Varga
                                           Title: President & CEO





                                                                   Exhibit 10(l)


               AMENDMENT AND RESTATEMENT AGREEMENT dated as of April 10, 2006 in
          respect of the FIVE-YEAR CREDIT AGREEMENT (as amended, supplemented or
          otherwise modified from time to time, the "Credit Agreement") dated as
          of July 30, 2004,  among  BROWN-FORMAN  CORPORATION  (the  "Company");
          BROWN-FORMAN  BEVERAGES  EUROPE LTD.; the LENDERS party  thereto;  and
          JPMORGAN CHASE BANK, N.A., as Administrative Agent.

     WHEREAS  the  Company  and  the  Lenders  whose  signatures  appear  below,
constituting  the Required  Lenders (as defined in the Credit  Agreement),  have
agreed,  on the terms and subject to the conditions  set forth herein,  to amend
and restate the Credit Agreement as set forth herein.

     NOW,  THEREFORE,  in  consideration  of the  premises  and  other  good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto hereby agree as follows:

     SECTION 1. Amendment and Restatement of Credit  Agreement.  Effective as of
the Amendment  Effective Date (as defined below), the Credit Agreement is hereby
amended and restated in the form attached as Exhibit A hereto (as so amended and
restated,  the "Restated Credit Agreement"),  it being agreed that all schedules
and exhibits to the Credit Agreement shall continue to constitute  schedules and
exhibits  to the  Restated  Credit  Agreement  in the  forms  thereof  in effect
immediately prior to the Amendment Effective Date.

     SECTION 2.  Representations  and  Warranties.  The Company  represents  and
warrants as of the Amendment Effective Date to the Lenders that:

               (a) All  representations and warranties set forth in the Restated
          Credit  Agreement  are true and correct in all material  respects with
          the same effect as if made on the Amendment Effective Date (other than
          the  representations  and warranties set forth in Sections 3.04(b) and
          3.05),  except  to the  extent  such  representations  and  warranties
          expressly   relate   to  an   earlier   date  (in   which   case  such
          representations  and  warranties  shall  be true  and  correct  in all
          material respects as of such earlier date).

               (b) On the Amendment  Effective Date, no Default has occurred and
          is continuing.

     SECTION 3. Conditions to Effectiveness. The Restated Credit Agreement shall
become  effective as an amendment and restatement of the Credit  Agreement,  and
Brown-Forman  Beverages  Europe Ltd. shall become a party to the Restated Credit
Agreement  and a  Borrower  thereunder,  on the date (the  "Amendment  Effective
Date") on which each of the  following  conditions  is  satisfied  (or waived in
accordance with Section 10.02 of the Credit Agreement),  which date is April 10,
2006:

               (a) The Administrative Agent (or its counsel) shall have received
          from  Lenders   constituting   the  Required   Lenders   either  (A) a
          counterpart  of this  Amendment and  Restatement  Agreement  signed on
          behalf  of such  party or (B)  written  evidence  satisfactory  to the
          Administrative  Agent (which may include  telecopy  transmission  of a
          signed  signature  page of this Amendment and  Restatement  Agreement)
          that  such  party  has  signed a  counterpart  of this  Amendment  and
          Restatement Agreement.

               (b)  The  Administrative  Agent  shall  have  received  favorable
          written  opinion[s]  (addressed  to the  Administrative  Agent and the
          Lenders  and dated the  Amendment  Effective  Date) of counsel for the
          Company substantially to the effect set forth in Exhibit B hereto. The
          Company hereby requests such counsel to deliver such opinion[s].

               (c) The  Administrative  Agent shall have received such documents
          and  certificates  as the  Administrative  Agent  or its  counsel  may
          reasonably  request relating to the  organization,  existence and good
          standing  of the Credit  Parties (as  defined in the  Restated  Credit
          Agreement) and the  authorization  of this  Amendment and  Restatement
          Agreement,   all  in   form   and   substance   satisfactory   to  the
          Administrative Agent and its counsel.

               (d) The  Administrative  Agent shall have received a certificate,
          dated the Amendment Effective Date and signed by the President, a Vice
          President  or a  Financial  Officer  of the  Company,  confirming  the
          accuracy of the representations set forth in paragraphs (a) and (b) of
          Section 2 of this Amendment and Restatement Agreement.

               (e)  The   Administrative   Agent   shall   have   received   all
          documentation and other information related to Brown-Forman  Beverages
          Europe Ltd. required by the Administrative Agent and each Lender under
          applicable  "know your  customer"  or similar  rules and  regulations,
          including the USA Patriot Act.

The  Administrative  Agent  shall  notify  the  Company  and the  Lenders of the
Amendment Effective Date, and such notice shall be conclusive and binding.

     SECTION 4. Applicable  Law. THIS AMENDMENT AND RESTATEMENT  AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,  THE LAWS OF THE STATE OF NEW
YORK.

     SECTION 5.  Counterparts.  This Amendment and Restatement  Agreement may be
executed in two or more counterparts, each of which shall constitute an original
but all of which when taken together shall constitute but one contract. Delivery
of an executed counterpart of a signature page of this Amendment and Restatement
Agreement  by telecopy  shall be  effective  as delivery of a manually  executed
counterpart of this Amendment and Restatement Agreement.

     SECTION 6.  Expenses.  The Company  agrees to reimburse the  Administrative
Agent for all  reasonable  out-of-pocket  expenses  incurred by it in connection
with this Amendment and Restatement  Agreement,  including the reasonable  fees,
charges  and  disbursements  of  Cravath,  Swaine & Moore LLP,  counsel  for the
Administrative Agent.



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


                                              BROWN-FORMAN CORPORATION

                                              By     /s/ Meredith M. Parente
                                              Name:  Meredith M. Parente
                                              Title: VP - Treasurer

                                              BROWN-FORMAN CORPORATION

                                              By     /s/ Roger D. Shannon
                                              Name:  Roger D. Shannon
                                              Title: AVP - Asst. Treasurer

                                              BROWN-FORMAN BEVERAGES EUROPE LTD.

                                              By     /s/ Nelea Absher
                                              Name:  Nelea Absher
                                              Title: Director

                                              BROWN-FORMAN BEVERAGES EUROPE LTD.

                                              By     /s/ Paul Pape
                                              Name:  Paul Pape
                                              Title: Director

                                              JPMORGAN CHASE BANK, N.A.,
                                               individually and as
                                               Administrative Agent,



                                                                     EXHIBIT A


                              AMENDED AND RESTATED
                           FIVE-YEAR CREDIT AGREEMENT
                                   dated as of
                                  July 30, 2004
                                      among
                            BROWN-FORMAN CORPORATION
                       BROWN-FORMAN BEVERAGES EUROPE LTD.
                 The Other Borrowing Subsidiaries Parties Hereto
                            The Lenders Party Hereto
                             BANK OF AMERICA, N.A.,
                              as Syndication Agent
                                 CITIBANK, N.A.
                                  HSBC BANK USA
                                       and
                         NATIONAL CITY BANK OF KENTUCKY
                             as Documentation Agents
                                       and
                            JPMORGAN CHASE BANK, N.A.
                             as Administrative Agent
                           ___________________________
                           J.P. MORGAN SECURITIES INC.
                         BANC OF AMERICA SECURITIES LLC,
                  as Joint Lead Arrangers and Joint Bookrunners



                                TABLE OF CONTENTS

                                    ARTICLE I
                                   Definitions

SECTION 1.01.     Defined Terms
SECTION 1.02.     Classification of Loans and Borrowings
SECTION 1.03.     Terms Generally
SECTION 1.04.     Accounting Terms; GAAP

                                   ARTICLE II
                                   The Credits

SECTION 2.01.     Commitments
SECTION 2.02.     Loans and Borrowings
SECTION 2.03.     Requests for Revolving Borrowings
SECTION 2.04.     Competitive Bid Procedure
SECTION 2.05.     Funding of Borrowings
SECTION 2.06.     Interest Elections
SECTION 2.07.     Termination and Reduction of Commitments
SECTION 2.08.     Repayment of Loans; Evidence of Debt
SECTION 2.09.     Prepayment of Loans
SECTION 2.10.     Increase in Commitments
SECTION 2.11.     Fees
SECTION 2.12.     Interest
SECTION 2.13.     Alternate Rate of Interest
SECTION 2.14.     Increased Costs
SECTION 2.15.     Break Funding Payments
SECTION 2.16.     Taxes
SECTION 2.17.     Payments Generally; Pro Rata Treatment; Sharing of Set-offs
SECTION 2.18.     Mitigation Obligations; Replacement of Lenders
SECTION 2.19.     Designation of Borrowing Subsidiaries

                                   ARTICLE III
                         Representations and Warranties

SECTION 3.01.     Organization; Powers
SECTION 3.02.     Authorization; Enforceability
SECTION 3.03.     Governmental Approvals; No Conflicts
SECTION 3.04.     Financial Condition; No Material Adverse Change
SECTION 3.05.     Litigation and Environmental Matters
SECTION 3.06.     Compliance with Laws and Agreements
SECTION 3.07.     Investment and Holding Company Status
SECTION 3.08.     Taxes
SECTION 3.09.     ERISA
SECTION 3.10.     Disclosure

                                   ARTICLE IV
                                   Conditions

SECTION 4.01.     [Intentionally Omitted]
SECTION 4.02.     Each Credit Event
SECTION 4.03.     Initial Credit Event for each Borrowing Subsidiary

                                    ARTICLE V
                              Affirmative Covenants

SECTION 5.01.     Financial Statements and Other Information
SECTION 5.02.     Notices of Material Events
SECTION 5.03.     Existence; Conduct of Business
SECTION 5.04.     Payment of Obligations
SECTION 5.05.     Maintenance of Properties; Insurance
SECTION 5.06.     Books and Records; Inspection Rights
SECTION 5.07.     Compliance with Laws
SECTION 5.08.     Use of Proceeds

                                   ARTICLE VI
                               Negative Covenants

SECTION 6.01.     Subsidiary Indebtedness
SECTION 6.02.     Liens
SECTION 6.03.     Sale and Leaseback Transactions
SECTION 6.04.     Fundamental Changes
SECTION 6.05.     Transactions with Affiliates
SECTION 6.06.     Ratio of Consolidated Total Debt to Consolidated Net Worth

                                   ARTICLE VII
                                Events of Default

                                  ARTICLE VIII
                            The Administrative Agent

                                   ARTICLE IX
                                    Guarantee

                                    ARTICLE X
                                  Miscellaneous

SECTION 10.01.    Notices
SECTION 10.02.    Waivers; Amendments
SECTION 10.03.    Expenses; Indemnity; Damage Waiver
SECTION 10.04.    Successors and Assigns
SECTION 10.05.    Survival
SECTION 10.06.    Counterparts; Integration; Effectiveness
SECTION 10.07.    Severability
SECTION 10.08.    Right of Setoff
SECTION 10.09.    Governing Law; Jurisdiction; Consent to Service of Process
SECTION 10.10.    WAIVER OF JURY TRIAL
SECTION 10.11.    Headings
SECTION 10.12.    Confidentiality
SECTION 10.13.    Interest Rate Limitation
SECTION 10.14.    Conversion of Currencies
SECTION 10.15.    USA Patriot Act






                    AMENDED AND RESTATED  FIVE-YEAR CREDIT AGREEMENT dated as of
               April 10, 2006 (the "Agreement"),  among BROWN-FORMAN CORPORATION
               (the "Company"),  a Delaware corporation;  BROWN-FORMAN BEVERAGES
               EUROPE  LTD.,  an  English  company,   and  the  other  BORROWING
               SUBSIDIARIES  from time to time party hereto (the Company and the
               Borrowing    Subsidiaries   being    collectively    called   the
               "Borrowers"), the LENDERS party hereto, BANK OF AMERICA, N.A., as
               Syndication  Agent,  CITIBANK,  N.A.,  HSBC BANK USA and NATIONAL
               CITY BANK OF  KENTUCKY,  as  Documentation  Agents,  and JPMORGAN
               CHASE BANK, N.A., as Administrative Agent.

     The  Company  (such  term  and each  other  capitalized  term  used but not
otherwise  defined  herein having the meaning  assigned to it in Article I)  has
requested the Lenders to establish the credit facility provided for herein under
which the Company and the Borrowing  Subsidiaries may obtain Revolving Loans and
Competitive Loans in an aggregate  principal amount of up to $400,000,000.  Such
Loans will be used for working  capital and general  corporate  purposes  and to
provide  liquidity  in  connection  with any  commercial  paper  program  of the
Company.  The Lenders are willing to extend such credit to the  Borrowers on the
terms and subject to the conditions set forth herein.  Accordingly,  the parties
hereto agree as follows:

                                    ARTICLE I
                                   Definitions

     SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:

     "ABR",  when used in reference to any Loan or Borrowing,  refers to whether
such Loan, or the Loans  comprising  such Borrowing,  are bearing  interest at a
rate determined by reference to the Alternate Base Rate.

     "Adjusted LIBO Rate" means,  with respect to any  Eurodollar  Borrowing for
any Interest Period, an interest rate per annum (rounded upwards,  if necessary,
to the next 1/16 of 1%) equal to  (a) the  LIBO  Rate for such  Interest  Period
multiplied by (b) the Statutory Reserve Rate.

     "Administrative  Agent" means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder.

     "Administrative  Questionnaire" means an Administrative  Questionnaire in a
form supplied by the Administrative Agent.

     "Affiliate" means, with respect to a specified Person,  another Person that
directly,  or  indirectly  through  one or more  intermediaries,  Controls or is
Controlled by or is under common Control with the Person specified.

     "Alternate  Base Rate"  means,  for any day, a rate per annum  equal to the
greater of (a) the  Prime Rate in effect on such day and (b) the  Federal  Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds  Effective Rate
shall be effective  from and including the effective  date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

     "Applicable  Percentage"  means, with respect to any Lender, the percentage
of the  total  Commitments  represented  by  such  Lender's  Commitment.  If the
Commitments  have  terminated or expired,  the Applicable  Percentages  shall be
determined based upon the Commitments most recently in effect,  giving effect to
any assignments.

     "Applicable  Rate"  means,  for any day,  with  respect  to any  Eurodollar
Revolving Loan, or with respect to the facility fees payable  hereunder,  as the
case may be, the  applicable  rate per annum set forth  below  under the caption
"LIBOR MARGIN" or "Facility  Fee", as the case may be, based upon the ratings by
S&P and Moody's, respectively, applicable on such date to the Index Debt and the
Utilization Percentage on such date:

                                            LIBOR MARGIN      LIBOR MARGIN
                                           if Utilization    if Utilization
Five Year      Ratings      Facility Fee   Percentage<=50%    Percentage>50%
Facility    (S&P/Moody's)   (% per annum)  (% per annum)      (% per annum)

Category 1  >= AA-/Aa3          0.060%          0.090%            0.140%
Category 2     A+/A1            0.070%          0.130%            0.180%
Category 3     A/A2             0.080%          0.170%            0.220%
Category 4     A-/A3            0.090%          0.210%            0.260%
Category 5     BBB+/Baa1        0.125%          0.375%            0.425%
Category 6   < BBB+/Baa1        0.150%          0.600%            0.650%


     For purposes of the foregoing,  (i) if either Moody's or S&P shall not have
in effect a rating for the Index Debt (other than by reason of the circumstances
referred to in the last  sentence of this  definition),  then such rating agency
shall be deemed to have  established a rating in Category 6; (ii) if the ratings
established or deemed to have been  established by Moody's and S&P for the Index
Debt shall fall within different Categories,  the Applicable Rate shall be based
on the higher of the two  ratings  unless one of the two  ratings is two or more
Categories  lower than the other,  in which  case the  Applicable  Rate shall be
determined  by reference to the Category next above that of the lower of the two
ratings; and (iii) if the ratings established or deemed to have been established
by Moody's  and S&P for the Index Debt shall be changed  (other than as a result
of a change in the  rating  system of  Moody's  or S&P),  such  change  shall be
effective  as of the  date  on  which  it is  first  publicly  announced  by the
applicable rating agency.  Each change in the Applicable Rate shall apply during
the period  commencing  on the  effective  date of such change and ending on the
date  immediately  preceding the effective date of the next such change.  If the
rating  system of Moody's or S&P shall  change,  or if either such rating agency
shall cease to be in the  business of rating  corporate  debt  obligations,  the
Company and the Lenders shall  negotiate in good faith to amend this  definition
to reflect such changed rating system or the unavailability of ratings from such
rating  agency  and,  pending  the  effectiveness  of any  such  amendment,  the
Applicable  Rate shall be determined by reference to the rating most recently in
effect prior to such change or cessation.

     "Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an  assignee  (with the  consent of any party  whose  consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

     "Attributable Debt" means, with respect to any Sale-Leaseback  Transaction,
the present value  (discounted at the rate set forth or implicit in the terms of
the lease included in such Sale-Leaseback  Transaction) of the total obligations
of the lessee for rental  payments  (other than  amounts  required to be paid on
account  of taxes,  maintenance,  repairs,  insurance,  assessments,  utilities,
operating and labor costs and other items which do not  constitute  payments for
property  rights)  during  the  remaining  term of the  lease  included  in such
Sale-Leaseback  Transaction  (including any period for which such lease has been
extended).  In the case of any lease  which is  terminable  by the  lessee  upon
payment  of a  penalty,  the  Attributable  Debt  shall  be  the  lesser  of the
Attributable Debt determined assuming termination upon the first date such lease
may be terminated  (in which case the  Attributable  Debt shall also include the
amount of the penalty,  but no rent shall be  considered  as required to be paid
under  such  lease  subsequent  to  the  first  date  upon  which  it  may be so
terminated) or the Attributable Debt determined assuming no such termination.

     "Availability  Period"  means the period from and  including  the Effective
Date  to but  excluding  the  earlier  of the  Maturity  Date  and  the  date of
termination of the Commitments.

     "Board" means the Board of Governors of the Federal  Reserve  System of the
United States of America.

     "Borrower" means the Company or any Borrowing Subsidiary.

     "Borrowing"  means  (a) Revolving  Loans of the  same  Type and to the same
Borrower,  made,  converted  or  continued  on the same date and, in the case of
Eurodollar  Loans, as to which a single  Interest Period is in effect,  or (b) a
Competitive Loan or group of Competitive  Loans of the same Type and to the same
Borrower  made on the same date and as to which a single  Interest  Period is in
effect.

     "Borrowing Request" means a request by a Borrower for a Revolving Borrowing
in accordance with Section 2.03.

     "Borrowing  Subsidiary" means  Brown-Forman  Beverages Europe Ltd. and each
other Subsidiary that has been designated as a Borrowing  Subsidiary pursuant to
Section 2.19 and that has not ceased to be a Borrowing Subsidiary as provided in
such Section.

     "Borrowing  Subsidiary  Agreement" means a Borrowing  Subsidiary  Agreement
substantially in the form of Exhibit C.

     "Borrowing Subsidiary Termination" means a Borrowing Subsidiary Termination
substantially in the form of Exhibit D.

     "Business Day" means any day that is not a Saturday, Sunday or other day on
which  commercial  banks in  New York City  are authorized or required by law to
remain closed;  provided that, when used in connection  with a Eurodollar  Loan,
the term  "Business  Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

     "Capital  Lease  Obligations"  of any Person means the  obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal property, or a combination thereof,
which  obligations  are required to be  classified  and accounted for as capital
leases on a balance  sheet of such  Person  under  GAAP,  and the amount of such
obligations  shall be the  capitalized  amount thereof  determined in accordance
with GAAP.

     "Change in Control"  means (a) the  acquisition  of ownership,  directly or
indirectly,  beneficially  or of  record,  by any  Person or group  (within  the
meaning of the  Securities  Exchange Act of 1934 and the rules of the Securities
and Exchange  Commission  thereunder as in effect on the date hereof), of shares
representing more than 50% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Company,  other than descendants
of George  Garvin Brown and their  respective  family  members and  descendants,
entities  controlled  by, or trusts for the benefit  of, any of them,  including
family and charitable  trusts;  (b) occupation of a majority of the seats (other
than vacant  seats) on the board of directors of the Company by Persons who were
neither   (i) nominated   by  the  board  of   directors   of  the  Company  nor
(ii) appointed  by directors so nominated;  or (c) the  acquisition of direct or
indirect Control of the Company by any Person or group.

     "Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement,  (b) any change in any law, rule or regulation or in
the  interpretation or application  thereof by any Governmental  Authority after
the date of this Agreement or  (c) compliance by any Lender (or, for purposes of
Section 2.14(b),  by any  lending  office  of such  Lender  or by such  Lender's
holding company,  if any) with any request,  guideline or directive  (whether or
not having the force of law) of any Governmental  Authority made or issued after
the date of this Agreement.

     "Class", when used in reference to any Loan or Borrowing, refers to whether
such Loan,  or the Loans  comprising  such  Borrowing,  are  Revolving  Loans or
Competitive Loans.

     "Code" means the Internal  Revenue  Code  of 1986,  as amended from time to
time.

     "Commitment"  means,  with respect to each Lender,  the  commitment of such
Lender to make Revolving Loans  hereunder,  as such commitment may be reduced or
increased  from time to time  pursuant  to  Section 2.07  or 2.10 or pursuant to
assignments by or to such Lender pursuant to  Section 10.04.  The initial amount
of each Lender's Commitment is set forth on Schedule 2.01,  or in the Assignment
and Acceptance  pursuant to which such Lender shall have assumed its Commitment,
as  applicable.  The initial  aggregate  amount of the Lenders'  Commitments  is
$400,000,000.

     "Company"  has the  meaning  assigned  to such term in the  heading of this
Agreement.

     "Competitive  Bid" means an offer by a Lender to make a Competitive Loan in
accordance with Section 2.04.

     "Competitive  Bid Rate"  means,  with respect to any  Competitive  Bid, the
Margin or the Fixed  Rate,  as  applicable,  offered by the Lender  making  such
Competitive Bid.

     "Competitive  Bid Request"  means a request by a Borrower  for  Competitive
Bids in accordance with Section 2.04.

     "Competitive Loan" means a Loan made pursuant to Section 2.04.

     "Consolidated  Assets" means at any time,  the  aggregate  amount of assets
(less applicable accumulated depreciation,  depletion and amortization and other
reserves  and  other  properly   deductible   items)  of  the  Company  and  its
Subsidiaries,  all as set forth in the most recent consolidated balance sheet of
the  Company  and  its  Subsidiaries,  determined  on a  consolidated  basis  in
accordance with GAAP.

     "Consolidated Net Worth" means on any date the net worth of the Company and
its Subsidiaries on such date,  determined on a consolidated basis in accordance
with GAAP.

     "Consolidated Total Debt" means on any date all Indebtedness of the Company
and its Subsidiaries on such date (other than obligations  referred to in clause
(i) of the definition of "Indebtedness"),  determined on a consolidated basis in
accordance with GAAP.

     "Control"  means the  possession,  directly or indirectly,  of the power to
direct or cause the direction of the management or policies of a Person, whether
through  the  ability to  exercise  voting  power,  by  contract  or  otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.

     "Credit  Party" means the  Company,  in its capacity as a Borrower and as a
guarantor of the Obligations of the other Borrowers  pursuant to Article IX, and
each Borrowing Subsidiary.

     "Default"  means  any  event or  condition  which  constitutes  an Event of
Default or which  upon  notice,  lapse of time or both  would,  unless  cured or
waived, become an Event of Default.

     "Disclosed  Matters"  means  the  actions,  suits and  proceedings  and the
environmental matters disclosed in Schedule 3.05.

     "Dollars" or "$" refers to lawful money of the United States of America.

     "Effective  Date"  means  the date on which  the  conditions  specified  in
Section 4.01 are satisfied (or waived in accordance with Section 10.02).

     "Environmental  Laws" means all material laws, rules,  regulations,  codes,
ordinances,  orders,  decrees,  judgments,   injunctions,   notices  or  binding
agreements  issued,  promulgated or entered into by any Governmental  Authority,
relating in any way to the  environment,  preservation or reclamation of natural
resources,  the  management,  release or  threatened  release  of any  Hazardous
Material or to health and safety matters.

     "Environmental  Liability"  means any  liability,  contingent  or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties  or  indemnities),  of the  Company  or  any  Subsidiary  directly  or
indirectly  resulting from or based upon (a) violation of any Environmental Law,
(b) the  generation,  use,  handling,  transportation,   storage,  treatment  or
disposal of any Hazardous  Materials,  (c) exposure to any Hazardous  Materials,
(d) the  release or  threatened  release  of any  Hazardous  Materials  into the
environment  or (e) any  contract,  agreement  or other  consensual  arrangement
pursuant to which  liability  is assumed or imposed  with  respect to any of the
foregoing.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
that,  together  with  the  Company,  is  treated  as a  single  employer  under
Section 414(b)  or (c) of the Code or,  solely for  purposes of  Section 302  of
ERISA and  Section 412  of the  Code,  is  treated  as a single  employer  under
Section 414 of the Code.

     "ERISA Event" means (a) any  "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived);  (b) the  existence with
respect  to any Plan of an  "accumulated  funding  deficiency"  (as  defined  in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to  Section 412(d)  of the Code or Section 303(d) of ERISA of an
application  for a waiver of the minimum  funding  standard  with respect to any
Plan;  (d) the  incurrence by the Company or any of its ERISA  Affiliates of any
liability  under Title IV of ERISA with respect to the  termination of any Plan;
(e) the  receipt by the Company or any ERISA  Affiliate  from the PBGC or a plan
administrator  of any notice  relating to an intention to terminate  any Plan or
Plans or to appoint a trustee to administer any Plan;  (f) the incurrence by the
Company or any of its ERISA  Affiliates  of any  liability  with  respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Company or any ERISA  Affiliate of any notice,  or the receipt by
any  Multiemployer  Plan from the Company or any ERISA  Affiliate of any notice,
concerning  the  imposition of Withdrawal  Liability or a  determination  that a
Multiemployer  Plan is, or is expected to be,  insolvent  or in  reorganization,
within the meaning of Title IV of ERISA.

     "Eurodollar",  when used in reference to any Loan or  Borrowing,  refers to
whether such Loan, or the Loans comprising such Borrowing,  are bearing interest
at a rate  determined by reference to the Adjusted LIBO Rate (or, in the case of
a Competitive Loan, the LIBO Rate).

     "Event of Default" has the meaning assigned to such term in Article VII.

     "Excluded  Taxes"  means,  with respect to the  Administrative  Agent,  any
Lender or any other  recipient of any payment to be made by or on account of any
Obligation hereunder,  (a) income or franchise taxes imposed on (or measured by)
its net income by the United States of America, or by the jurisdiction under the
laws of which such  recipient is organized or in which its  principal  office is
located or, in the case of any Lender, in which its applicable lending office is
located,  (b) any branch profit taxes imposed by the United States of America or
any similar tax imposed by any other  jurisdiction  in which such  recipient  is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Company under Section 2.18(b)),  any withholding tax that is
imposed by the United States of America (or any political  subdivision  thereof)
on payments by a US Credit Party from an office within such  jurisdiction to the
extent such tax is in effect and  applicable to such payments on the date hereof
or at the  time  such  Foreign  Lender  becomes  a party to this  Agreement  (or
designates a new lending  office) or is  attributable  to such Foreign  Lender's
failure to comply with  Section 2.16(e),  except to the extent that such Foreign
Lender (or its assignor,  if any) was entitled,  at the time of designation of a
new lending office (or assignment),  to receive  additional amounts with respect
to such withholding tax pursuant to Section 2.16(a).

     "Federal Funds  Effective  Rate" means,  for any day, the weighted  average
(rounded  upwards,  if  necessary,  to the  next  1/100  of 1%) of the  rates on
overnight Federal funds  transactions with members of the Federal Reserve System
arranged by Federal funds brokers,  as published on the next succeeding Business
Day by the  Federal  Reserve  Bank  of  New York,  or,  if  such  rate is not so
published for any day that is a Business Day, the average (rounded  upwards,  if
necessary,  to the  next  1/100 of 1%) of the  quotations  for such day for such
transactions  received  by the  Administrative  Agent from three  Federal  funds
brokers of recognized standing selected by it.

     "Financial  Officer" means the chief  executive  officer,  chief  financial
officer,  principal  accounting  officer,  treasurer,   assistant  treasurer  or
controller of the Company.

     "Fixed Rate"  means,  with  respect to any  Competitive  Loan (other than a
Eurodollar  Competitive Loan), the fixed rate of interest per annum specified by
the Lender making such Competitive Loan in its related Competitive Bid.

     "Fixed  Rate Loan" means a  Competitive  Loan  bearing  interest at a Fixed
Rate.

     "Foreign  Lender"  means any Lender that is  organized  under the laws of a
jurisdiction  other than the United  States  of America,  a State thereof or the
District of Columbia.

     "GAAP" means generally accepted accounting  principles in the United States
of America.

     "Governmental   Authority"  means  the  government  of  the  United  States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency,  authority,  instrumentality,  regulatory body, court,
central  bank  or  other  similar  governmental  entity  exercising   executive,
legislative,  judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.

     "Guarantee"  of or by any Person (the  "guarantor")  means any  obligation,
contingent or otherwise,  of the guarantor  guaranteeing  or having the economic
effect of guaranteeing  any Indebtedness or other obligation of any other Person
(the  "primary  obligor") in any manner,  whether  directly or  indirectly,  and
including any obligation of the guarantor,  direct or indirect,  (a) to purchase
or pay (or  advance  or  supply  funds  for the  purchase  or  payment  of) such
Indebtedness  or other  obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment  thereof,  (b) to  purchase or
lease property,  securities or services for the purpose of assuring the owner of
such  Indebtedness or other obligation of the payment  thereof,  (c) to maintain
working capital,  equity capital or any other financial  statement  condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness  or other  obligation  or (d) as an account party in respect of any
letter of credit or letter of guaranty  issued to support such  Indebtedness  or
obligation;  provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

     "Hazardous  Materials"  means all  explosive or  radioactive  substances or
wastes  and all  hazardous  or toxic  substances,  wastes  or other  pollutants,
including  petroleum or petroleum  distillates,  asbestos or asbestos containing
materials,  polychlorinated  biphenyls,  radon gas, infectious or medical wastes
and all other  substances  or wastes of any  nature  regulated  pursuant  to any
Environmental Law.

     "Hedging Agreement" means any interest rate protection  agreement,  foreign
currency  exchange  agreement,  commodity  price  protection  agreement or other
interest or currency exchange rate or commodity price hedging arrangement.

     "Indebtedness"   of  any  Person  means,   without   duplication,   (a) all
obligations of such Person for borrowed money,  (b) all debt obligations of such
Person evidenced by bonds,  debentures,  notes or similar  instruments,  (c) all
obligations  of such Person  under  conditional  sale or other  title  retention
agreements relating to property acquired by such Person,  (d) all obligations of
such Person in respect of the  deferred  purchase  price of property or services
(excluding  accounts payable incurred in the ordinary course of business and not
overdue by more than 60 days), (e) all Indebtedness of others secured by (or for
which the holder of such  Indebtedness  has an  existing  right,  contingent  or
otherwise,  to be secured  by) any Lien on  property  owned or  acquired by such
Person,  whether  or not the  Indebtedness  secured  thereby  has been  assumed,
(f) all  Guarantees by such Person of  Indebtedness  of others,  (g) all Capital
Lease Obligations of such Person, (h) all obligations,  contingent or otherwise,
of such  Person as an account  party in respect of letters of credit and letters
of guaranty, other than letters of credit arising in the ordinary course of such
Person's  business   supporting   accounts  payable  and  (i) all   obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances.  The
Indebtedness  of any Person shall include the  Indebtedness  of any other entity
(including  any  partnership  in which such Person is a general  partner) to the
extent such Person is liable  therefor  as a result of such  Person's  ownership
interest in or other  relationship  with such  entity,  except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.

     "Indemnified Taxes" means Taxes other than Excluded Taxes.

     "Index Debt" means senior,  unsecured,  long-term indebtedness for borrowed
money of the Company  that is not  guaranteed  by any other Person or subject to
any other credit enhancement.

     "Information  Memorandum"  means the  Confidential  Information  Memorandum
dated July, 2004 relating to the Company and the Transactions.

     "Interest  Election  Request"  means a request by the relevant  Borrower to
convert or continue a Revolving Borrowing in accordance with Section 2.06.

     "Interest  Payment Date" means  (a) with  respect to any ABR Loan, the last
day of each  March,  June,  September  and  December,  (b) with  respect  to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar  Borrowing with an
Interest Period of more than three months' duration,  each day prior to the last
day of such Interest  Period that occurs at intervals of three months'  duration
after the first day of such  Interest  Period and (c) with  respect to any Fixed
Rate Loan,  the last day of the Interest  Period  applicable to the Borrowing of
which  such Loan is a part and,  in the case of a Fixed Rate  Borrowing  with an
Interest Period of more than 90 days'  duration (unless  otherwise  specified in
the applicable Competitive Bid Request),  each day prior to the last day of such
Interest  Period that occurs at intervals of 90 days'  duration  after the first
day of such  Interest  Period,  and any other  dates that are  specified  in the
applicable  Competitive  Bid Request as Interest  Payment  Dates with respect to
such Borrowing.

     "Interest Period" means (a) with respect to any Eurodollar  Borrowing,  the
period  commencing on the date of such  Borrowing and ending on the  numerically
corresponding  day in the calendar  month that is one, two,  three or six months
thereafter,  as the Borrower may elect,  and (b) with  respect to any Fixed Rate
Borrowing,  the period  (which  shall not be less than  seven days  or more than
360 days)  commencing  on the  date of such  Borrowing  and  ending  on the date
specified in the applicable  Competitive  Bid Request;  provided that (i) if any
Interest  Period  would end on a day other than a Business  Day,  such  Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurodollar  Borrowing only, such next succeeding Business Day would fall in
the next calendar  month,  in which case such  Interest  Period shall end on the
next  preceding  Business  Day and  (ii) any  Interest  Period  pertaining  to a
Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which  there is no  numerically  corresponding  day in the last
calendar  month of such  Interest  Period) shall end on the last Business Day of
the last calendar month of such Interest Period.  For purposes hereof,  the date
of a Borrowing  initially shall be the date on which such Borrowing is made and,
in the case of a Revolving Borrowing,  thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing.

     "Lender Affiliate" means,  (a) with respect to any Lender, (i) an Affiliate
of such Lender or (ii) any entity (whether a corporation,  partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar  extensions  of credit in the  ordinary  course of its
business  and is  administered  or managed by a Lender or an  Affiliate  of such
Lender and (b) with  respect to any Lender that is a fund which  invests in bank
loans and  similar  extensions  of credit,  any other fund that  invests in bank
loans and  similar  extensions  of credit and is managed by the same  investment
advisor as such Lender or by an Affiliate of such investment advisor.

     "Lenders"  means the Persons listed on  Schedule 2.01  and any other Person
that shall have become a party hereto  pursuant to an Assignment and Acceptance,
other than any such  Person  that  ceases to be a party  hereto  pursuant  to an
Assignment and Acceptance.

     "LIBO  Rate"  means,  with  respect  to any  Eurodollar  Borrowing  for any
Interest Period,  the rate appearing on Page 3750 of the Telerate Service (or on
any  successor  or  substitute  page of such  Service,  or any  successor  to or
substitute  for such  Service,  providing  rate  quotations  comparable to those
currently  provided  on  such  page  of  such  Service,  as  determined  by  the
Administrative  Agent from time to time for purposes of providing  quotations of
interest rates applicable to dollar deposits in the London interbank  market) at
approximately   11:00 a.m.,   London  time,  two  Business  Days  prior  to  the
commencement  of such Interest  Period,  as the rate for dollar  deposits with a
maturity  comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar  Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered  by  the  principal  London  office  of  the  Administrative   Agent  in
immediately  available  funds in the London  interbank  market at  approximately
11:00 a.m.,  London time,  two Business Days prior to the  commencement  of such
Interest Period.

     "Lien" means, with respect to any asset,  (a) any mortgage,  deed of trust,
lien, pledge, hypothecation,  encumbrance, charge or security interest in, on or
of such asset,  (b) the  interest of a vendor or a lessor under any  conditional
sale  agreement,  capital lease or title  retention  agreement (or any financing
lease having  substantially  the same economic  effect as any of the  foregoing)
relating to such asset and (c) in the case of securities,  any purchase  option,
call or similar right (other than rights of first refusal or first offer,  which
shall not be a Lien) of a third party with respect to such securities.

     "Loans"  means the loans made by the  Lenders to the  Borrower  pursuant to
this Agreement.

     "Margin" means,  with respect to any Competitive Loan bearing interest at a
rate based on the LIBO Rate, the marginal rate of interest,  if any, to be added
to or subtracted from the LIBO Rate to determine the rate of interest applicable
to such  Loan,  as  specified  by the  Lender  making  such Loan in its  related
Competitive Bid.

     "Material  Adverse  Effect"  means a  material  adverse  effect on  (a) the
financial  condition or results of operation of the Company and the Subsidiaries
taken as a whole or (b) the rights of or remedies available to the Lenders under
this Agreement.

     "Material  Indebtedness"  means  Indebtedness  (other than the  Loans),  or
obligations in respect of one or more Hedging Agreements,  of any one or more of
the Company and its  Subsidiaries  in an aggregate  principal  amount  exceeding
$25,000,000.  For purposes of determining Material Indebtedness,  the "principal
amount" of the  obligations  of the Company or any  Subsidiary in respect of any
Hedging  Agreement  at any time shall be the maximum  aggregate  amount  (giving
effect to any netting  agreements)  that the Company or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.

     "Maturity Date" means July 30, 2009.

     "Moody's" means Moody's Investors Service, Inc.

     "Multiemployer   Plan"   means  a   multiemployer   plan  as   defined   in
Section 4001(a)(3) of ERISA.

     "Obligations"  means,  with respect to any  Borrower,  the due and punctual
payment of (i) the  principal  of and premium,  if any, and interest  (including
interest   accruing   during  the  pendency  of  any   bankruptcy,   insolvency,
receivership  or other  similar  proceeding,  regardless  of whether  allowed or
allowable in such  proceeding) on the Loans made to such  Borrower,  when and as
due,  whether  at  maturity,  by  acceleration,  upon one or more  dates set for
prepayment or otherwise and (ii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise  (including monetary obligations incurred during the pendency
of  any  bankruptcy,  insolvency,  receivership  or  other  similar  proceeding,
regardless of whether allowed or allowable in such proceeding), of such Borrower
under this Agreement.

     "Other  Taxes"  means any and all  present or future  stamp or  documentary
taxes or any other excise or property  taxes,  charges or similar levies arising
from any payment made hereunder or from the  execution,  delivery or enforcement
of, or otherwise with respect to, this Agreement.

     "PBGC"  means the  Pension  Benefit  Guaranty  Corporation  referred to and
defined in ERISA and any successor entity performing similar functions.

     "Person" means any natural person, corporation,  limited liability company,
trust, joint venture, association, company, partnership,  Governmental Authority
or other entity.

     "Plan" means any employee  pension benefit plan (other than a Multiemployer
Plan) subject to the  provisions of Title IV of ERISA or Section 412 of the Code
or  Section 302  of ERISA,  and in  respect  of which the  Company  or any ERISA
Affiliate  is (or, if such plan were  terminated,  would under  Section 4069  of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

     "Prime Rate" means the rate of interest per annum  publicly  announced from
time to time by  JPMorgan  Chase  Bank,  N.A. as its prime rate in effect at its
principal  office in New York  City;  each  change in the  Prime  Rate  shall be
effective from and including the date such change is publicly announced as being
effective.

     "Principal  Property"  means all property  located in the United  States of
America directly engaged in the manufacturing  activities of the Company and its
Subsidiaries,  the  inventory  and  accounts  receivable  of the Company and its
Subsidiaries  wherever  located and the capital stock or other equity  interests
owned by the Company and its Subsidiaries.

     "Register" has the meaning set forth in Section 10.04.

     "Related  Parties"  means,  with  respect  to any  specified  Person,  such
Person's Affiliates and the respective directors,  officers,  employees,  agents
and advisors of such Person and such Person's Affiliates.

     "Required  Lenders" means, at any time,  Lenders having Revolving Loans and
unused Commitments  representing more than 50% of the sum of the total Revolving
Loans and unused  Commitments  at such time;  provided  that,  for  purposes  of
declaring the Loans to be due and payable  pursuant to Article VII,  and for all
purposes  after the Loans become due and payable  pursuant to Article VII or the
Commitments  expire  or  terminate,  the  outstanding  Competitive  Loans of the
Lenders shall be included in their respective Revolving Loans in determining the
Required Lenders.

     "Revolving Loan" means a Loan made pursuant to Section 2.03.

     "Sale-Leaseback  Transactions" means any arrangement whereby the Company or
a Subsidiary  shall sell or transfer  any  property,  real or personal,  used or
useful  in  its  business,  whether  now  owned  or  hereinafter  acquired,  and
thereafter rent or lease property that it intends to use for  substantially  the
same purpose or purposes as the property sold or transferred;  provided that any
such   arrangement   entered  into  within   180 days  after  the   acquisition,
construction  or substantial  improvement  of the subject  property shall not be
deemed to be a "Sale-Leaseback Transaction".

     "S&P" means Standard & Poor's.

     "Significant  Subsidiary"  means each  Subsidiary  which is a  "significant
subsidiary" as defined in Rule 1-02(w) of  Regulation S-X  of the Securities and
Exchange  Commission  as such rule may be amended or modified and in effect from
time to time.

     "Statutory  Reserve Rate" means a fraction  (expressed  as a decimal),  the
numerator of which is the number one and the  denominator of which is the number
one minus the  aggregate  of the  maximum  reserve  percentages  (including  any
marginal,  special,  emergency or supplemental  reserves) expressed as a decimal
established  by the  Board to which  the  Administrative  Agent is  subject  for
eurocurrency  funding  (currently  referred to as "Eurocurrency  Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such  Regulation D.  Eurodollar  Loans shall be deemed to constitute
eurocurrency  funding  and to be subject to such  reserve  requirements  without
benefit of or credit for proration,  exemptions or offsets that may be available
from  time to time to any  Lender  under  such  Regulation D  or any  comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.

     "Subsidiary"  means, with respect to any Person (the "parent") at any date,
any corporation,  limited liability company,  partnership,  association or other
entity the accounts of which would be  consolidated  with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared  in  accordance  with  GAAP as of  such  date,  as  well  as any  other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests  representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership,  more than 50% of the general partnership interests are, as of such
date,  owned,  controlled  or held,  or (b) that is, as of such date,  otherwise
Controlled,  by the parent or one or more  subsidiaries  of the parent or by the
parent and one or more subsidiaries of the parent.

     "Subsidiary" means any subsidiary of the Company.

     "Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

     "Transactions" means the execution, delivery and performance by the Company
and the other Borrowers of this Agreement and the borrowing of Loans.

     "Type", when used in reference to any Loan or Borrowing,  refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate,  the Alternate  Base Rate or,
in the case of a Competitive Loan or Borrowing, the LIBO Rate or a Fixed Rate.

     "US Credit Party" means each Credit Party that is incorporated or otherwise
organized in the United  States of America,  a state  thereof or the District of
Columbia.

     "USA Patriot Act" means the Uniting and Strengthening  America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

     "Utilization  Percentage" means the percentage produced by dividing (i) the
aggregate amount of outstanding Loans by (ii) the total Commitments,  unless the
Commitments shall have been terminated, in which case the Utilization Percentage
shall be 100%.

     "Withdrawal  Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer  Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

     SECTION 1.02. Classification of Loans and Borrowings.  For purposes of this
Agreement,  Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g.,  a  "Eurodollar  Loan") or by Class and Type  (e.g.,  a
"Eurodollar Revolving Loan").  Borrowings also may be classified and referred to
by Class  (e.g.,  a  "Revolving  Borrowing")  or by Type  (e.g.,  a  "Eurodollar
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").

     SECTION 1.03. Terms Generally.  The definitions of terms herein shall apply
equally to the  singular  and plural  forms of the terms  defined.  Whenever the
context may require,  any pronoun  shall  include the  corresponding  masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed  by the phrase  "without  limitation".  The word "will"
shall be  construed  to have the same  meaning  and effect as the word  "shall".
Unless the context requires  otherwise (a) any definition of or reference to any
agreement,  instrument or other document  herein shall be construed as referring
to such  agreement,  instrument or other  document as from time to time amended,
supplemented  or  otherwise  modified  (subject  to  any  restrictions  on  such
amendments,  supplements or modifications  set forth herein),  (b) any reference
herein to any Person shall be construed to include such Person's  successors and
assigns, (c) the words "herein", "hereof" and "hereunder",  and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any  particular  provision  hereof,   (d) all  references  herein  to  Articles,
Sections,  Exhibits  and  Schedules  shall be construed to refer to Articles and
Sections of, and Exhibits and  Schedules  to, this  Agreement  and (e) the words
"asset" and  "property"  shall be  construed to have the same meaning and effect
and to refer to any and all  tangible  and  intangible  assets  and  properties,
including cash, securities, accounts and contract rights.

     SECTION  1.04.  Accounting  Terms;  GAAP.  Except  as  otherwise  expressly
provided  herein,  all  terms of an  accounting  or  financial  nature  shall be
construed  in  accordance  with GAAP,  as in effect from time to time;  provided
that, if the Company notifies the Administrative Agent that the Company requests
an  amendment  to any  provision  hereof to  eliminate  the effect of any change
occurring  after the date  hereof in GAAP or in the  application  thereof on the
operation of such provision (or if the Administrative Agent notifies the Company
that the Required  Lenders request an amendment to any provision hereof for such
purpose),  regardless  of whether any such notice is given  before or after such
change  in GAAP or in the  application  thereof,  then such  provision  shall be
interpreted  on the basis of GAAP as in effect and  applied  immediately  before
such  change  shall have  become  effective  until such  notice  shall have been
withdrawn or such provision amended in accordance herewith.

                                   ARTICLE II
                                   The Credits

     SECTION 2.01.  Commitments.  Subject to the terms and  conditions set forth
herein,  each  Lender  agrees to make  Revolving  Loans to the  Company  and the
Borrowing  Subsidiaries  from time to time during the Availability  Period in an
aggregate  principal amount that will not result in (a) such Lender's  Revolving
Loans  exceeding such Lender's  Commitment or (b) the sum of the total Revolving
Loans plus the  aggregate  principal  amount of  outstanding  Competitive  Loans
exceeding the total Commitments.  Within the foregoing limits and subject to the
terms and  conditions  set forth herein,  the  Borrowers may borrow,  prepay and
reborrow Revolving Loans.

     SECTION 2.02.  Loans and Borrowings.  (a) Each Revolving Loan shall be made
as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably
in accordance with their respective Commitments.  Each Competitive Loan shall be
made in accordance with the procedures set forth in Section 2.04. The failure of
any  Lender to make any Loan  required  to be made by it shall not  relieve  any
other Lender of its  obligations  hereunder;  provided that the  Commitments and
Competitive  Bids of the Lenders are several and no Lender shall be  responsible
for any other Lender's failure to make Loans as required.

     (b)  Subject  to  Section 2.13,   (i) each  Revolving  Borrowing  shall  be
comprised  entirely of ABR Loans or Eurodollar Loans as the applicable  Borrower
may request in accordance herewith, and (ii) each Competitive Borrowing shall be
comprised  entirely of  Eurodollar  Loans or Fixed Rate Loans as the  applicable
Borrower may request in accordance herewith.  Each Lender at its option may make
any  Eurodollar  Loan by causing any domestic or foreign  branch or Affiliate of
such Lender to make such Loan;  provided  that any exercise of such option shall
not affect  the  obligation  of the  applicable  Borrower  to repay such Loan in
accordance with the terms of this Agreement.

     (c)  At the  commencement  of  each  Interest  Period  for  any  Eurodollar
Revolving  Borrowing,  such Borrowing shall be in an aggregate amount that is an
integral  multiple of $1,000,000 and not less than $5,000,000.  At the time that
each ABR Revolving  Borrowing is made,  such Borrowing  shall be in an aggregate
amount that is an integral  multiple of $1,000,000 and not less than $5,000,000;
provided that an ABR Revolving  Borrowing may be in an aggregate  amount that is
equal to the entire unused balance of the total  Commitments.  Each  Competitive
Borrowing  shall be in an  aggregate  amount  that is an  integral  multiple  of
$1,000,000  and not less than  $5,000,000.  Borrowings of more than one Type and
Class may be outstanding at the same time;  provided that there shall not at any
time be more than a total of 10 Eurodollar Revolving Borrowings outstanding.

     (d)  Notwithstanding  any other provision of this  Agreement,  the Borrower
shall not be  entitled  to  request,  or to elect to  convert or  continue,  any
Borrowing if the Interest Period  requested with respect thereto would end after
the Maturity Date.

     SECTION  2.03.  Requests for Revolving  Borrowings.  To request a Revolving
Borrowing,  the applicable Borrower,  or the Company on behalf of the applicable
Borrower,  shall  notify the  Administrative  Agent of such request by telephone
(a) in  the  case  of  a  Eurodollar  Borrowing,   not  later  than  11:00 a.m.,
New York City  time,  three  Business  Days  before  the  date  of the  proposed
Borrowing  or (b) in the case of an ABR  Borrowing,  not later than  11:00 a.m.,
New York City time, on the date of the proposed Borrowing.  Each such telephonic
Borrowing  Request shall be irrevocable and shall be confirmed  promptly by hand
delivery or telecopy to the Administrative  Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower (or by
the Company on its behalf).  Each such telephonic and written  Borrowing Request
shall specify the following information in compliance with Section 2.02:

     (i)  the Borrower requesting such Borrowing (or on whose behalf the Company
          is requesting such Borrowing);

     (ii) the aggregate amount of the requested Borrowing;

     (iii)the date of such Borrowing, which shall be a Business Day;

     (iv) whether  such  Borrowing  is to be an ABR  Borrowing  or a  Eurodollar
          Borrowing;

     (v)  in the case of a Eurodollar Borrowing,  the initial Interest Period to
          be applicable  thereto,  which shall be a period  contemplated  by the
          definition of the term "Interest Period"; and

     (vi) the location and number of the  relevant  Borrower's  account to which
          funds are to be disbursed, which shall comply with the requirements of
          Section 2.05.

If no election as to the Type of  Revolving  Borrowing  is  specified,  then the
requested Revolving  Borrowing shall be an ABR Borrowing.  If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing,  then
the Borrower shall be deemed to have selected an Interest  Period of one month's
duration.  Promptly  following receipt of a Borrowing Request in accordance with
this Section,  the Administrative  Agent shall advise each Lender of the details
thereof  and of the  amount  of  such  Lender's  Loan  to be made as part of the
requested Borrowing.

     SECTION  2.04.  Competitive  Bid  Procedure.  (a)  Subject to the terms and
conditions set forth herein,  from time to time during the  Availability  Period
any  Borrower  may  request  Competitive  Bids and may (but  shall  not have any
obligation to) accept Competitive Bids and borrow  Competitive  Loans;  provided
that the sum of the total Revolving Loans plus the aggregate principal amount of
outstanding   Competitive   Loans  at  any  time  shall  not  exceed  the  total
Commitments. To request Competitive Bids, the Company or the applicable Borrower
shall notify the Administrative Agent of such request by telephone,  in the case
of a Eurodollar Borrowing,  not later than 11:00 a.m.,  New York City time, four
Business  Days before the date of the proposed  Borrowing  and, in the case of a
Fixed  Rate  Borrowing,  not later  than  10:00 a.m.,  New York City  time,  one
Business  Day  before  the date of the  proposed  Borrowing;  provided  that the
applicable  Borrower may submit up to (but not more than) three  Competitive Bid
Requests on the same day, but a Competitive Bid Request shall not be made within
five  Business  Days after the date of any  previous  Competitive  Bid  Request,
unless  any and all such  previous  Competitive  Bid  Requests  shall  have been
withdrawn or all Competitive  Bids received in response thereto  rejected.  Each
such  telephonic  Competitive  Bid Request  shall be confirmed  promptly by hand
delivery or telecopy to the  Administrative  Agent of a written  Competitive Bid
Request  in a form  approved  by the  Administrative  Agent  and  signed  by the
Borrower. Each such telephonic and written Competitive Bid Request shall specify
the following information in compliance with Section 2.02:

     (i)  the Borrower  requesting the Competitive Bid and the aggregate  amount
          of the requested Borrowing;

     (ii) the date of such Borrowing, which shall be a Business Day;

     (iii)whether such  Borrowing  is to be a  Eurodollar  Borrowing or a Fixed
          Rate Borrowing;

     (iv) the Interest Period to be applicable to such Borrowing, which shall be
          a period contemplated by the definition of the term "Interest Period";
          and

     (v)  the  location  and  number  of the  account  to which  funds are to be
          disbursed, which shall comply with the requirements of Section 2.05.

Promptly  following receipt of a Competitive Bid Request in accordance with this
Section,  the  Administrative  Agent  shall  notify the  Lenders of the  details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.

     (b) Each Lender may (but shall not have any obligation to) make one or more
Competitive Bids in response to a Competitive Bid Request.  Each Competitive Bid
by a Lender must be in a form approved by the  Administrative  Agent and must be
received by the  Administrative  Agent by telecopy,  in the case of a Eurodollar
Competitive  Borrowing,  not later than  9:30 a.m.,  New York City  time,  three
Business Days before the proposed date of such Competitive Borrowing, and in the
case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on
the proposed date of such  Competitive  Borrowing.  Competitive Bids that do not
conform  substantially to the form approved by the  Administrative  Agent may be
rejected by the Administrative  Agent, and the Administrative Agent shall notify
the applicable  Lender as promptly as  practicable.  Each  Competitive Bid shall
specify (i) the  principal amount (which shall be a minimum of $5,000,000 and an
integral  multiple of $1,000,000 and which may equal the entire principal amount
of the Competitive  Borrowing  requested) of the Competitive  Loan or Loans that
the Lender is willing to make,  (ii) the  Competitive Bid Rate or Rates at which
the Lender is prepared  to make such Loan or Loans  (expressed  as a  percentage
rate per annum in the form of a decimal to no more than four decimal places) and
(iii) the Interest Period applicable to each such Loan and the last day thereof.

     (c) The Administrative  Agent shall promptly notify the applicable Borrower
by telecopy of the  Competitive Bid Rate and the principal  amount  specified in
each  Competitive  Bid and the  identity of the Lender that shall have made such
Competitive Bid.

     (d)  Subject  only to the  provisions  of this  paragraph,  the  applicable
Borrower may accept or reject any Competitive Bid. The Borrower shall notify the
Administrative  Agent by telephone,  confirmed by telecopy in a form approved by
the Administrative Agent, whether and to what extent it has decided to accept or
reject each Competitive Bid, in the case of a Eurodollar  Competitive Borrowing,
not later than  10:30 a.m.,  New York City  time, three Business Days before the
date of the  proposed  Competitive  Borrowing,  and in the case of a Fixed  Rate
Borrowing,  not later than 10:30 a.m.,  New York City time, on the proposed date
of the Competitive  Borrowing;  provided that (i) the failure of the Borrower to
give such notice  shall be deemed to be a  rejection  of each  Competitive  Bid,
(ii) the  Borrower  shall  not  accept a  Competitive  Bid made at a  particular
Competitive Bid Rate if such Borrower  rejects a Competitive Bid made at a lower
Competitive  Bid  Rate,  (iii) the  aggregate  amount  of the  Competitive  Bids
accepted by the Borrower shall not exceed the aggregate  amount of the requested
Competitive Borrowing specified in the related Competitive Bid Request,  (iv) to
the extent necessary to comply with clause (iii)  above, the Borrower may accept
Competitive Bids at the same Competitive Bid Rate in part, which acceptance,  in
the case of multiple  Competitive  Bids at such  Competitive Bid Rate,  shall be
made pro rata in accordance  with the amount of each such  Competitive  Bid, and
(v) except  pursuant to clause (iv)  above, no Competitive Bid shall be accepted
for a Competitive Loan unless such  Competitive  Loan is in a minimum  principal
amount of $5,000,000 and an integral  multiple of $1,000,000;  provided  further
that if a Competitive Loan must be in an amount less than $5,000,000  because of
the provisions of clause (iv)  above, such Competitive Loan may be for a minimum
of $1,000,000 or any integral multiple thereof,  and in calculating the pro rata
allocation  of  acceptances  of  portions  of  multiple  Competitive  Bids  at a
particular  Competitive  Bid Rate pursuant to  clause (iv)  the amounts shall be
rounded to  integral  multiples  of  $1,000,000  in a manner  determined  by the
Borrower.  A notice  given by a Borrower  pursuant  to this  paragraph  shall be
irrevocable.

     (e) The  Administrative  Agent shall promptly notify each bidding Lender by
telecopy  whether or not its  Competitive Bid has been accepted (and, if so, the
amount and  Competitive Bid Rate so accepted),  and each successful  bidder will
thereupon become bound,  subject to the terms and conditions hereof, to make the
Competitive Loan in respect of which its Competitive Bid has been accepted.

     (f) If the Administrative  Agent shall elect to submit a Competitive Bid in
its capacity as a Lender,  it shall submit such  Competitive Bid directly to the
applicable  Borrower  at least one quarter of an hour  earlier  than the time by
which the other  Lenders are  required to submit their  Competitive  Bids to the
Administrative Agent pursuant to paragraph (b) of this Section.

     SECTION 2.05.  Funding of Borrowings.  (a) Each Lender shall make each Loan
to be made by it  hereunder on the  proposed  date  thereof by wire  transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the  Administrative  Agent most  recently  designated  by it for such purpose by
notice to the Lenders.  The Administrative  Agent will make such Loans available
to the  applicable  Borrower by promptly  crediting the amounts so received,  in
like funds,  to an account of the Borrower  maintained  with the  Administrative
Agent  in New  York  City  and  designated  by the  Borrower  in the  applicable
Borrowing Request or Competitive Bid Request.

     (b) Unless the  Administrative  Agent  shall have  received  notice  from a
Lender prior to the proposed  Borrowing that such Lender will not make available
to  the  Administrative  Agent  such  Lender's  share  of  such  Borrowing,  the
Administrative  Agent may assume that such Lender has made such share  available
on such date in  accordance  with  paragraph (a)  of this  Section  and may,  in
reliance  upon such  assumption,  make  available  to the  relevant  Borrower  a
corresponding  amount. In such event, if a Lender has not in fact made its share
of the applicable  Borrowing  available to the  Administrative  Agent,  then the
applicable Lender and such Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding  amount with interest thereon,  for
each day from and  including  the date  such  amount is made  available  to such
Borrower to but excluding the date of payment to the  Administrative  Agent,  at
(i) in the case of such Lender,  the greater of the Federal Funds Effective Rate
and a rate  determined by the  Administrative  Agent in accordance  with banking
industry rules on interbank  compensation  or (ii) in the case of such Borrower,
the interest  rate  applicable  to the relevant  Loan.  If such Lender pays such
amount to the  Administrative  Agent,  then such amount  shall  constitute  such
Lender's Loan included in such Borrowing.

     SECTION 2.06.  Interest  Elections.  (a) Each Revolving Borrowing initially
shall be of the Type specified in the applicable  Borrowing  Request and, in the
case of a Eurodollar Revolving Borrowing,  shall have an initial Interest Period
as specified in such Borrowing Request.  Thereafter, the applicable Borrower may
elect  to  convert  such  Borrowing  to a  different  Type or to  continue  such
Borrowing  and,  in the case of a  Eurodollar  Revolving  Borrowing,  may  elect
Interest  Periods  therefor,  all as provided in this Section.  The Borrower may
elect  different  options  with  respect to  different  portions of the affected
Borrowing,  in which case each such portion shall be allocated ratably among the
Lenders holding the Loans  comprising such Borrowing,  and the Loans  comprising
each such portion shall be considered a separate  Borrowing.  This Section shall
not apply to Competitive Borrowings, which may not be converted or continued.

     (b) To make an  election  pursuant  to this  Section,  a  Borrower,  or the
Company on its behalf, shall notify the Administrative Agent of such election by
telephone  by  the  time  that a  Borrowing  Request  would  be  required  under
Section 2.03 if such Borrower were requesting a Revolving  Borrowing of the Type
resulting  from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Interest Election Request in a form approved by the Administrative Agent
and signed by the relevant Borrower (or by the Company on its behalf).

     (c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:

     (i)  the Borrowing to which such Interest  Election Request applies and, if
          different options are being elected with respect to different portions
          thereof,  the  portions  thereof  to be  allocated  to each  resulting
          Borrowing (in which case the  information to be specified  pursuant to
          clauses (iii)  and (iv) below shall be  specified  for each  resulting
          Borrowing);

     (ii) the  effective  date of the election  made  pursuant to such  Interest
          Election Request, which shall be a Business Day;

     (iii)whether  the  resulting  Borrowing  is to be an  ABR  Borrowing  or a
          Eurodollar Borrowing; and

     (iv) if the  resulting  Borrowing is a Eurodollar  Borrowing,  the Interest
          Period to be applicable  thereto after giving effect to such election,
          which shall be a period  contemplated  by the  definition  of the term
          "Interest Period".

If any such Interest  Election Request requests a Eurodollar  Borrowing but does
not  specify  an  Interest  Period,  then the  Borrower  shall be deemed to have
selected an Interest Period of one month's duration.

     (d)  Promptly  following  receipt  of an  Interest  Election  Request,  the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.

     (e) If the relevant  Borrower fails to deliver a timely  Interest  Election
Request with respect to a Eurodollar Revolving Borrowing prior to the end of the
Interest Period  applicable  thereto,  then,  unless such Borrowing is repaid as
provided  herein,  at the end of such Interest  Period such  Borrowing  shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the relevant Borrower, then,
so long as an  Event  of  Default  is  continuing  (i)no  outstanding  Revolving
Borrowing  may be  converted  to or  continued  as a  Eurodollar  Borrowing  and
(ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted to an
ABR Borrowing at the end of the Interest Period applicable thereto.

     SECTION  2.07.  Termination  and  Reduction  of  Commitments.   (a)  Unless
previously terminated, the Commitments shall terminate on the Maturity Date.

     (b) The Company may at any time terminate, or from time to time reduce, the
Commitments;  provided that (i) each reduction of the Commitments shall be in an
amount that is an integral  multiple of $1,000,000 and not less than  $5,000,000
and (ii) the Company  shall not  terminate or reduce the  Commitments  if, after
giving  effect to any  concurrent  prepayment  of the Loans in  accordance  with
Section 2.09, the sum of the Revolving Loans plus the aggregate principal amount
of outstanding Competitive Loans would exceed the total Commitments.

     (c) The Company  shall notify the  Administrative  Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three  Business  Days  prior  to the  effective  date  of  such  termination  or
reduction,  specifying  such election and the effective  date thereof.  Promptly
following  receipt of any notice,  the  Administrative  Agent  shall  advise the
Lenders of the contents  thereof.  Each notice delivered by the Company pursuant
to this Section shall be  irrevocable;  provided that a notice of termination of
the  Commitments  delivered  by the  Company  may  state  that  such  notice  is
conditioned  upon the  effectiveness of other credit  facilities,  in which case
such notice may be revoked by the Company (by notice to the Administrative Agent
on or prior to the specified effective date) if such condition is not satisfied.
Any  termination  or  reduction  of the  Commitments  shall be  permanent.  Each
reduction  of the  Commitments  shall  be made  ratably  among  the  Lenders  in
accordance with their respective Commitments.

     SECTION  2.08.  Repayment of  Loans;  Evidence of Debt.  (a) Each  Borrower
hereby  unconditionally  promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid  principal  amount of each Revolving Loan
made to such Borrower on the Maturity Date, and (ii) to the Administrative Agent
for the  account  of each  Lender  the  then  unpaid  principal  amount  of each
Competitive Loan on the last day of the Interest Period applicable to such Loan.

     (b) Each Lender shall  maintain in  accordance  with its usual  practice an
account or accounts  evidencing the indebtedness of each Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

     (c) The  Administrative  Agent  shall  maintain  accounts in which it shall
record  (i) the amount of each Loan made  hereunder,  the Class and Type thereof
and the Interest Period applicable thereto,  (ii) the amount of any principal or
interest due and payable or to become due and payable from each Borrower to each
Lender hereunder and (iii) the amount of any sum received by the  Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.

     (d) The entries made in the accounts  maintained  pursuant to paragraph (b)
or (c) of this  Section  shall be prima  facie  evidence  of the  existence  and
amounts of the obligations recorded therein absent manifest error; provided that
the failure of any Lender or the Administrative  Agent to maintain such accounts
or any error  therein  shall not in any  manner  affect  the  obligation  of any
Borrower to repay the Loans in accordance with the terms of this Agreement.

     (e)  Any  Lender  may  request  that  Loans  made by it be  evidenced  by a
promissory note. In such event, each Borrower shall prepare, execute and deliver
to such  Lender a  promissory  note  payable to the order of such Lender (or, if
requested by such Lender,  to such Lender and its  registered  assigns) and in a
form approved by the Administrative  Agent.  Thereafter,  the Loans evidenced by
such promissory note and interest  thereon shall at all times  (including  after
assignment  pursuant to Section 10.04) be represented by one or more  promissory
notes in such form payable to the order of the payee named  therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

     SECTION 2.09. Prepayment of Loans. (a) Any Borrower shall have the right at
any time and from time to time to prepay any Borrowing of such Borrower in whole
or in part,  subject to prior notice in  accordance  with  paragraph (b) of this
Section;  provided  that the  Borrowers  shall not have the right to prepay  any
Competitive Loan without the prior consent of the Lender thereof.

     (b) The  applicable  Borrower  shall  notify  the  Administrative  Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving  Borrowing,  not later than 11:00 a.m., New
York City time, three Business Days before the date of prepayment or (ii) in the
case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New
York City time, on the date of prepayment. Each such notice shall be irrevocable
and shall specify the prepayment date and the principal amount of each Borrowing
or portion  thereof to be prepaid;  provided  that, if a notice of prepayment is
given in connection with a conditional  notice of termination of the Commitments
as contemplated by  Section 2.07,  then such notice of prepayment may be revoked
if such  notice of  termination  is revoked  in  accordance  with  Section 2.07.
Promptly following receipt of any such notice relating to a Revolving Borrowing,
the Administrative Agent shall advise the Lenders of the contents thereof.  Each
partial  prepayment of any Revolving  Borrowing shall be in an amount that would
be permitted in the case of an advance of a Revolving Borrowing of the same Type
as provided in Section 2.02. Each  prepayment of a Revolving  Borrowing shall be
applied  ratably to the Loans  included  in the prepaid  Borrowing.  Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.12.

     SECTION  2.10.  Increase in  Commitments.  (a) The Company  may, by written
notice to the Administrative  Agent (which shall promptly deliver a copy to each
of the Lenders),  request that the total  Commitments  be increased by an amount
not less than  $50,000,000  for any such  increase;  provided  that after giving
effect to any such  increase the sum of the total  Commitments  shall not exceed
$600,000,000  minus any amount by which the Commitments  shall have been reduced
pursuant  to  Section  2.07.  Such  notice  shall set  forth  the  amount of the
requested  increase in the total Commitments and the date on which such increase
is requested to become  effective (which shall be not less than 10 Business Days
or more than 60 days after the date of such notice), and shall offer each Lender
the  opportunity to increase its Commitment by its Applicable  Percentage of the
proposed  increased amount.  Each Lender shall, by notice to the Company and the
Administrative  Agent given not more than 10 Business Days after the date of the
Company's notice, either agree to increase its Commitment by all or a portion of
the offered  amount (each Lender so agreeing  being an  "Increasing  Lender") or
decline to increase its Commitment  (and any Lender that does not deliver such a
notice  within such period of 10 Business  Days shall be deemed to have declined
to increase its Commitment) (each Lender so declining or deemed to have declined
being a  "Non-Increasing  Lender").  In the event that, on the 10th Business Day
after the Company shall have  delivered a notice  pursuant to the first sentence
of this  paragraph,  the  Lenders  shall have agreed  pursuant to the  preceding
sentence to increase  their  Commitments  by an  aggregate  amount less than the
increase in the total  Commitments  requested  by the  Company,  the Company may
arrange for one or more banks or other financial  institutions (any such bank or
other  financial  institution  referred to in this  clause (a)  being  called an
"Augmenting  Lender"),  which may include any Lender,  to extend  Commitments or
increase  their  existing  Commitments  in an  aggregate  amount  equal  to  the
unsubscribed  amount;  provided that each  Augmenting  Lender,  if not already a
Lender hereunder,  shall be subject to the approval of the Administrative  Agent
(which  approval  shall not be  unreasonably  withheld) and the Company and each
Augmenting  Lender shall execute all such  documentation  as the  Administrative
Agent shall reasonably specify to evidence its Commitment and/or its status as a
Lender hereunder. Any increase in the total Commitments may be made in an amount
which is less than the  increase  requested  by the  Company  if the  Company is
unable to arrange for, or chooses not to arrange for, Augmenting Lenders.

     (b) On the effective date (the "Increase  Effective  Date") of any increase
in  the  total  Commitments  pursuant  to  this  Section 2.10  (the  "Commitment
Increase"),  (i) the  aggregate  principal amount of the Loans  outstanding (the
"Initial Loans")  immediately prior to giving effect to the Commitment  Increase
on the Increase Effective Date shall be deemed to be paid,  (ii) each Increasing
Lender and each  Augmenting  Lender  that shall have been a Lender  prior to the
Commitment  Increase shall pay to the Administrative  Agent in same day funds an
amount equal to the  difference  between  (A) the  product of (1) such  Lender's
Applicable  Percentage   (calculated  after  giving  effect  to  the  Commitment
Increase)  multiplied  by  (2) the  amount  of  the  Subsequent  Borrowings  (as
hereinafter  defined)  and  (B) the  product  of  (1) such  Lender's  Applicable
Percentage  (calculated  without  giving  effect  to  the  Commitment  Increase)
multiplied by (2) the amount of the Initial Loans,  (iii) each Augmenting Lender
that shall not have been a Lender prior to the Commitment  Increase shall pay to
Administrative  Agent  in same day  funds an  amount  equal  to the  product  of
(1) such  Augmenting  Lender's  Applicable  Percentage  (calculated after giving
effect  to  the  Commitment  Increase)  multiplied  by  (2) the  amount  of  the
Subsequent  Borrowings,  and  (iv) after the  Administrative  Agent receives the
funds specified in clauses (ii) and (iii) above, the Administrative  Agent shall
pay to each Non-Increasing Lender the portion of such funds that is equal to the
difference   between  (A) the  product  of  (1) such   Non-Increasing   Lender's
Applicable  Percentage  (calculated  without  giving  effect  to the  Commitment
Increase) multiplied by (2) the amount of the Initial Loans, and (B) the product
of (1) such  Non-Increasing  Lender's  Applicable  Percentage  (calculated after
giving effect to the  Commitment  Increase)  multiplied by (2) the amount of the
Subsequent  Borrowings,  (v) after the effectiveness of the Commitment Increase,
the  Borrowers  shall be  deemed to have made new  Borrowings  (the  "Subsequent
Borrowings") in an aggregate  principal amount equal to the aggregate  principal
amount  of the  Initial  Loans and of the  types  and for the  Interest  Periods
specified  in a  Borrowing  Request  delivered  to the  Administrative  Agent in
accordance with Section 2.04,  (vi) each  Non-Increasing Lender, each Increasing
Lender  and each  Augmenting  Lender  shall  be  deemed  to hold its  Applicable
Percentage of each Subsequent  Borrowing (each calculated after giving effect to
the  Commitment  Increase) and  (vii) each  applicable  Borrower  shall pay each
Increasing Lender and each Non-Increasing  Lender any and all accrued but unpaid
interest on the Initial Loans.  The deemed  payments made pursuant to clause (i)
above in respect of each Eurodollar Loan shall be subject to  indemnification by
the  applicable  Borrower  pursuant to the  provisions  of  Section 2.15  if the
Increase Effective Date occurs other than on the last day of the Interest Period
relating thereto and breakage costs result.

     (c) Increases  and new  Commitments  created  pursuant to this Section 2.10
shall  become  effective on the date  specified  in the notice  delivered by the
Company pursuant to the first sentence of paragraph (a) above.

     (d) Notwithstanding the foregoing, no increase in the total Commitments (or
in the  Commitment  of any  Lender) or  addition  of a New Lender  shall  become
effective  under this  Section  unless,  (i) on the date of such  increase,  the
conditions  set  forth  in  paragraphs (a)  and  (b) of  Section 4.02  shall  be
satisfied and the Administrative Agent shall have received a certificate to that
effect dated such date and executed by a Financial Officer of the Borrower,  and
(ii) the  Administrative  Agent shall have received (with sufficient  copies for
each of the Lenders) documents  consistent with those delivered on the Effective
Date under  clauses (b)  and (c) of  Section 4.01  as to the corporate power and
authority  of the  Borrower  to borrow  hereunder  after  giving  effect to such
increase.

     SECTION 2.11.  Fees.  (a) The Company  agrees to pay to the  Administrative
Agent for the account of each Lender a facility  fee,  which shall accrue at the
Applicable  Rate on the daily amount of the  Commitment of such Lender  (whether
used or unused)  during the period  from and  including  the date  hereof to but
excluding the date on which such Commitment  terminates;  provided that, if such
Lender continues to have any Loans outstanding after its Commitment  terminates,
then such  facility  fee shall  continue  to accrue on the daily  amount of such
Lender's Loans from and including the date on which its Commitment terminates to
but  excluding  the date on which  such  Lender  ceases to have any  outstanding
Loans.  Accrued  facility  fees  shall be  payable in arrears on the last day of
March, June,  September and December of each year,  commencing on the first such
date to occur after the date  hereof,  and on the date on which the  Commitments
shall have  terminated  and the Lenders  shall have no  outstanding  Loans.  All
facility  fees shall be computed on the basis of a year of 360 days and shall be
payable  for the  actual  number of days  elapsed  (including  the first day but
excluding the last day).

     (b) The  Company  agrees to pay to the  Administrative  Agent,  for its own
account,  fees  payable in the amounts and at the times  separately  agreed upon
between the Company and the Administrative Agent.

     (c)  All  fees  payable  hereunder  shall  be  paid on the  dates  due,  in
immediately available funds, to the Administrative Agent for distribution to the
Persons  entitled  thereto.   Fees  paid  shall  not  be  refundable  under  any
circumstances.

     SECTION 2.12.  Interest.  (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate.

     (b) The Loans  comprising  each  Eurodollar  Borrowing  shall bear interest
(i) in the case of a Eurodollar  Revolving  Loan,  at the Adjusted LIBO Rate for
the Interest  Period in effect for such Borrowing  plus the Applicable  Rate, or
(ii) in  the case of a  Eurodollar  Competitive  Loan,  at the LIBO Rate for the
Interest  Period in effect for such Borrowing plus (or minus, as applicable) the
Margin applicable to such Loan.

     (c) Each Fixed Rate Loan shall bear  interest at the Fixed Rate  applicable
to such Loan.

     (d) Notwithstanding  the foregoing,  if any principal of or interest on any
Loan or any fee or other amount  payable by any  Borrower  hereunder is not paid
when due,  whether at stated  maturity,  upon  acceleration  or otherwise,  such
overdue amount shall bear interest,  after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise  applicable to such Loan as provided in the preceding  paragraphs
of this  Section  or  (ii) in  the case of any other  amount,  2% plus  the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.

     (e)  Accrued  interest  on each Loan  shall be  payable  in arrears on each
Interest  Payment Date for such Loan and, in the case of Revolving  Loans,  upon
termination of the Commitments;  provided that (i) interest  accrued pursuant to
paragraph (d)  of this Section shall be payable on demand,  (ii) in the event of
any  repayment  or  prepayment  of any Loan (other than a  prepayment  of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest on
the  principal  amount  repaid or  prepaid  shall be payable on the date of such
repayment  or  prepayment  and  (iii) in  the  event  of any  conversion  of any
Eurodollar  Revolving  Loan  prior  to the end of the  current  Interest  Period
therefor,  accrued  interest on such Loan shall be payable on the effective date
of such conversion.

     (f) All  interest  hereunder  shall be  computed  on the basis of a year of
360 days,  except that interest computed by reference to the Alternate Base Rate
at times  when the  Alternate  Base  Rate is based on the  Prime  Rate  shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed  (including the
first day but  excluding  the last day).  The  applicable  Alternate  Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.

     SECTION 2.13.  Alternate Rate of Interest.  If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:

     (a)  the  Administrative  Agent determines  (which  determination  shall be
          conclusive  absent manifest error) that adequate and reasonable  means
          do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate,
          as applicable, for such Interest Period; or

     (b)  the  Administrative  Agent is advised by the Required  Lenders (or, in
          the case of a Eurodollar Competitive Loan, the Lender that is required
          to make such Loan) that the  Adjusted  LIBO Rate or the LIBO Rate,  as
          applicable,  for such Interest  Period will not  adequately and fairly
          reflect the cost to such Lenders (or Lender) of making or  maintaining
          their Loans (or its Loan) included in such Borrowing for such Interest
          Period;

then the Administrative  Agent shall give notice thereof to the Borrower and the
Lenders by  telephone  or telecopy as promptly as  practicable  thereafter  and,
until the  Administrative  Agent  notifies  the Company and the Lenders that the
circumstances  giving  rise to such  notice no longer  exist,  (i) any  Interest
Election Request that requests the conversion of any Revolving  Borrowing to, or
continuation  of any  Revolving  Borrowing as, a Eurodollar  Borrowing  shall be
ineffective,  (ii) if any  Borrowing  Request  requests a  Eurodollar  Revolving
Borrowing,  such  Borrowing  shall be made as an ABR  Borrowing  and  (iii)  any
request  by  the  Borrower  for a  Eurodollar  Competitive  Borrowing  shall  be
ineffective;  provided that (A) if the circumstances  giving rise to such notice
do not affect all the Lenders,  then  requests by the  Borrower  for  Eurodollar
Competitive  Borrowings may be made to Lenders that are not affected thereby and
(B) if the  circumstances  giving  rise to such  notice  affect only one Type of
Borrowings, then the other Type of Borrowings shall be permitted.

     SECTION 2.14. Increased Costs. (a) If any Change in Law shall:

     (i)  impose,  modify or deem  applicable  any reserve,  special  deposit or
          similar  requirement  against  assets  of,  deposits  with  or for the
          account of, or credit extended by, any Lender (except any such reserve
          requirement reflected in the Adjusted LIBO Rate); or

     (ii) impose  on any  Lender  or  the  London  interbank  market  any  other
          condition  affecting this Agreement or Eurodollar  Loans or Fixed Rate
          Loans made by such Lender;

and the result of any of the  foregoing  shall be to  increase  the cost to such
Lender of making or maintaining  any  Eurodollar  Loan or Fixed Rate Loan (or of
maintaining its obligation to make any such Loan) or to reduce the amount of any
sum  received or  receivable  by such Lender  hereunder  (whether of  principal,
interest or otherwise),  then the Company will pay or cause the other  Borrowers
to pay, to such Lender such additional amount or amounts as will compensate such
Lender for such additional costs incurred or reduction suffered.

     (b) If any  Lender  determines  that any  Change in Law  regarding  capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company,  if any, as
a  consequence  of this  Agreement  or the Loans made by such  Lender to a level
below  that  which  such  Lender or such  Lender's  holding  company  could have
achieved but for such Change in Law (taking  into  consideration  such  Lender's
policies  and the  policies of such  Lender's  holding  company  with respect to
capital  adequacy),  then  from time to time the  Company  will pay or cause the
other Borrowers to pay to such Lender such additional  amount or amounts as will
compensate  such Lender or such Lender's  holding company for any such reduction
suffered.

     (c) A certificate of a Lender setting forth the amount or amounts necessary
to  compensate  such  Lender  or its  holding  company,  as the case may be,  as
specified  in  paragraph'(a)  or (b) of this  Section  shall be delivered to the
Company and shall be conclusive  absent manifest error. The Company shall pay or
cause other  Borrowers to pay to such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.

     (d) If the cost to any  Lender  of  making  or  maintaining  any Loan to or
participating  in any  Letter  of  Credit  of any  Issuing  Bank of  issuing  or
maintaining any Letter of Credit to a Borrowing  Subsidiary is increased (or the
amount of any sum  received  or  receivable  by any  Lender  (or its  applicable
lending  office) or any Issuing  Bank is  reduced)  by an amount  deemed in good
faith by such Lender or such Issuing Bank to be material,  by reason of the fact
that such Borrowing  Subsidiary is  incorporated  in, has its principal place of
business in, or borrows from, a  jurisdiction  outside the United  States,  such
Borrowing  Subsidiary  shall indemnify such Lender or such Issuing Bank for such
increased  cost or reduction  within 15 days after demand by such Lender or such
Issuing Bank (with a copy to the  Administrative  Agent).  A certificate of such
Lender or such Issuing  Bank  claiming  compensation  under this  paragraph  and
setting forth the  additional  amount or amounts to be paid to it hereunder (and
the basis for the  calculation of such amount or amounts) shall be conclusive in
the absence of manifest error.

     (e)  Failure  or delay on the part of any  Lender  to  demand  compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such  compensation;  provided  that the Company  shall not be required to
compensate or cause the other  Borrowers to compensate a Lender pursuant to this
Section for any increased costs or reductions  incurred more than 270 days prior
to the date that such Lender  notifies  the Borrower of the Change in Law giving
rise to such  increased  costs or reductions  and of such Lender's  intention to
claim compensation therefor;  provided further that, if the Change in Law giving
rise to such  increased  costs or  reductions is  retroactive,  then the 270-day
period  referred to above shall be extended to include the period of retroactive
effect thereof.

     (f)  Notwithstanding  the foregoing  provisions  of this Section,  a Lender
shall not be entitled to compensation pursuant to this Section in respect of any
Competitive  Loan if the Change in Law that would  otherwise  entitle it to such
compensation  shall have been  publicly  announced  prior to  submission  of the
Competitive Bid pursuant to which such Loan was made.

     SECTION 2.15.  Break Funding  Payments.  In the event of (a) the payment of
any principal of any  Eurodollar  Loan or Fixed Rate Loan other than on the last
day of an Interest Period applicable  thereto (including as a result of an Event
of Default),  (b) the  conversion of any Eurodollar  Loan other than on the last
day of the  Interest  Period  applicable  thereto,  (c) the  failure  to borrow,
convert,  continue  or prepay  any  Revolving  Loan on the date or in the amount
specified in any notice  delivered  pursuant hereto  (regardless of whether such
notice  may be  revoked  under  Section 2.09(b)  and is  revoked  in  accordance
therewith),  (d) the failure to borrow any Competitive  Loan after accepting the
Competitive Bid to make such Loan, or (e) the  assignment of any Eurodollar Loan
or Fixed Rate Loan other than on the last day of the Interest Period  applicable
thereto as a result of a request by the Company pursuant to Section 2.18,  then,
in any such event, the applicable  Borrower shall compensate each Lender for the
loss,  cost and expense  attributable to such event. In the case of a Eurodollar
Loan,  such loss,  cost or  expense to any Lender  shall be deemed to include an
amount  determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal  amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such  Loan,  for the  period  from the date of such event to the last day of the
then current  Interest  Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such  Loan),  over  (ii) the  amount  of  interest  which  would  accrue on such
principal  amount for such period at the  interest  rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable  amount  and period  from other  banks in the  eurodollar  market.  A
certificate  of any Lender  setting forth any amount or amounts that such Lender
is  entitled to receive  pursuant  to this  Section  shall be  delivered  to the
Borrower and shall be conclusive absent manifest error. The applicable  Borrower
shall pay such  Lender the amount  shown as due on any such  certificate  within
10 days after receipt thereof.

     SECTION  2.16.  Taxes.  (a) Any and all  payments  by or on  account of any
obligation  of any Credit  Party  hereunder  shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if any
Borrower shall be required to deduct any  Indemnified  Taxes or Other Taxes from
such payments,  then (i) the sum payable shall be increased as necessary so that
after  making  all  required  deductions  (including  deductions  applicable  to
additional  sums payable  under this  Section) the  Administrative  Agent or the
applicable  Lender (as the case may be)  receives an amount  equal to the sum it
would have received had no such  deductions been made,  (ii) the  Borrower shall
make such deductions and (iii) such  Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.

     (b) In addition,  the  Borrowers  shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

     (c) The relevant Borrower shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified  Taxes  or  Other  Taxes  paid by the  Administrative  Agent or such
Lender,  as the case may be, on or with  respect to any payment by or on account
of any obligation of such Borrower  hereunder  (including  Indemnified  Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties,  interest and reasonable  expenses arising therefrom
or with respect thereto,  whether or not such  Indemnified  Taxes or Other Taxes
were  correctly  or legally  imposed or  asserted by the  relevant  Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Company by a Lender, or by the Administrative  Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.

     (d) As soon as practicable  after any payment of Indemnified Taxes or Other
Taxes by any Borrower to a Governmental  Authority,  such Borrower shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued
by such  Governmental  Authority  evidencing such payment,  a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

     (e) Any Foreign  Lender that is entitled to an exemption  from or reduction
of withholding  tax under the law of the  jurisdiction  in which the Borrower is
located,  or any treaty to which such  jurisdiction is a party,  with respect to
payments under this  Agreement  shall deliver to the Company (with a copy to the
Administrative  Agent),  at the time or times prescribed by applicable law, such
properly  completed and executed  documentation  prescribed by applicable law or
reasonably  requested  by the Company as will  permit  such  payments to be made
without withholding or at a reduced rate.

     SECTION 2.17. Payments Generally; Pro Rata Treatment;  Sharing of Set-offs.
(a) Each  Borrower  shall make each payment  required to be made by it hereunder
(whether  of  principal,   interest  or  fees,  or  of  amounts   payable  under
Section 2.14,  2.15 or 2.16,  or otherwise)  prior to 12:00 noon,  New York City
time, on the date when due, in immediately  available funds,  without set-off or
counterclaim.  Any  amounts  received  after  such time on any date may,  in the
discretion of the  Administrative  Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating  interest thereon.  All
such  payments  shall  be made to the  Administrative  Agent at its  offices  at
270 Park  Avenue,   New York,   New York,   except  that  payments  pursuant  to
Sections 2.14,  2.15,  2.16  and 10.03  shall be made  directly  to the  Persons
entitled thereto.  The  Administrative  Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate  recipient
promptly  following receipt thereof.  If any payment hereunder shall be due on a
day that is not a Business  Day,  the date for payment  shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.

     (b) If at any time insufficient  funds are received by and available to the
Administrative  Agent to pay fully all amounts of  principal,  interest and fees
then due hereunder,  such funds shall be applied  (i) first,  towards payment of
interest and fees then due hereunder, ratably among the parties entitled thereto
in  accordance  with the amounts of interest and fees then due to such  parties,
and (ii) second,  towards payment of principal then due hereunder, ratably among
the parties  entitled  thereto in accordance  with the amounts of principal then
due to such parties.

     (c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise,  obtain  payment in respect of any principal of or interest on any
of its Revolving Loans resulting in such Lender  receiving  payment of a greater
proportion of the aggregate  amount of its Revolving Loans and accrued  interest
thereon  than the  proportion  received  by any other  Lender,  then the  Lender
receiving  such  greater  proportion  shall  purchase  (for cash at face  value)
participations  in the  Revolving  Loans  to the  extent  necessary  so that the
benefit  of all  such  payments  shall  be  shared  by the  Lenders  ratably  in
accordance  with the  aggregate  amount of principal of and accrued  interest on
their respective  Revolving Loans;  provided that (i) if any such participations
are  purchased  and all or any  portion of the payment  giving  rise  thereto is
recovered,  such  participations  shall  be  rescinded  and the  purchase  price
restored  to the  extent  of  such  recovery,  without  interest,  and  (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by any Borrower  pursuant to and in  accordance  with the express  terms of this
Agreement  or  any  payment  obtained  by a  Lender  as  consideration  for  the
assignment of or sale of a participation  in any of its Loans to any assignee or
participant,  other than to the Company or any  Subsidiary or Affiliate  thereof
(as to which the  provisions of this paragraph  shall apply).  Each Credit Party
consents to the foregoing  and agrees,  to the extent it may  effectively  do so
under applicable law, that any Lender acquiring a participation  pursuant to the
foregoing  arrangements may exercise against such Credit Party rights of set-off
and counterclaim  with respect to such  participation as fully as if such Lender
were a direct creditor of such Credit Party in the amount of such participation.

     (d) Unless the  Administrative  Agent  shall have  received  notice  from a
Borrower prior to the date on which any payment is due from such Borrower to the
Administrative Agent for the account of the Lenders hereunder that such Borrower
will not make  such  payment,  the  Administrative  Agent may  assume  that such
Borrower has made such payment on such date in  accordance  herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In such
event,  if such  Borrower  has not in fact made such  payment,  then each of the
Lenders  severally  agrees to repay to the  Administrative  Agent  forthwith  on
demand the amount so distributed to such Lender with interest thereon,  for each
day  from and  including  the  date  such  amount  is  distributed  to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the  Administrative  Agent
in accordance with banking industry rules on interbank compensation.

     (e) If any Lender shall fail to make any payment  required to be made by it
pursuant to Section 2.05(b)  or 2.17(d),  then the Administrative  Agent may, in
its  discretion  (notwithstanding  any  contrary  provision  hereof),  apply any
amounts thereafter received by the Administrative  Agent for the account of such
Lender to satisfy such Lender's  obligations  under such Sections until all such
unsatisfied obligations are fully paid.

     SECTION 2.18.  Mitigation  Obligations;  Replacement of Lenders. (a) If any
Lender requests  compensation under  Section 2.14,  or if any US Credit Party is
required  to pay  any  additional  amount  to  any  Lender  or any  Governmental
Authority  for the  account of any Lender  pursuant to  Section 2.16,  then such
Lender shall use reasonable  efforts to designate a different lending office for
funding or booking its Loans  hereunder or to assign its rights and  obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender,  such  designation or assignment  (i) would  eliminate or reduce
amounts  payable  pursuant to Section 2.14  or 2.16,  as the case may be, in the
future and  (ii) would  not  subject  such  Lender to any  unreimbursed  cost or
expense and would not otherwise be  disadvantageous  to such Lender. The Company
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

     (b) If any Lender requests  compensation under  Section 2.14,  or if any US
Credit  Party is  required  to pay any  additional  amount to any  Lender or any
Governmental  Authority for the account of any Lender pursuant to  Section 2.16,
or if any Lender  defaults in its obligation to fund Loans  hereunder,  then the
Company may, at its sole expense and effort,  upon notice to such Lender and the
Administrative  Agent,  require  such  Lender to assign  and  delegate,  without
recourse  (in  accordance  with and  subject to the  restrictions  contained  in
Section 10.04),  all its interests,  rights and obligations under this Agreement
(other than any  outstanding  Competitive  Loans held by it) to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment);  provided that (i) the Company shall have received the
prior  written  consent of the  Administrative  Agent,  which  consent shall not
unreasonably  be withheld,  (ii) such  Lender shall have received  payment of an
amount equal to the outstanding  principal of its Loans (other than  Competitive
Loans), accrued interest thereon,  accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Company (in the case of all other amounts) and
(iii) in the case of any such assignment resulting from a claim for compensation
under  Section 2.14  or payments  required to be made pursuant to  Section 2.16,
such assignment will result in a reduction in such  compensation or payments.  A
Lender  shall not be required to make any such  assignment  and  delegation  if,
prior  thereto,  as a result  of a  waiver  by such  Lender  or  otherwise,  the
circumstances  entitling the Company to require such  assignment  and delegation
cease to apply.

     SECTION 2.19. Designation of Borrowing Subsidiaries. The Company may at any
time and from time to time designate any Subsidiary as a Borrowing Subsidiary by
delivery  to  the  Administrative  Agent  of a  Borrowing  Subsidiary  Agreement
executed  by such  Subsidiary  and the  Company,  and upon  such  delivery  such
Subsidiary  shall for all purposes of this  Agreement be a Borrowing  Subsidiary
and a party  to this  Agreement  until  the  Company  shall  have  executed  and
delivered to the Administrative  Agent a Borrowing  Subsidiary  Termination with
respect  to such  Subsidiary,  whereupon  such  Subsidiary  shall  cease to be a
Borrowing  Subsidiary  and  a  party  to  this  Agreement.  Notwithstanding  the
preceding sentence, no Borrowing Subsidiary Termination will become effective as
to any  Borrowing  Subsidiary at a time when any principal of or interest on any
Loan to such Borrowing Subsidiary shall be outstanding hereunder,  provided that
such Borrowing Subsidiary  Termination shall be effective to terminate the right
of such Borrowing Subsidiary to make further Borrowings under this Agreement. As
soon as  practicable  upon  receipt of a  Borrowing  Subsidiary  Agreement,  the
Administrative Agent shall send a copy thereof to each Lender.

                                  ARTICLE III
                         Representations and Warranties

     The Company and each other Borrower  represents and warrants to the Lenders
that:

     SECTION  3.01.   Organization;   Powers.   Each  of  the  Company  and  its
Subsidiaries is duly organized,  validly existing and in good standing under the
laws of the  jurisdiction  of its  organization,  has all  requisite  power  and
authority  to carry on its  business  as now  conducted  and,  except  where the
failure to do so,  individually  or in the  aggregate,  would not  reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good  standing  in, every  jurisdiction  where such  qualification  is
required.

     SECTION 3.02.  Authorization;  Enforceability.  The Transactions are within
each  Credit  Party's  corporate  powers  and have been duly  authorized  by all
necessary  corporate and, if required,  stockholder  action.  This Agreement has
been duly executed and  delivered by each Credit Party and  constitutes a legal,
valid and binding  obligation  of each Credit Party,  enforceable  in accordance
with its terms, subject to applicable  bankruptcy,  insolvency,  reorganization,
moratorium or other laws affecting  creditors'  rights  generally and subject to
general  principles of equity,  regardless of whether considered in a proceeding
in equity or at law.

     SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval  of,  registration  or filing  with,  or any
other action by, any Governmental  Authority,  except such as have been obtained
or made and are in full force and effect,  (b) will  not violate any  applicable
law or regulation or the charter,  by-laws or other organizational  documents of
the  Company  or any of  its  Subsidiaries  or  any  order  of any  Governmental
Authority,  (c) will  not  violate or result in a default  under any  indenture,
agreement  or  other  instrument   binding  upon  the  Company  or  any  of  its
Subsidiaries  or its assets,  or give rise to a right  thereunder to require any
payment to be made by the Company or any of its  Subsidiaries,  and (d) will not
result in the creation or  imposition of any Lien on any asset of the Company or
any of its  Subsidiaries  pursuant to the terms of any  indenture,  agreement or
other instrument binding on the Company or any of its Subsidiaries.

     SECTION 3.04.  Financial  Condition;  No Material  Adverse Change.  (a) The
Company has heretofore  furnished to the Lenders its consolidated  balance sheet
and statements of income,  stockholders  equity and cash flows as of and for the
fiscal year ended  April 30, 2004,  reported  on by  PricewaterhouseCoopers LLP,
independent public accountants. Such financial statements present fairly, in all
material  respects,  the financial  position and results of operations  and cash
flows of the Company and its consolidated  Subsidiaries as of such dates and for
such periods in accordance with GAAP.

     (b) Since April 30, 2004 through the date of this Agreement, there has been
no material  adverse  change in the business,  assets,  liabilities,  condition,
financial  or  otherwise,   or  material  agreements  of  the  Company  and  its
Subsidiaries, taken as a whole.

     SECTION  3.05.  Litigation  and  Environmental  Matters.  (a)  There are no
actions,  suits or  proceedings  by or before  any  arbitrator  or  Governmental
Authority  pending  against  or, to the  knowledge  of the  Company,  threatened
against or  affecting  the  Company or any of its  Subsidiaries  (i) as to which
there is a  reasonable  probability  of an adverse  determination  and that,  if
adversely  determined,  would  reasonably  be expected,  individually  or in the
aggregate,  to result in a Material  Adverse  Effect  (other than the  Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.

     (b) Except for the  Disclosed  Matters and except with respect to any other
matters that, individually or in the aggregate, would not reasonably be expected
to result in a Material  Adverse  Effect,  neither  the  Company  nor any of its
Subsidiaries  (i) has failed to comply with any  Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental  Law,  (ii) has  become  subject to any  Environmental  Liability,
(iii) has  received  notice  of any  claim  with  respect  to any  Environmental
Liability or (iv) knows of any basis for any Environmental Liability.

     SECTION 3.06. Compliance with Laws and Agreements.  Each of the Company and
its  Subsidiaries is in compliance with all laws,  regulations and orders of any
Governmental  Authority  applicable  to it or its property  and all  indentures,
agreements and other instruments  binding upon it or its property,  except where
the failure to do so,  individually  or in the  aggregate,  has not resulted and
would not result in a Material  Adverse  Effect.  No Default has occurred and is
continuing.

     SECTION 3.07.  Investment and Holding Company  Status.  Neither the Company
nor any of its Subsidiaries is an "investment company" as defined in, or subject
to regulation under, the Investment Company Act of 1940.

     SECTION 3.08.  Taxes. The Company and its Subsidiaries have timely filed or
caused to be filed all Tax returns  and reports  required to have been filed and
has paid or  caused  to be paid  all  Taxes  required  to have  been  paid by it
pursuant to said Tax returns or  pursuant  to any  assessment  received by them,
except  (a) any  Taxes that are being  contested  in good  faith by  appropriate
proceedings and for which the Company or such Subsidiary, as applicable, has set
aside on its books adequate reserves or (b) to the extent that the failure to do
so would not reasonably be expected to result in a Material Adverse Effect.

     SECTION 3.09. ERISA. No ERISA Event has occurred or is reasonably  expected
to occur that,  when taken  together  with all other such ERISA Events for which
liability  is  reasonably  expected to occur,  would  reasonably  be expected to
result in a Material Adverse Effect.

     SECTION 3.10. Disclosure. Neither the Information Memorandum nor any of the
other reports, financial statements, certificates or other information furnished
by or on behalf of the  Borrowers to the  Administrative  Agent or any Lender in
connection  with the  negotiation of this  Agreement or delivered  hereunder (as
modified  or  supplemented  by other  information  so  furnished)  contains  any
material  misstatement  of fact or omits to state any material fact necessary to
make the statements  therein, in the light of the circumstances under which they
were made, not misleading;  provided that,  with respect to projected  financial
information,  the Borrowers represent only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

                                   ARTICLE IV
                                   Conditions

     SECTION 4.01. [Intentionally Omitted]

     SECTION 4.02.  Each Credit Event.  The  obligation of each Lender to make a
Loan on the  occasion of any  Borrowing  is subject to the  satisfaction  of the
following conditions:

     (a)  The  representations and warranties of the Borrowers set forth in this
          Agreement   (other   than   the    representations    set   forth   in
          Sections 3.04(b)  and 3.05) shall be true and correct on and as of the
          date of such Borrowing.

     (b)  At the time of and immediately  after giving effect to such Borrowing,
          no Default shall have occurred and be continuing.

Each Borrowing  shall be deemed to constitute a  representation  and warranty by
the Borrowers on the date thereof as to the matters  specified in paragraphs (a)
and (b) of this Section.

     SECTION  4.03.  Initial  Credit Event for each  Borrowing  Subsidiary.  The
obligation  of each Lender to make Loans to a Borrowing  Subsidiary  (other than
the  Borrowing  Subsidiary  party  hereto on the date  hereof) is subject to the
satisfaction of the following conditions:

     (a)  The  Administrative  Agent (or its counsel)  shall have  received such
          Borrowing Subsidiary's  Borrowing Subsidiary Agreement,  duly executed
          by all parties thereto.

     (b)  The Administrative Agent shall have received (i) all documentation and
          other information related to such Borrowing Subsidiary required by the
          Administrative  Agent and each  Lender  under  applicable  "know  your
          customer" or similar rules and regulations,  including the USA Patriot
          Act, and (ii) such documents,  certificates  and legal opinions as the
          Administrative Agent or its counsel may reasonably request relating to
          the   formation,   existence  and  good  standing  of  such  Borrowing
          Subsidiary, the authorization and legality of the Transactions insofar
          as they  relate  to such  Borrowing  Subsidiary  and any  other  legal
          matters   relating  to  such  Borrowing   Subsidiary,   its  Borrowing
          Subsidiary  Agreement or such Transactions,  all in form and substance
          satisfactory to the Administrative Agent and its counsel.

                                   ARTICLE V
                              Affirmative Covenants

     Until the Commitments  have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full, the Company and each other Borrower  covenants and agrees with the Lenders
that:

     SECTION 5.01. Financial Statements and Other Information.  The Company will
furnish to the Administrative Agent and each Lender:

     (a)  within  120 days  after the end of each fiscal year of the Company,  a
          copy of its audited  consolidated balance sheet and related statements
          of  operations,  stockholders'  equity and cash flows as of the end of
          and for such year,  setting forth in each case in comparative form the
          figures  for  the   previous   fiscal   year,   all   reported  on  by
          PricewaterhouseCoopers  LLP or other independent public accountants of
          recognized  national  standing  (without  a  "going  concern"  or like
          qualification or exception and without any  qualification or exception
          as to the scope of such  audit) to the effect  that such  consolidated
          financial  statements  present  fairly in all  material  respects  the
          financial  condition  and results of operations of the Company and its
          consolidated  Subsidiaries on a consolidated  basis in accordance with
          GAAP consistently applied;

     (b)  within  60 days  after  the  end of  each of the  first  three  fiscal
          quarters  of  each  fiscal  year  of  the  Company,   a  copy  of  its
          consolidated  balance  sheet and  related  statements  of  operations,
          stockholders'  equity  and  cash  flows  as of the end of and for such
          fiscal  quarter  and the then  elapsed  portion  of the  fiscal  year,
          setting  forth in each case in  comparative  form the  figures for the
          corresponding  period or  periods of (or,  in the case of the  balance
          sheet,  as of the end of) the previous  fiscal year,  all certified by
          one of its  Financial  Officers as  presenting  fairly in all material
          respects the  financial  condition  and results of  operations  of the
          Company and its consolidated  Subsidiaries on a consolidated  basis in
          accordance with GAAP consistently applied,  subject to normal year-end
          audit adjustments and the absence of footnotes;

     (c)  concurrently  with any delivery of financial  statements  under clause
          (a) or (b) above,  a certificate of a Financial Officer of the Company
          (i) certifying  as to whether a Default has occurred and, if a Default
          has occurred,  specifying the details  thereof and any action taken or
          proposed  to be taken with  respect  thereto  and  (ii) setting  forth
          reasonably  detailed   calculations   demonstrating   compliance  with
          Section 6.06;

     (d)  concurrently  with any delivery of financial  statements  under clause
          (a) above,  a certificate of the accounting firm that reported on such
          financial  statements  stating whether they obtained  knowledge during
          the course of their  examination of such  financial  statements of any
          Default (which  certificate  may be limited to the extent  required by
          accounting rules or guidelines);

     (e)  promptly  after  the same  become  publicly  available,  copies of all
          periodic  and other  reports,  proxy  statements  and other  materials
          regularly  filed by the Company or any Subsidiary  with the Securities
          and Exchange Commission,  or any Governmental  Authority succeeding to
          any or all of the functions of said Commission,  or distributed by the
          Company to its shareholders generally, as the case may be; and

     (f)  promptly  following  any  request  therefor,  such  other  information
          regarding the operations,  business affairs and financial condition of
          the Company or any  Subsidiary,  or compliance  with the terms of this
          Agreement,  as the  Administrative  Agent or any Lender may reasonably
          request.

     SECTION 5.02.  Notices of Material Events.  The Company will furnish to the
Administrative Agent prompt written notice of the following:

     (a)  the occurrence of any Default;

     (b)  the filing or  commencement  of any action,  suit or  proceeding by or
          before any arbitrator or Governmental  Authority  against or affecting
          the Company or any Affiliate  thereof  that, if adversely  determined,
          would  reasonably be expected to result in a Material  Adverse Effect;
          and

     (c)  any other development that results in, or would reasonably be expected
          to result in, a Material Adverse Effect.

Each notice  delivered under this Section shall be accompanied by a statement of
a Financial  Officer or other executive officer of the Company setting forth the
details of the event or  development  requiring such notice and any action taken
or proposed to be taken with respect thereto.

     SECTION 5.03.  Existence;  Conduct of Business.  The Company will, and will
cause each of its Significant Subsidiaries to, do or cause to be done all things
necessary  to  preserve,  renew  and keep in full  force  and  effect  its legal
existence and the rights, licenses, permits,  privileges,  franchises,  patents,
copyrights,  trademarks  and trade names material to the conduct of its business
except  (in the case of any such  failure  to do so other  than with  respect to
preserving,  renewing and keeping in full force and effect the  existence of the
Company)  where the  failure  to do so would not  result in a  Material  Adverse
Effect;   provided   that  the   foregoing   shall  not   prohibit  any  merger,
consolidation, liquidation or dissolution permitted under Section 6.04.

     SECTION 5.04. Payment of Obligations. The Company will, and will cause each
of its Subsidiaries to, pay its Tax liabilities, that, if not paid, would result
in a Material  Adverse  Effect  before the same shall  become  delinquent  or in
default,  except where (a) the  validity or amount thereof is being contested in
good faith by appropriate  proceedings,  (b) the  Company or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance with
GAAP and  (c) the  failure  to make  payment  pending  such  contest  would  not
reasonably be expected to result in a Material Adverse Effect.

     SECTION 5.05. Maintenance of Properties;  Insurance.  The Company will, and
will cause each of its  Subsidiaries  to,  (a) keep  and  maintain  all property
material to the conduct of its  business in good  working  order and  condition,
ordinary  wear and tear  excepted,  except  where the failure to do so would not
reasonably be expected to result in a Material Adverse Effect and  (b) maintain,
with  financially  sound and reputable  insurance  companies,  insurance in such
amounts  and  against  such risks as are  customarily  maintained  by  companies
engaged  in the same or  similar  businesses  operating  in the same or  similar
locations.

     SECTION 5.06. Books and Records;  Inspection  Rights. The Company will, and
will cause each of its Significant  Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities,  except, in the case of
any Significant  Subsidiary,  where the failure to do so would not reasonably be
expected to result in a Material  Adverse  Effect.  The Company  will,  and will
cause each of its Subsidiaries to, permit any representatives  designated by the
Administrative  Agent or any Lender,  upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss  its  affairs,  finances  and  condition  with its  officers  and
independent accountants, all at such reasonable times and as often as reasonably
requested.

     SECTION 5.07.  Compliance  with Laws. The Company will, and will cause each
of its Subsidiaries to, comply with all laws,  rules,  regulations and orders of
any Governmental  Authority,  including Environmental Laws and ERISA, applicable
to it or its property, except where the failure to do so, individually or in the
aggregate, would not result in a Material Adverse Effect.

     SECTION 5.08. Use of Proceeds.  The proceeds of the Loans will be used only
for working capital and general  corporate  purposes and to provide liquidity in
connection  with any commercial  paper program of the Borrowers.  No part of the
proceeds  of any Loan will be used,  whether  directly  or  indirectly,  for any
purpose  that  entails  a  violation  of any of the  Regulations  of the  Board,
including Regulations U and X.

                                   ARTICLE VI
                               Negative Covenants

     Until the  Commitments  have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full, the
Company and each other Borrower covenants and agrees with the Lenders that:

     SECTION  6.01.  Subsidiary  Indebtedness.  The Company  will not permit any
Subsidiary to create, incur, assume or permit to exist any Indebtedness, except:

     (a)  Indebtedness   existing   on  the  date   hereof   and  set  forth  on
          Schedule 6.01  and  extensions,  renewals or  replacements of any such
          Indebtedness  that do not increase the  outstanding  principal  amount
          thereof;

     (b)  Indebtedness of any Subsidiary to the Company or any other Subsidiary;
          provided that no such Indebtedness  shall be assigned to, or subjected
          to any  Lien in  favor  of,  a Person  other  than  the  Company  or a
          Subsidiary;

     (c)  Indebtedness  of any Subsidiary  incurred to finance the  acquisition,
          construction or improvement by such Subsidiary of any fixed or capital
          assets,  including  Capital  Lease  Obligations  and any  Indebtedness
          incurred or assumed in connection with the  acquisition,  construction
          or improvement of any such assets,  and any Indebtedness  secured by a
          Lien  on any  such  assets  prior  to  the  acquisition  thereof,  and
          extensions,   renewals  and  replacements  of  any  of  the  foregoing
          Indebtedness  referred to in this  paragraph  that do not increase the
          outstanding principal amount thereof;  provided that such Indebtedness
          is incurred prior to or within 180 days after such  acquisition or the
          completion of such construction or improvement;

     (d)  Indebtedness  of any Person that becomes a  Subsidiary  after the date
          hereof; provided that such Indebtedness exists at the time such Person
          becomes a  Subsidiary  and is not  created in  contemplation  of or in
          connection with such Person becoming a Subsidiary;

     (e)  Indebtedness  of any  Subsidiary  as an  account  party in  respect of
          letters of credit backing obligations (other than Indebtedness) of any
          Subsidiary;

     (f)  Indebtedness consisting of industrial  development,  pollution control
          or other revenue bonds or similar  instruments issued or guaranteed by
          any Governmental Authority; and

     (g)  Other Indebtedness not expressly permitted by clauses (a)  through (f)
          above;  provided  that  the  sum,  without  duplication,   of  (i) the
          outstanding  Indebtedness  permitted  by  this  clause (g),   (ii) the
          aggregate  principal amount of the outstanding  obligations secured by
          Liens permitted by Section 6.02(n) and (iii) the  Attributable Debt in
          respect of Sale-Leaseback  Transactions  permitted by  Section 6.03(b)
          does not at any time exceed 25% of Consolidated Assets.

     SECTION  6.02.  Liens.  The  Company  will  not,  and will not  permit  any
Subsidiary  to,  create,  incur,  assume  or  permit  to  exist  any Lien on any
Principal Property now owned or hereafter acquired by it, except:

     (a)  Liens  imposed  by law for  taxes  that  are not yet due or are  being
          contested in compliance with Section 5.04;

     (b)  carriers', warehousemen's,  mechanics', materialmen's, repairmen's and
          other like Liens  imposed by law,  arising in the  ordinary  course of
          business;

     (c)  pledges  and  deposits  made in the  ordinary  course of  business  in
          compliance  with  workers'  compensation,  unemployment  insurance and
          other social security laws or regulations;

     (d)  deposits to secure the performance of bids, trade  contracts,  leases,
          statutory obligations,  surety and appeal bonds, performance bonds and
          other  obligations of a like nature, in each case made in the ordinary
          course of business;

     (e)  judgment liens in respect of judgments  that do not constitute  Events
          of Default under clause (k) of Article VII;

     (f)  easements, zoning restrictions, rights-of-way and similar encumbrances
          on  property  imposed  by law or  arising  in the  ordinary  course of
          business  that  do not  secure  any  monetary  obligations  and do not
          materially  detract  from  the  value  of  the  affected  property  or
          materially  interfere  with the  ordinary  conduct of  business of the
          Company and the Subsidiaries taken as a whole;

     (g)  any Lien on any  property  or asset of the  Company or any  Subsidiary
          existing on the date hereof (or on improvements or accessions  thereto
          or proceeds  therefrom) and set forth on Schedule 6.02;  provided that
          (i) such  Lien shall not apply to any other  property  or asset of the
          Company or any  Subsidiary  and  (ii) such  Lien shall be permitted by
          this  clause (g)  only to the extent of the amount of the  obligations
          which it  secures  on the date  hereof and  extensions,  renewals  and
          replacements thereof up to the outstanding principal amount thereof;

     (h)  any  Lien   (i) existing  on  any  property  or  asset  prior  to  the
          acquisition thereof by the Company or any Subsidiary, (ii) existing on
          any property or asset of any Person that  becomes a  Subsidiary  after
          the date hereof prior to the time such Person  becomes a Subsidiary or
          (iii) to  the extent such Lien  applies only to the property or assets
          so  acquired  by the  Company or any  Subsidiary  or owned by a Person
          prior to the time such Person becomes a Subsidiary,  arising after the
          date of such acquisition or such Person becoming a Subsidiary pursuant
          to contractual  commitments entered into prior thereto;  provided that
          (x) such Lien is not created in contemplation of or in connection with
          such acquisition or such Person becoming a Subsidiary, as the case may
          be,  (y) such Lien shall not apply to any other  property or assets of
          the Company or any Subsidiary  other than  improvements and accessions
          to the assets to which it  originally  applies  and  proceeds  of such
          assets,  improvements  and  accessions  and  (z) such  Lien  shall  be
          permitted by this  clause (h)  only to the extent of the amount of the
          obligations  which it secures on the date of such  acquisition  or the
          date  such  Person  becomes  a  Subsidiary,  as the case  may be,  and
          extensions,  renewals and  replacements  thereof up to the outstanding
          principal amount thereof;

     (i)  Liens on fixed or capital assets acquired,  constructed or improved by
          the Company or any  Subsidiary;  provided that  (i) such  Liens secure
          Indebtedness permitted by clause (c) of Section 6.01,  (ii) such Liens
          and the  Indebtedness  secured thereby are incurred prior to or within
          180 days after such acquisition or the completion of such construction
          or improvement, (iii) the Indebtedness secured thereby does not exceed
          the cost of acquiring, constructing or improving such fixed or capital
          assets and  (iv) such  Liens shall not apply to any other  property or
          assets of the Company or any Subsidiary;

     (j)  Liens  securing  industrial  development,  pollution  control or other
          revenue  bonds or  similar  instruments  issued or  guaranteed  by any
          Governmental Authority;

     (k)  Liens in favor of any  Governmental  Authority  to secure  obligations
          pursuant to the provisions of any contract or statute;

     (l)  Liens to secure  obligations  of a  Subsidiary  to the  Company or any
          other Subsidiary;

     (m)  Liens on equity,  joint venture,  partnership,  or other  ownership or
          investment  interests  (collectively,  the "Equity  Interests") of the
          Company or any Subsidiary in any Person arising in connection with the
          rights  of a third  party  owning  Equity  Interests  in  such  Person
          pursuant  to a  joint  venture,  shareholder,  distribution  or  other
          agreement  between  the  Company or any of its  Subsidiaries  and such
          third party to purchase the Equity  Interests  owned by the Company or
          any Subsidiary in such Person for reasonable  value pursuant to change
          in control  provisions,  noncompetition  provisions,  restrictions  on
          competing  brands or other business  restriction  provisions in one or
          more of the agreements between such parties; and

     (n)  Liens  not  expressly  permitted  by  clauses (a)  through (m)  above;
          provided that the sum of (i) the outstanding Indebtedness permitted by
          Section 6.01(g),   (ii) the   aggregate   principal   amount   of  the
          outstanding  obligations secured by Liens permitted by this clause (n)
          and  (iii) the   Attributable   Debt  in  respect  of   Sale-Leaseback
          Transactions  permitted  by  Section 6.03(b)  does  not  at  any  time
          exceed 25% of Consolidated Assets.

     SECTION 6.03.  Sale and Leaseback  Transactions.  The Company will not, and
will not  permit  any of its  Subsidiaries  to,  enter  into any  Sale-Leaseback
Transaction relating to any Principal Property except:

     (a)  Sale-Leaseback  Transactions to which the Company or any Subsidiary is
          a party as of the date hereof; and

     (b)  other  Sale-Leaseback  Transactions;  provided that the sum of (i) the
          outstanding   Indebtedness  permitted  by  Section 6.01(g),   (ii) the
          aggregate principal amount of outstanding obligations secured by Liens
          permitted by Section 6.02(n) and (iii) the aggregate Attributable Debt
          in respect of Sale-Leaseback Transactions permitted by this clause (b)
          does not at any time exceed 25% of Consolidated Assets.

     SECTION 6.04.  Fundamental  Changes. (a) The Company will not, and will not
permit any Significant  Subsidiary to, merge into or consolidate  with any other
Person,  or permit  any other  Person to merge into or  consolidate  with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions)  assets  representing  all or  substantially  all the aggregate
assets of the  Company  and the  Subsidiaries  (whether  now owned or  hereafter
acquired),  or  liquidate  or  dissolve,  except that if at the time thereof and
immediately  after giving  effect  thereto no Default shall have occurred and be
continuing  (i) any Person may merge into the Borrower in a transaction in which
the Borrower is the surviving  corporation,  (ii) any  Person may merge with any
Subsidiary in a transaction  in which the surviving  entity is a Subsidiary  and
(iii) any  Subsidiary may liquidate or dissolve or, so long as such  transaction
does not constitute a transfer or other  disposition of all or substantially all
the aggregate  assets of the Borrower and the  Subsidiaries,  merge with or into
any other Person.

     (b) The  Company  will  not,  and will not  permit  any of its  Significant
Subsidiaries  to,  engage as its principal  business in any business  other than
businesses  of  the  type   collectively   conducted  by  the  Company  and  its
Subsidiaries  on the date of this  Agreement and businesses  reasonably  related
thereto.

     (c) The  Company  will not  permit any other  Borrower,  while it remains a
Borrower, to cease to be a Subsidiary.

     SECTION 6.05. Transactions with Affiliates.  The Company will not, and will
not permit any of its  Subsidiaries  to, sell,  lease or otherwise  transfer any
property or assets to, or purchase,  lease or otherwise  acquire any property or
assets from,  or otherwise  engage in any other  transactions  with,  any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Company or such  Subsidiary  than could
be  obtained  on  an  arm's-length   basis  from  unrelated  third  parties  and
(b) transactions between or among the Company and its Subsidiaries not involving
any other Affiliate;  provided that nothing contained in this Section 6.05 shall
prevent the Borrower or any Subsidiary  from paying  dividends to its respective
shareholders.

     SECTION 6.06.  Ratio of Consolidated  Total Debt to Consolidated Net Worth.
The  Borrower  will  not  permit  the  ratio  of  Consolidated   Total  Debt  to
Consolidated Net Worth at any time to be greater than 2.00 to 1.00.

                                  ARTICLE VII
                                Events of Default

     If any of the following events ("Events of Default") shall occur:

     (a) any  Borrower  shall fail to pay any  principal of any Loan when and as
the same shall become due and  payable,  whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;

     (b) any  Borrower  shall fail to pay any interest on any Loan or any fee or
any other  amount  (other  than an amount  referred  to in  clause  (a) of  this
Article) payable under this Agreement, when and as the same shall become due and
payable,  and such  failure  shall  continue  unremedied  for a period  of three
Business Days;

     (c) any  representation  or warranty made or deemed made by or on behalf of
the  Company or any  Borrower in or in  connection  with this  Agreement  or any
amendment  or  modification  hereof  or  waiver  hereunder,  or in  any  report,
certificate,  financial  statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or waiver
hereunder,  shall prove to have been  materially  incorrect  when made or deemed
made;

     (d) the Company or any Borrower,  as  applicable,  shall fail to observe or
perform any covenant,  condition or agreement  contained in  Section 5.02,  5.03
(with respect to the Borrower s existence) or 5.08 or in Article VI;

     (e) the Company or any Borrower,  as  applicable,  shall fail to observe or
perform any covenant,  condition or agreement contained in this Agreement (other
than  those  specified  in  clause (a),  (b) or (d) of this  Article),  and such
failure shall  continue  unremedied for a period of 30 days after notice thereof
from the Administrative  Agent to the Company (which notice will be given at the
request of any Lender);

     (f) the Company or any Subsidiary  shall fail to make any payment  (whether
of principal or interest) in respect of any Material  Indebtedness,  when and as
the same shall become due and payable or within any applicable cure period;

     (g) any Material  Indebtedness is declared to be due prior to its scheduled
maturity or the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf require the prepayment,  repurchase,  redemption or
defeasance  thereof,  prior  to  its  scheduled  maturity;  provided  that  this
clause (g) shall not apply to secured  Indebtedness that becomes due as a result
of the  voluntary  sale or transfer  of the  property  or assets  securing  such
Indebtedness;

     (h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed  seeking  (i) liquidation,  reorganization  or  other  relief  in
respect  of the  Company or any  Significant  Subsidiary  or its debts,  or of a
substantial part of its assets, under any Federal,  state or foreign bankruptcy,
insolvency,  receivership  or similar law now or hereafter in effect or (ii) the
appointment  of a receiver,  trustee,  custodian,  sequestrator,  conservator or
similar  official  for  the  Company  or  any  Significant  Subsidiary  or for a
substantial  part of its  assets,  and,  in any such case,  such  proceeding  or
petition shall continue  undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;

     (i)  the  Company  or  any  Significant  Subsidiary  shall  (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other  relief  under any Federal,  state or foreign  bankruptcy,  insolvency,
receivership  or similar law now or  hereafter  in effect,  (ii) consent  to the
institution  of, or fail to  contest  in a timely and  appropriate  manner,  any
proceeding or petition described in clause (h) of this Article,  (iii) apply for
or consent to the appointment of a receiver, trustee,  custodian,  sequestrator,
conservator or similar  official for the Borrower or any Significant  Subsidiary
or for a  substantial  part of its assets,  (iv) file  an answer  admitting  the
material  allegations  of a petition  filed  against it in any such  proceeding,
(v) make a general  assignment  for the benefit of creditors  or  (vi) take  any
action for the purpose of effecting any of the foregoing;

     (j) the Company or any Significant Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;

     (k) one or more  judgments for the payment of money in an aggregate  amount
in excess  of $25,000,000  shall be rendered against the Company, any Subsidiary
or any combination  thereof and the same shall remain  undischarged for a period
of 30 consecutive  days during which execution shall not be effectively  stayed,
or any action  shall be legally  taken by a judgment  creditor to attach or levy
upon any assets of the Company or any Subsidiary to enforce any such judgment;

     (l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders,  when taken  together  with all other ERISA Events that have  occurred,
would  reasonably  be  expected  to result in  liability  of the Company and the
Subsidiaries in an aggregate  amount  exceeding  (i) $25,000,000  in any year or
(ii) $50,000,000 for all periods; or

     (m) a Change in Control shall occur;

then,  and in every such event (other than an event with respect to any Borrower
described in  clause (h)  or (i) of this  Article),  and at any time  thereafter
during the continuance of such event, the  Administrative  Agent may, and at the
request of the Required Lenders shall, by notice to the Company,  take either or
both of the following  actions,  at the same or different  times:  (i) terminate
the Commitments,  and thereupon the Commitments shall terminate immediately, and
(ii) declare  the Loans then  outstanding  to be due and payable in whole (or in
part,  in which case any  principal  not so  declared  to be due and payable may
thereafter  be declared to be due and  payable),  and thereupon the principal of
the Loans so declared to be due and  payable,  together  with  accrued  interest
thereon and all fees and other obligations of the Borrowers  accrued  hereunder,
shall become due and payable immediately,  without presentment,  demand, protest
or other notice of any kind,  all of which are hereby  waived by the  Borrowers;
and in case of any event with  respect to any Borrower  described in  clause (h)
or (i) of this Article,  the Commitments shall  automatically  terminate and the
principal of the Loans then outstanding,  together with accrued interest thereon
and all fees and other  obligations of the Borrowers  accrued  hereunder,  shall
automatically become due and payable,  without presentment,  demand,  protest or
other notice of any kind, all of which are hereby waived by the Borrowers.

                                  ARTICLE VIII
                            The Administrative Agent

     Each of the Lenders hereby irrevocably appoints the Administrative Agent as
its agent and  authorizes the  Administrative  Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative  Agent
by the terms  hereof,  together  with such actions and powers as are  reasonably
incidental thereto.

     The bank serving as the Administrative  Agent hereunder shall have the same
rights  and  powers in its  capacity  as a Lender as any  other  Lender  and may
exercise the same as though it were not the Administrative  Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally  engage
in any kind of business with the Company or any  Subsidiary  or other  Affiliate
thereof as if it were not the Administrative Agent hereunder.

     The  Administrative  Agent shall not have any duties or obligations  except
those  expressly  set forth  herein.  Without  limiting  the  generality  of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other  implied  duties,  regardless  of whether a Default  has  occurred  and is
continuing,  (b) the  Administrative  Agent  shall not have any duty to take any
discretionary action or exercise any discretionary  powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage  of the  Lenders as shall be  necessary  under the  circumstances  as
provided in  Section 10.02),  and (c) except as expressly set forth herein,  the
Administrative  Agent  shall  not have any duty to  disclose,  and  shall not be
liable for the failure to disclose,  any information  relating to the Company or
any of its Subsidiaries  that is communicated to or obtained by the bank serving
as  Administrative  Agent  or  any  of  its  Affiliates  in  any  capacity.  The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary  under the  circumstances  as
provided  in  Section 10.02)  or in the absence of its own gross  negligence  or
wilful  misconduct.  The  Administrative  Agent  shall  be  deemed  not to  have
knowledge of any Default unless and until written notice thereof is given to the
Administrative  Agent by the Company or a Lender, and the  Administrative  Agent
shall not be  responsible  for or have any duty to  ascertain  or  inquire  into
(i) any statement, warranty or representation made in or in connection with this
Agreement,  (ii) the  contents  of any  certificate,  report  or other  document
delivered  hereunder  or  in  connection  herewith,   (iii) the  performance  or
observance of any of the covenants,  agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this  Agreement  or any other  agreement,  instrument  or  document,  or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm  receipt of items  expressly  required  to be  delivered  to the
Administrative Agent. Each party to this Agreement acknowledges that neither the
Syndication  Agent  nor  the   Documentation   Agents  shall  have  any  duties,
responsibilities,   obligations  or  authority  under  this  Agreement  in  such
capacity. The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement,  instrument,  document or other writing  believed by it to be genuine
and to have been signed or sent by the proper Person. The  Administrative  Agent
also may rely upon any statement  made to it orally or by telephone and believed
by it to be made by the proper  Person,  and shall not incur any  liability  for
relying thereon.  The  Administrative  Agent may consult with legal counsel (who
may be counsel for any  Borrower),  independent  accountants  and other  experts
selected by it, and shall not be liable for any action  taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

     The  Administrative  Agent may perform any and all its duties and  exercise
its rights and powers by or through any one or more sub-agents  appointed by the
Administrative  Agent.  The  Administrative  Agent  and any such  sub-agent  may
perform any and all its duties and exercise its rights and powers  through their
respective  Related  Parties.  The  exculpatory   provisions  of  the  preceding
paragraphs  shall apply to any such sub-agent and to the Related  Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities  provided
for herein as well as activities as Administrative Agent.

     Subject to the  appointment  and  acceptance of a successor  Administrative
Agent as provided in this paragraph,  the Administrative Agent may resign at any
time by notifying the Lenders and the Company.  Upon any such  resignation,  the
Company shall have the right,  in  consultation  with the Required  Lenders,  to
appoint  a  successor.  If no  successor  shall  have been so  appointed  by the
Borrower and shall have  accepted  such  appointment  within  30 days  after the
retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative  Agent  may,  on  behalf  of the  Lenders,  appoint  a  successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank.  Upon the  acceptance  of its  appointment  as
Administrative  Agent hereunder by a successor,  such successor shall succeed to
and become  vested with all the  rights,  powers,  privileges  and duties of the
retiring  Administrative  Agent, and the retiring  Administrative Agent shall be
discharged  from its duties and obligations  hereunder.  The fees payable by the
Company to a successor  Administrative  Agent shall be the same as those payable
to its  predecessor  unless  otherwise  agreed  between  the  Borrower  and such
successor.   After  the  Administrative  Agent's  resignation   hereunder,   the
provisions of this Article and  Section 10.03  shall  continue in effect for the
benefit  of  such  retiring  Administrative  Agent,  its  sub-agents  and  their
respective  Related  Parties in respect  of any  actions  taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

     Each Lender  acknowledges  that it has,  independently and without reliance
upon the  Administrative  Agent or any other Lender and based on such  documents
and information as it has deemed  appropriate,  made its own credit analysis and
decision to enter into this  Agreement.  Each Lender also  acknowledges  that it
will,  independently and without reliance upon the  Administrative  Agent or any
other Lender and based on such  documents and  information as it shall from time
to time deem  appropriate,  continue to make its own  decisions in taking or not
taking action under or based upon this Agreement,  any related  agreement or any
document furnished hereunder or thereunder.

                                   ARTICLE IX
                                    Guarantee

     In order to induce  the  Lenders  to extend  credit to the other  Borrowers
hereunder, the Company hereby irrevocably and unconditionally  guarantees,  as a
primary  obligor and not merely as a surety,  the payment when and as due of the
Obligations of such other Borrowers. The Company further agrees that the due and
punctual payment of such Obligations may be extended or renewed,  in whole or in
part, without notice to or further assent from it, and that it will remain bound
upon its guarantee  hereunder  notwithstanding  any such extension or renewal of
any such Obligation.

     The Company  waives  presentment  to, demand of payment from and protest to
any Borrower of any of the Obligations,  and also waives notice of acceptance of
its  obligations  and notice of protest for  nonpayment.  The obligations of the
Company hereunder shall not be affected by (a) the failure of the Administrative
Agent or any  Lender to assert  any claim or demand or to  enforce  any right or
remedy against any Borrower under the provisions of this Agreement or otherwise;
(b) any  extension  or renewal of any of the  Obligations;  (c) any  rescission,
waiver,  amendment  or  modification  of, or release  from,  any of the terms or
provisions of this Agreement, or any other agreement;  (d) any default,  failure
or delay, willful or otherwise, in the performance of any of the Obligations; or
(e) any  other act,  omission or delay to do any other act which may or might in
any manner or to any extent vary the risk of the Company or otherwise operate as
a discharge of a guarantor as a matter of law or equity or which would impair or
eliminate any right of the Company to subrogation.

     The Company  further  agrees that its  agreement  hereunder  constitutes  a
guarantee  of  payment  when  due  (whether  or not any  bankruptcy  or  similar
proceeding shall have stayed the accrual or collection of any of the Obligations
or operated as a discharge thereof) and not merely of collection, and waives any
right to require that any resort be had by the Administrative Agent or Lender to
any balance of any deposit account or credit on the books of the  Administrative
Agent or Lender in favor of any Borrower or any other Person.

     The  obligations  of the  Company  hereunder  shall not be  subject  to any
reduction,  limitation,  impairment or termination for any reason, and shall not
be subject to any defense or set-off,  counterclaim,  recoupment or  termination
whatsoever,  by reason of the invalidity,  illegality or unenforceability of any
of  the  Obligations,  any  impossibility  in  the  performance  of  any  of the
Obligations or otherwise.

     The Company further agrees that its obligations hereunder shall continue to
be effective or be  reinstated,  as the case may be, if at any time payment,  or
any part thereof,  of any  Obligation is rescinded or must otherwise be restored
by the  Administrative  Agent or Lender upon the bankruptcy or reorganization of
any Borrower or otherwise.

     In  furtherance  of the  foregoing and not in limitation of any other right
which the  Administrative  Agent or Lender may have at law or in equity  against
the Company by virtue hereof,  upon the failure of any other Borrower to pay any
Obligation  when and as the same  shall  become  due,  whether at  maturity,  by
acceleration,  after  notice of  prepayment  or  otherwise,  the Company  hereby
promises to and will, upon receipt of written demand by the Administrative Agent
or Lender,  forthwith pay, or cause to be paid, to the  Administrative  Agent or
Lender in cash an amount equal to the unpaid principal amount of such Obligation
then due, together with accrued and unpaid interest thereon.

     Upon  payment by the Company of any sums as provided  above,  all rights of
the Company against any Borrower  arising as a result thereof by way of right of
subrogation  or otherwise  shall in all respects be  subordinated  and junior in
right  of  payment  to the  prior  indefeasible  payment  in  full  of  all  the
Obligations owed by such Borrower to the Administrative Agent and the Lenders.

     Nothing shall  discharge or satisfy the liability of the Company  hereunder
except the full and indefeasible performance and payment of the Obligations.

                                   ARTICLE X
                                  Miscellaneous

     SECTION  10.01.   Notices.   Except  in  the  case  of  notices  and  other
communications  expressly  permitted to be given by  telephone,  all notices and
other  communications  provided  for  herein  shall be in  writing  and shall be
delivered  by  hand  or  overnight  courier  service,  mailed  by  certified  or
registered mail or sent by telecopy, as follows:

     (a)  if  to  the  Company,  to it at  Brown-Forman  Corporation,  850 Dixie
          Highway,  Louisville,   KY 40210,  Attention  of  Treasurer  (Telecopy
          No. (502)  774-6908),  with a copy to the Attention of General Counsel
          (Telecopy No. (502) 774-6650);

     (b)  if to any  Borrowing  Subsidiary,  to it in  care  of the  Company  as
          provided in paragraph (a) above;

     (c)  if to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and
          Agency Services Group, 1111 Fannin,  Houston,  TX 77002,  Attention of
          Cynthia Gonzalvo (Telecopy No. (713) 750-2782); and

     (d)  if to any other Lender,  to it at its address (or telecopy number) set
          forth in its Administrative Questionnaire.

     Any party hereto may change its address or telecopy  number for notices and
other  communications  hereunder  by  notice to the other  parties  hereto.  All
notices and other  communications  given to any party hereto in accordance  with
the provisions of this Agreement  shall be deemed to have been given on the date
of receipt.

     SECTION  10.02.  Waivers;  Amendments.  (a)  No  failure  or  delay  by the
Administrative  Agent or any Lender in exercising  any right or power  hereunder
shall operate as a waiver thereof,  nor shall any single or partial  exercise of
any such  right or  power,  or any  abandonment  or  discontinuance  of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the  exercise  of any other  right or power.  The  rights  and  remedies  of the
Administrative  Agent  and the  Lenders  hereunder  are  cumulative  and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any  provision  of this  Agreement  or consent to any  departure by any Borrower
therefrom shall in any event be effective  unless the same shall be permitted by
paragraph (b)  of this  Section,  and  then  such  waiver  or  consent  shall be
effective  only in the  specific  instance  and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be  construed  as  a  waiver  of  any   Default,   regardless   of  whether  the
Administrative  Agent or any  Lender may have had  notice or  knowledge  of such
Default at the time.

     (b) Neither this Agreement nor any provision hereof may be waived,  amended
or modified  except  pursuant to an agreement or agreements  in writing  entered
into  by the  Company  and  the  Required  Lenders  or by the  Company  and  the
Administrative Agent with the consent of the Required Lenders;  provided that no
such  agreement  shall  (i) increase  the  Commitment of any Lender  without the
written consent of such Lender,  (ii) reduce the principal amount of any Loan or
reduce  the rate of  interest  thereon,  or reduce any fees  payable  hereunder,
without the written consent of each Lender affected thereby,  (iii) postpone the
scheduled  date of payment of the principal  amount of any Loan, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any  such  payment,  or  postpone  the  scheduled  date  of  expiration  of  any
Commitment,  without  the  written  consent  of each  Lender  affected  thereby,
(iv) change  Section  2.07(c) or  Section 2.17(b)  or (c) in a manner that would
alter  the pro rata  sharing  of  Commitment  reductions  or  payments  required
thereby, as the case may be, without the written consent of each Lender affected
thereby or (v) change any of the provisions of this Section or the definition of
"Required  Lenders"  or any other  provision  hereof  specifying  the  number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
make any  determination  or grant any  consent  hereunder,  without  the written
consent of each Lender;  provided  further that no such  agreement  shall amend,
modify or  otherwise  affect  the rights or duties of the  Administrative  Agent
hereunder without the prior written consent of the Administrative Agent.

     SECTION 10.02A. Amendment or Waiver of Guarantor Obligations.  No amendment
or waiver shall release the Company from, or limit or condition, its Obligations
under Article IX, unless approved by all Lenders.

     SECTION 10.03.  Expenses;  Indemnity;  Damage Waiver. (a) The Company shall
pay (i) all  reasonable  out-of-pocket  expenses incurred by the  Administrative
Agent  and  its  Affiliates,   including  the  reasonable   fees,   charges  and
disbursements  of counsel for the  Administrative  Agent, in connection with the
syndication of the credit  facilities  provided for herein,  the preparation and
administration of this Agreement or any amendments,  modifications or waivers of
the provisions  hereof (whether or not the transactions  contemplated  hereby or
thereby shall be consummated),  and (ii) all  out-of-pocket expenses incurred by
the Administrative  Agent or any Lender,  including the reasonable fees, charges
and disbursements of any counsel for the Administrative  Agent or any Lender, in
connection  with the lawful  enforcement  of its rights in connection  with this
Agreement,  including its rights under this Section,  or in connection  with the
Loans made hereunder,  including all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans.

     (b) The Company shall indemnify the  Administrative  Agent and each Lender,
and each Related Party of any of the  foregoing  Persons (each such Person being
called an "Indemnitee") against, and hold each Indemnitee harmless from, any and
all losses,  claims,  damages,  liabilities and related expenses,  including the
fees,  charges and disbursements of any counsel for any Indemnitee,  incurred by
or asserted  against any Indemnitee  arising out of, in connection with, or as a
result of (i) the  execution or delivery of this  Agreement or any  agreement or
instrument  contemplated  hereby, the performance by the parties hereto of their
respective  obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom,  (iii) any  actual  or  alleged  presence  or  release  of  Hazardous
Materials on or from any property owned or operated by the Company or any of its
Subsidiaries,  or any Environmental  Liability related in any way to the Company
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding  relating to any of the foregoing,  whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto;  provided that such indemnity shall not, as to any Indemnitee, be
available  to the extent  that such  losses,  claims,  damages,  liabilities  or
related  expenses are determined by a court of competent  jurisdiction  by final
and nonappealable  judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.

     (c) To the extent that the Company  fails to pay any amount  required to be
paid  by it to the  Administrative  Agent  under  paragraph  (a) or (b) of  this
Section,  each Lender severally agrees to pay to the  Administrative  Agent such
Lender's  Applicable  Percentage  (determined as of the time that the applicable
unreimbursed  expense or  indemnity  payment is sought) of such  unpaid  amount;
provided that the  unreimbursed  expense or  indemnified  loss,  claim,  damage,
liability  or related  expense,  as the case may be, was incurred by or asserted
against the Administrative Agent in its capacity as such.

     (d) To the extent  permitted by applicable  law, no Borrower  shall assert,
and each Borrower hereby waives, any claim against any Indemnitee, on any theory
of  liability,  for special,  indirect,  consequential  or punitive  damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this  Agreement or any agreement or instrument  contemplated  hereby,
the Transactions, any Loan or the use of the proceeds thereof.

     (e) All  amounts due under this  Section  shall be payable  promptly  after
written demand therefor.

     SECTION 10.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding  upon and inure to the benefit of the parties  hereto and their
respective  successors  and assigns  permitted  hereby,  except that neither the
Company nor any Borrower  may assign or otherwise  transfer any of its rights or
obligations  hereunder without the prior written consent of each Lender (and any
attempted  assignment or transfer by the Borrower  without such consent shall be
null and void).  Nothing  in this  Agreement,  expressed  or  implied,  shall be
construed  to confer  upon any Person  (other  than the  parties  hereto,  their
respective  successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

     (b) Any Lender may assign to one or more  assignees all or a portion of its
rights and obligations  under this Agreement  (including all or a portion of its
Commitment  and the Loans at the time owing to it);  provided that (i) except in
the case of an assignment by a Lender to a Lender Affiliate of such Lender,  the
Administrative  Agent must give its prior  written  consent  to such  assignment
(which consent shall not be unreasonably  withheld),  (ii) except in the case of
an  assignment  to a Lender or a Lender  Affiliate,  the Borrower  must give its
prior  written  consent  to  such   assignment   (which  consent  shall  not  be
unreasonably withheld), (iii) except in the case of an assignment to a Lender or
a Lender  Affiliate  or an  assignment  of the  entire  remaining  amount of the
assigning  Lender's  Commitment,  the amount of the  Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and   Acceptance   with  respect  to  such   assignment   is  delivered  to  the
Administrative  Agent)  shall not be less  than  $5,000,000  unless  each of the
Company  and the  Administrative  Agent  otherwise  consent,  (iv) each  partial
assignment  shall be made as an  assignment of a  proportionate  part of all the
assigning Lender's rights and obligations under this Agreement, except that this
clause  (iv)  shall not apply to rights in respect  of  outstanding  Competitive
Loans,  (v) the  parties to each  assignment  shall  execute  and deliver to the
Administrative  Agent an Assignment and  Acceptance,  together with a processing
and  recordation  fee of $3,500,  and  (vi) the  assignee,  if it shall not be a
Lender,   shall   deliver  to  the   Administrative   Agent  an   Administrative
Questionnaire;  and provided further that any consent of the Borrower  otherwise
required under this paragraph shall not be required if an Event of Default under
clause (h) or (i) of Article  VII has  occurred  and is  continuing.  Subject to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective  date  specified in each  Assignment  and Acceptance the
assignee  thereunder  shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement,  and the assigning Lender  thereunder shall, to the
extent of the interest  assigned by such Assignment and Acceptance,  be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance  covering all of the assigning  Lender's rights and obligations under
this Agreement,  such Lender shall cease to be a party hereto but shall continue
to be entitled to the  benefits of  Sections 2.14,  2.15,  2.16 and 10.03).  Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this  paragraph  shall be treated for purposes of this
Agreement  as a sale by such  Lender  of a  participation  in  such  rights  and
obligations in accordance with paragraph (e) of this Section.

     (c) The Administrative  Agent,  acting for this purpose as an agent of each
Borrower, shall maintain at one of its offices in The City of New York a copy of
each  Assignment  and  Acceptance  delivered  to  it  and  a  register  for  the
recordation  of the names and addresses of the Lenders,  and the  Commitment of,
and  principal  amount of the Loans owing to, each Lender  pursuant to the terms
hereof from time to time (the "Register").  The entries in the Register shall be
conclusive,  and the  Borrowers,  the  Administrative  Agent and the Lenders may
treat each Person whose name is recorded in the  Register  pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary.  The Register  shall be available for  inspection by the
Company  and any  Lender,  at any  reasonable  time and from  time to time  upon
reasonable prior notice.

     (d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the assignee's completed  Administrative
Questionnaire  (unless the assignee  shall already be a Lender  hereunder),  the
processing and recordation fee referred to in  paragraph (b) of this Section and
any  written  consent  to such  assignment  required  by  paragraph  (b) of this
Section,  the  Administrative  Agent shall accept such Assignment and Acceptance
and record the  information  contained  therein in the  Register.  No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

     (e)  Any  Lender  may,   without  the  consent  of  any   Borrower  or  the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and/or obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (i) such  Lender's  obligations under this Agreement
shall remain unchanged,  (ii) such Lender shall remain solely responsible to the
other  parties  hereto for the  performance  of such  obligations  and (iii) the
Borrowers, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation  shall provide that such Lender shall retain
the  sole  right  to  enforce  this  Agreement  and to  approve  any  amendment,
modification  or waiver of any provision of this  Agreement;  provided that such
agreement  or  instrument  may provide  that such  Lender will not,  without the
consent  of the  Participant,  agree to any  amendment,  modification  or waiver
described  in  the  first   proviso  to  Section   10.02(b)  that  affects  such
Participant. Subject to paragraph (f) of this Section, each Borrower agrees that
each  Participant  shall be entitled to the benefits of Sections 2.14,  2.15 and
2.16 to the same extent as if it were a Lender and had  acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law  and if  prior  written  notice  of the  sale  of the  participation  to the
Participant is provided to the applicable Borrower,  each Participant also shall
be  entitled  to the  benefits  of  Section 10.08  as  though  it were a Lender,
provided such  Participant  agrees to be subject to Section 2.17(c) as though it
were a Lender.

     (f) A  Participant  shall not be entitled  to receive  any greater  payment
under Section 2.14 or 2.16 than the  applicable  Lender would have been entitled
to receive with respect to the participation  sold to such  Participant,  unless
the sale of the  participation  to such  Participant  is made with the Company's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.16  unless the Company
is notified of the  participation  sold to such Participant and such Participant
agrees, for the benefit of the Company, to comply with Section 2.16(e) as though
it were a Lender.

     (g) Any Lender may at any time pledge or assign a security  interest in all
or any portion of its rights under this Agreement to secure  obligations of such
Lender,  including any pledge or assignment to secure  obligations  to a Federal
Reserve Bank,  and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest  shall  release  a Lender  from  any of its  obligations  hereunder  or
substitute any such pledgee or assignee for such Lender as a party hereto.

     SECTION 10.05.  Survival.  All covenants,  agreements,  representations and
warranties  made  by the  Borrowers  herein  and in the  certificates  or  other
instruments  delivered in connection with or pursuant to this Agreement shall be
considered  to have been  relied  upon by the  other  parties  hereto  and shall
survive  the  execution  and  delivery of this  Agreement  and the making of any
Loans,  regardless of any  investigation  made by any such other party or on its
behalf and notwithstanding  that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect  representation  or warranty
at the time any credit is extended  hereunder,  and shall continue in full force
and effect as long as the  principal  of or any accrued  interest on any Loan or
any fee or any other amount  payable  under this  Agreement is  outstanding  and
unpaid  and so long as the  Commitments  have not  expired  or  terminated.  The
provisions of Sections 2.14, 2.15, 2.16 and 10.03 and Article VIII shall survive
and  remain in full  force and  effect  regardless  of the  consummation  of the
transactions contemplated hereby, the repayment of the Loans and the Commitments
or the termination of this Agreement or any provision hereof.

     SECTION 10.06. Counterparts; Integration; Effectiveness. This Agreement may
be  executed in  counterparts  (and by  different  parties  hereto on  different
counterparts), each of which shall constitute an original, but all of which when
taken  together  shall  constitute a single  contract.  This  Agreement  and any
separate letter  agreements  with respect to fees payable to the  Administrative
Agent  constitute the entire contract among the parties  relating to the subject
matter hereof and supersede any and all previous  agreements and understandings,
oral or written,  relating to the subject matter  hereof.  Except as provided in
Section 4.01,  this  Agreement  shall become  effective  when it shall have been
executed by the  Administrative  Agent and when the  Administrative  Agent shall
have  received  counterparts  hereof  which,  when  taken  together,   bear  the
signatures of each of the other parties hereto,  and thereafter shall be binding
upon and  inure to the  benefit  of the  parties  hereto  and  their  respective
successors and assigns.  Delivery of an executed counterpart of a signature page
of this  Agreement  by  telecopy  shall be  effective  as delivery of a manually
executed counterpart of this Agreement.

     SECTION  10.07.  Severability.  Any provision of this  Agreement held to be
invalid,  illegal  or  unenforceable  in  any  jurisdiction  shall,  as to  such
jurisdiction,  be  ineffective to the extent of such  invalidity,  illegality or
unenforceability without affecting the validity,  legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a  particular  jurisdiction  shall not  invalidate  such  provision in any other
jurisdiction.

     SECTION 10.08.  Right of Setoff. If an Event of Default shall have occurred
and be continuing,  each Lender and each of its Affiliates is hereby  authorized
at any time and from time to time,  to the fullest  extent  permitted by law, to
set off and apply any and all  deposits  (general  or  special,  time or demand,
provisional  or final) at any time held and other  obligations at any time owing
by such  Lender or  Affiliate  to or for the credit or the account of any Credit
Party  against  any of and  all the  obligations  of such  Credit  Party  now or
hereafter  existing under this Agreement  held by such Lender,  irrespective  of
whether or not such Lender shall have made any demand under this  Agreement  and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies  (including other rights of
setoff) which such Lender may have.

     SECTION 10.09. Governing Law; Jurisdiction;  Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

     (b) Each Credit Party hereby irrevocably and unconditionally  submits,  for
itself and its property,  to the nonexclusive  jurisdiction of the Supreme Court
of the State of New York  sitting in New York  County  and of the United  States
District  Court of the Southern  District of New York,  and any appellate  court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or for  recognition or  enforcement  of any judgment,  and each of the
parties hereto hereby irrevocably and unconditionally  agrees that all claims in
respect of any such action or  proceeding  may be heard and  determined  in such
New York State or, to the extent  permitted by law, in such Federal court.  Each
of the  parties  hereto  agrees  that a final  judgment  in any such  action  or
proceeding  shall be conclusive  and may be enforced in other  jurisdictions  by
suit on the  judgment or in any other  manner  provided by law.  Nothing in this
Agreement shall affect any right that the Administrative Agent or any Lender may
otherwise  have to bring any action or  proceeding  relating  to this  Agreement
against any Borrower or its properties in the courts of any jurisdiction.

     (c) Each Borrower hereby  irrevocably and  unconditionally  waives,  to the
fullest extent it may legally and  effectively do so, any objection which it may
now or hereafter  have to the laying of venue of any suit,  action or proceeding
arising  out of or  relating  to this  Agreement  in any  court  referred  to in
paragraph (b) of this  Section.  Each of the parties  hereto hereby  irrevocably
waives,  to the fullest extent  permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

     (d) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in  Section 10.01.  Nothing in this Agreement
will  affect the right of any party to this  Agreement  to serve  process in any
other manner permitted by law.

     SECTION 10.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES,  TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY  IN ANY  LEGAL  PROCEEDING  DIRECTLY  OR  INDIRECTLY  ARISING  OUT OF OR
RELATING TO THIS  AGREEMENT OR THE  TRANSACTIONS  CONTEMPLATED  HEREBY  (WHETHER
BASED ON CONTRACT,  TORT OR ANY OTHER THEORY).  EACH PARTY HERETO  (A) CERTIFIES
THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS  REPRESENTED,
EXPRESSLY  OR  OTHERWISE,  THAT SUCH  OTHER  PARTY  WOULD  NOT,  IN THE EVENT OF
LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVER AND  (B) ACKNOWLEDGES  THAT IT
AND THE OTHER PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     SECTION  10.11.  Headings.  Article and Section  headings  and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement  and  shall  not  affect  the   construction  of,  or  be  taken  into
consideration in interpreting, this Agreement.

     SECTION 10.12.  Confidentiality.  Each of the Administrative  Agent and the
Lenders agrees to maintain the  confidentiality  of the  Information (as defined
below),  except that Information may be disclosed (a) to its and its Affiliates'
directors,  officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be  informed of the  confidential  nature of such  Information  and
instructed to keep such Information  confidential),  (b) to the extent requested
by any bank regulatory authority,  (c) to the extent required by applicable laws
or  regulations  or by any  subpoena or similar  legal  process  (but only after
giving prompt written notice to the Company,  to the extent permitted by law, of
any such  requirement or request so that the Company may seek a protective order
or other appropriate  remedy and/or waive compliance with this Section),  (d) to
any other party to this  Agreement,  (e) in connection  with the exercise of any
remedies hereunder or any suit, action or proceeding relating the enforcement of
rights   hereunder,   (f)  subject  to  an   agreement   containing   provisions
substantially  the  same  as  those  of  this  Section,  to any  assignee  of or
Participant  in, or any  prospective  assignee of or Participant  in, any of its
rights or obligations under this Agreement,  (g) with the consent of the Company
or (h) to the extent such Information  (i) becomes publicly available other than
as a  result  of a breach  of this  Section  or  (ii) becomes  available  to the
Administrative  Agent or any  Lender on a  nonconfidential  basis  from a source
other than the Company.  For the purposes of this Section,  "Information"  means
all  information  received  from the  Company  relating  to the  Company  or its
business,   other  than  any  such   information   that  is   available  to  the
Administrative  Agent  or  any  Lender  on  a  nonconfidential  basis  prior  to
disclosure by the Company;  provided that, in the case of  information  received
from the Company after the date hereof,  such information is clearly  identified
at the time of delivery as  confidential.  Any Person  required to maintain  the
confidentiality  of  Information as provided in this Section shall be considered
to have complied  with its  obligation to do so if such Person has exercised the
same degree of care to maintain the  confidentiality of such Information as such
Person  would  accord  to  its  own  confidential  information.  Notwithstanding
anything herein to the contrary, any Lender (and any employee, representative or
other  agent  of such  Lender)  may  disclose  to any and all  persons,  without
limitation of any kind, such Lender's U.S.  federal income tax treatment and the
U.S.  federal  income tax  structure  of the  transactions  contemplated  hereby
relating to such Lender and all  materials  of any kind  (including  opinions or
other tax  analyses)  that are provided to it relating to such tax treatment and
tax structure.  However,  no disclosure of any information  relating to such tax
treatment or tax structure may be made to the extent nondisclosure is reasonably
necessary in order to comply with applicable securities laws.

     SECTION 10.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary,  if at any time the interest rate applicable to any Loan, together
with all fees,  charges and other  amounts which are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum  Rate") which may be contracted for,  charged,  taken,
received  or  reserved  by the  Lender  holding  such  Loan in  accordance  with
applicable law, the rate of interest  payable in respect of such Loan hereunder,
together with all Charges  payable in respect  thereof,  shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been  payable in  respect  of such Loan but were not  payable as a result of the
operation  of this  Section  shall be  cumulated  and the  interest  and Charges
payable to such Lender in respect of other Loans or periods  shall be  increased
(but not above the Maximum Rate therefor) until such cumulated amount,  together
with  interest  thereon  at the  Federal  Funds  Effective  Rate to the  date of
repayment, shall have been received by such Lender.

     SECTION  10.14.  Conversion  of  Currencies.  (a) If,  for the  purpose  of
obtaining  judgment  in any  court,  it is  necessary  to  convert  a sum  owing
hereunder in one currency into another  currency,  each party hereto  (including
any Borrowing  Subsidiary) agrees, to the fullest extent that it may effectively
do so, that the rate of exchange used shall be that at which in accordance  with
normal banking procedures in the relevant  jurisdiction the first currency could
be purchased with such other currency on the Business Day immediately  preceding
the day on which final judgment is given.

     (b) The obligations of each Borrower in respect of any sum due to any party
hereto  or any  holder  of the  obligations  owing  hereunder  (the  "Applicable
Creditor")  shall,  notwithstanding  any judgment in a currency  (the  "Judgment
Currency")  other  than the  currency  in which  such  sum is  stated  to be due
hereunder (the "Agreement Currency"),  be discharged only to the extent that, on
the  Business  Day  following  receipt  by the  Applicable  Creditor  of any sum
adjudged to be so due in the Judgment Currency,  the Applicable  Creditor may in
accordance with normal banking procedures in the relevant  jurisdiction purchase
the  Agreement  Currency  with  the  Judgment  Currency;  if the  amount  of the
Agreement  Currency  so  purchased  is less than the sum  originally  due to the
Applicable  Creditor in the  Agreement  Currency,  such  Borrower  agrees,  as a
separate  obligation and  notwithstanding  any such  judgment,  to indemnify the
Applicable  Creditor  against  such  loss.  The  obligations  of  the  Borrowers
contained in this Section 10.14  shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.

     SECTION 10.15.  USA Patriot Act. Each Lender hereby  notifies the Borrowers
that  pursuant to the  requirements  of the USA  Patriot  Act, it is required to
obtain,  verify and record  information  that  identifies the  Borrowers,  which
information includes the name and address of the Borrowers and other information
that will allow such Lender to identify the Borrowers in accordance with the USA
Patriot Act.


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

[See  signatures to original  Credit  Agreement and to Amendment and Restatement
Agreement dated as of April 10, 2006]




                                                                     Exhibit 13



                              FINANCIAL HIGHLIGHTS
          (Expressed in millions, except per share amounts and ratios)
- --------------------------------------------------------------------------------
Year Ended April 30,                              2005        2006     % Change
- --------------------------------------------------------------------------------
CONTINUING OPERATIONS
Net Sales                                        $2,227      $2,444       10%
Gross Profit                                     $1,170      $1,321       13%
Operating Income                                 $  446      $  563       26%
Income from Continuing Operations                $  340      $  395       16%
Earnings Per Share from Continuing Operations
 - Basic                                         $ 2.79      $ 3.24       16%
 - Diluted                                       $ 2.77      $ 3.20       15%
Return on Average Invested Capital                 22.8%       21.7%
Gross Margin                                       52.5%       54.0%
Operating Margin                                   20.0%       23.0%



                         QUARTERLY FINANCIAL INFORMATION
               (Expressed in millions, except per share amounts)

- ----------------------------------------------------------------------------------------------------------------------------------
                                                    Fiscal 2005                                       Fiscal 2006
                                  ----------------------------------------------    ----------------------------------------------
                                   First    Second     Third    Fourth               First    Second     Third    Fourth
                                  Quarter   Quarter   Quarter   Quarter    Year     Quarter   Quarter   Quarter   Quarter    Year
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                              
Net Sales                           $481      $627      $607      $511    $2,227      $547      $666      $637      $594    $2,444
Gross Profit                         253       330       305       281     1,170       303       357       334       326     1,321
Net Income
   Continuing Operations              60        93       124        62       340        88       112       120        76       395
   Total Company                      51       101        95        61       308        13       109       120        78       320
Basic EPS
   Continuing Operations           $0.49     $0.76     $1.02     $0.51     $2.79     $0.72     $0.92     $0.99     $0.62     $3.24
   Total Company                    0.42      0.83      0.78      0.50      2.53      0.10      0.89      0.99      0.64      2.62
Diluted EPS
   Continuing Operations           $0.49     $0.76     $1.02     $0.50     $2.77     $0.71     $0.91     $0.98     $0.61     $3.20
   Total Company                    0.42      0.83      0.78      0.49      2.52      0.10      0.88      0.98      0.63      2.60
Cash Dividends Per Common Share
   Declared                        $0.43     $0.00     $0.49     $0.00     $0.92     $0.49     $0.00     $0.56     $0.00     $1.05
   Paid                             0.21      0.21      0.25      0.25      0.92      0.25      0.25      0.28      0.28      1.05

Market Price Per Common Share
   Class A High                   $49.75    $50.11    $51.88    $56.65    $56.65    $64.15    $65.65    $74.25    $84.45    $84.45
   Class A Low                     46.34     44.20     46.20     50.68     44.20     56.44     58.02     64.64     69.80     56.44

   Class B High                   $49.60    $50.00    $50.09    $55.96    $55.96    $61.59    $63.69    $72.40    $82.55    $82.55
   Class B Low                     45.53     42.80     44.90     48.13     42.80     54.90     55.50     62.41     67.66     54.90

Note: Quarterly amounts may not add to amounts for the year due to rounding.



                             SELECTED FINANCIAL DATA
          (Expressed in millions, except per share amounts and ratios)
                              Year Ended April 30,
                                                                                               
                                            1997     1998     1999     2000     2001     2002     2003     2004     2005     2006
                                           ------   ------   ------   ------   ------   ------   ------   ------   ------   ------
CONTINUING OPERATIONS
Net Sales                                  $1,367    1,409    1,489    1,588    1,611    1,647    1,822    2,020    2,227    2,444
Gross Profit                               $  659      709      760      832      864      859      911    1,035    1,170    1,321
Operating Income                           $  256      268      281      298      317      320      338      381      446      563
Income from Continuing Operations          $  150      161      176      188      199      208      221      242      340      395
Weighted Average Shares used to
 calculate Earnings Per Share
  - Basic                                   138.0    137.9    137.2    137.0    137.0    136.7    134.7    121.4    121.7    122.1
  - Diluted                                 138.0    138.0    137.4    137.2    137.1    137.0    135.1    122.0    122.5    123.4
Earnings Per Share from
 Continuing Operations
  - Basic                                  $ 1.09     1.16     1.28     1.37     1.45     1.52     1.64     1.99     2.79     3.24
  - Diluted                                $ 1.09     1.16     1.28     1.37     1.45     1.52     1.63     1.98     2.77     3.20

Gross Margin                                 48.2%    50.3%    51.0%    52.4%    53.6%    52.1%    50.0%    51.3%    52.5%    54.0%
Operating Margin                             18.8%    19.0%    18.8%    18.8%    19.7%    19.4%    18.6%    18.9%    20.0%    23.0%
Effective Tax Rate                           37.9%    37.4%    36.1%    36.0%    35.8%    34.0%    33.6%    33.1%    32.6%    29.3%
Average Invested Capital                   $  573      602      700      912    1,038    1,148    1,288    1,410    1,554    1,883
Return on Average Invested Capital           28.1%    28.1%    26.1%    21.6%    20.1%    18.6%    17.5%    18.1%    22.8%    21.7%


TOTAL COMPANY
Cash Dividends Declared Per Common Share   $ 0.53     0.55     0.58     0.61     0.64     0.68     0.73     0.80     0.92     1.05
Average Stockholders' Equity               $  671      757      855      976    1,111    1,241    1,290      936    1,198    1,397
Total Assets at April 30                   $1,428    1,494    1,735    1,802    1,939    2,016    2,264    2,376    2,649    2,728
Long-Term Debt at April 30                 $   57       43       46       33       33       33      629      630      351      351
Total Debt at April 30                     $  219      157      290      259      237      200      829      679      630      576
Cash Flow from Operations                  $  176      220      213      241      232      249      243      304      396      344
Return on Average Stockholders' Equity       25.2%    24.2%    23.4%    22.1%    20.7%    18.1%    18.7%    27.1%    25.7%    22.9%
Total Debt to Total Capital                  23.0%    16.1%    24.0%    19.8%    16.6%    13.2%    49.4%    38.3%    32.5%    26.9%
Dividend Payout Ratio                        43.5%    41.5%    39.5%    38.5%    38.1%    41.4%    41.1%    38.2%    36.1%    40.0%




Notes:
1.  Includes the consolidated results of Sonoma-Cutrer Vineyards, Finlandia
    Vodka Worldwide, Tuoni e Canepa, and Swift & Moore since their acquisitions
    in April 1999, December 2002, February 2003, and February 2006,
    respectively.
2.  Weighted average shares, earnings per share, and cash dividends declared
    per common share have been adjusted for a 2-for-1 common stock split in
    January 2004.
3.  We define Return on Average Invested Capital as the sum of net income
    (excluding extraordinary items) and after-tax interest expense, divided by
    average invested capital.  Invested capital equals assets less liabilities,
    excluding interest-bearing debt.
4.  We define Return on Average Stockholders' Equity as income applicable
    to common stock divided by average stockholders' equity.
5.  We define Total Debt to Total Capital as total debt divided by the sum of
    total debt and stockholders' equity.
6.  We define Dividend Payout Ratio as cash dividends divided by net income.

                                       37


                      MANAGEMENT'S DISCUSSION AND ANALYSIS

In  the  discussion  below,  we  review  Brown-Forman's  consolidated  financial
condition and results of  operations  for the fiscal years ended April 30, 2004,
2005, and 2006. We also make statements  relating to our  anticipated  financial
performance  and other  forward-looking  statements and discuss factors that may
affect  our future  financial  condition  and  performance.  We have  prepared a
non-exclusive  list of risk factors  that could cause  actual  results to differ
materially  from  our  anticipated   results.   Please  read  this  Management's
Discussion and Analysis section in conjunction  with our consolidated  financial
statements  for the year ended April 30,  2006,  their  related  notes,  and the
important information regarding forward-looking statements on page 70.

We sold Lenox Inc. on September 1, 2005 -- four months into our fiscal year.  As
a result,  its results of operations  through August 2005, the related  non-cash
impairment  charge,  and other  transaction  costs associated with the sale have
been  classified  as  discontinued  operations,  net  of  income  taxes,  in the
accompanying   consolidated  statements  of  operations,   and  its  assets  and
liabilities   have  been  classified  as  held  for  sale  in  the  accompanying
consolidated  balance  sheets.  Before  this  fiscal  year,  our  annual  report
presented Lenox's operating results and assets in the Consumer Durables segment,
of which it  composed  the major  part.  As a result of the sale,  the  Consumer
Durables segment no longer constitutes a separate reportable segment.

EXECUTIVE OVERVIEW

Brown-Forman  Corporation is a diversified producer and marketer of fine quality
consumer  products  including  Jack Daniel's and its family of brands,  Southern
Comfort, Finlandia, Canadian Mist, Fetzer and Bolla wines, Sonoma-Cutrer, Korbel
Champagne,  and Hartmann luggage. We globally market and sell various categories
of  beverage  alcohol  products,  such  as  Tennessee,  Canadian,  and  Kentucky
whiskies;  Kentucky bourbon;  California  sparkling wine;  tequila;  table wine;
liqueurs; vodka; rum; and ready-to-drink products.

Our Operations

Our largest and most  important  market is the U.S.,  where 59% of our net sales
from  continuing  operations  were generated in fiscal 2006,  compared to 65% in
fiscal 2004.  Our U.S.  sales grew 7% in fiscal 2006,  while our non-U.S.  sales
broke the $1 billion  barrier for the first  time,  growing an  impressive  15%.
Europe, our  second-largest  region in terms of net sales, grew a healthy 11% in
fiscal 2006 and  represented  29% of total net sales for continuing  operations.
Growth from the rest of the world was  excellent,  improving 23% in fiscal 2006,
and now constitutes 12% of our total net sales from  continuing  operations,  up
from 10% in fiscal 2004.

                             Net Sales by Geography
                                 (in millions)

                              2004          2005          2006
                              ----          ----          ----
United States               $1,303        $1,346        $1,434
Europe                         514           637           710
Other                          203           244           300
                            ------        ------        ------
Total                       $2,020        $2,227        $2,444
                            ======        ======        ======

                                       38


Consumer demand for both premium and super-premium  brands in the U.S. continued
to expand  this past year,  and most of our brands  benefited  from this  trend.
Positive  demographic  trends,  a growing  consumer  interest  in  spirits-based
cocktails,  and the  consumers'  continuing  desire to trade up to more  premium
offerings  helped to create the  encouraging  environment for premium spirits in
the U.S. We anticipate that this positive environment will continue in the U.S.,
yet we recognize  that  consumer  preferences  can change very quickly and could
affect our  performance  if we are not  prepared to respond  quickly to changing
industry and competitive dynamics.

International  expansion has provided a  significant  portion of our growth over
the past decade.  The most robust  international  markets for our brands are the
United Kingdom, Poland, Germany, South Africa,  Australia,  Spain, Italy, China,
Japan,  and France.  As we continue to expand outside of the U.S., our financial
results are  increasingly  affected by changes in foreign  exchange  rates -- in
terms of both revenue from goods sold in local  currencies and the cost of goods
and services  purchased  in local  currencies.  On a net basis,  we sell more in
local  currency  than we buy, thus  exposing  financial  results to the negative
impact  of a  strengthening  U.S.  dollar.  To help  protect  against  this,  we
regularly hedge our foreign currency exposure. But over the long-term,  reported
profits from our  international  business may be adversely  affected if the U.S.
dollar strengthens against other currencies.

Our Brands

Our premium  global  brands,  which  include Jack  Daniel's,  Southern  Comfort,
Finlandia,  and their brand families  represented 70% of our net sales in fiscal
2006, with revenues growing at double-digit rates.

Beverages Fiscal 2006 Net Sales by Category:
   Premium Global             70%
   Mid-Priced Regional        25%
   Super-Premium Developing    5%

Jack Daniel's  Tennessee  Whiskey  remains the most  important  brand within our
portfolio and is one of the largest and most  profitable  spirits  brands in the
world.  Global volume for Jack Daniel's grew an impressive  8%, growing in 90 of
the 120 countries  where it was sold during fiscal 2006. We estimate that fiscal
2006 was the first year in which there were over 1 billion  individual  consumer
transactions  with the brand  (defined  as the  purchase of a bottle in a retail
store or the  ordering  of a drink in a  restaurant  or bar).  In the U.S.,  the
brand's  largest  market and where  approximately  54% of Jack Daniel's is sold,
nearly  300,000  nine-liter  cases were  added to its  already-large  base.  The
brand's  volumes  approached  4 million  cases  outside the U.S. in fiscal 2006,
growing at a double-digit  rate. The healthy  environment  for premium  spirits,
increased levels of advertising and promotional support, and the brand's overall
marketplace  strength  have  combined  to provide  strong  growth in volumes and
double-digit  gains in gross  profit.  A  significant  percentage  of our  total
earnings are derived from Jack  Daniel's and the brand's  growth is vital to our
overall  marketplace  strength.  Accordingly,  it will remain our major  overall
focus.  While a  significant  decline in volume or  selling  price for the brand
could materially depress our overall earnings,  we are encouraged by the broader
geographic  dispersion  of the brand's  profits and the natural  diversification
that comes with this.

Southern  Comfort,  our second most important brand,  delivered solid volume and
profit growth in fiscal 2006. The brand grew 6% in its largest market, the U.S.,
and also exhibited solid 4% growth in international  markets, led by Germany and
South Africa.  Finlandia's  volume grew 15% to over 2.1 million cases,  becoming
the fifth brand in our  portfolio to eclipse at least 2 million  cases in annual
depletions  (as defined on the next page).  In  contrast  to Jack  Daniel's  and
Southern Comfort, over 80% of this brand's volumes are sold outside of the U.S.,
including  nearly 500,000 cases in its largest  market,  Poland.  We expect both
Southern  Comfort and  Finlandia to  contribute  significantly  to our long-term
growth.

Our mid-priced  regional  brands had mixed results during fiscal 2006.  Together
they represent 25% of our total net sales and they remain important contributors
to our  earnings  and cash  flow.  Solid  volume  growth  for  Fetzer and Korbel
Champagne  were offset by declines for Canadian  Mist,  Bolla,  and Early Times.
These large,  off-premise-driven  category  leaders  compete in extremely  price
competitive categories.  We have tested different combinations of price support,
advertising, and promotional spending behind these brands, and we are encouraged
that in nearly all cases,  their gross profit  improved.  However,  we have more
moderate growth expectations from most of these brands going forward.

Our  super-premium  developing  brands,  representing  5% of net sales in fiscal
2006, make up a portfolio that we believe has significant  growth  opportunities
around the world.  Overall  volume for these  brands was up nearly 20% in fiscal
2006,  led by  excellent  double-digit  growth for Sonoma-  Cutrer and  Bonterra
wines,  Tuaca liqueur,  and Woodford  Reserve  bourbon.  With the acquisition of
Chambord  Liqueur on May 31, 2006, our  superpremium  developing brand portfolio
expanded further and gave us yet another potentially  meaningful  contributor to
our earnings in the years ahead.

Our Distribution Network

We continued to strengthen  the global  distribution  system for our brands this
past year. We employ a variety of distribution  models around the world, and our
preference  for a  particular  arrangement  or  partnership  depends  on several
factors,  including our assessment of a market's longterm  competitive  dynamics
and our  portfolio's  stage of  development  in the market.  In several  markets
around the world, we own and operate our own distribution network, while in many
others,  including the U.S., we use third parties to distribute our portfolio of
brands.  In addition  to  implementing  many new  distribution  arrangements  in
Continental Europe, we modified our distribution  arrangements in Eastern Europe
and  Japan to  enhance  our  performance  and add to our  capabilities  in those
markets. We also assumed 100% ownership of our Australian  distributor,  Swift &
Moore, in the latter part of fiscal 2006, a change we believe will contribute to
the growth of our business in that important spirits and ready-to-drink  market.
This fiscal year, we will be reviewing  distribution  agreements in at least two
key markets,  the United  Kingdom and Japan,  as contracts in these  markets are
scheduled to expire in April 2007 and June 2007, respectively. Additionally, the
U.S.  distribution  environment is going through many changes currently,  and we
are  evaluating  a variety of options  that  might lead to new  arrangements  or
partnerships.

                                       39


Our Earnings Outlook

We are optimistic  about our earnings  outlook for fiscal 2007 due in large part
to  the  current  momentum  of  our  brands,  the  continued   favorable  global
environment for premium spirits,  and the many  opportunities we believe we have
to continue building our fine portfolio of brands around the world.

Fiscal 2006 earnings from  continuing  operations  were $3.20 per diluted share.
Adjusted for unusual items (an $0.11 benefit  associated  with  terminating  our
distribution  rights to the  Glenmorangie  family of brands, a net $0.15 benefit
related to acquiring full ownership of our Australian  distributor,  and a $0.04
gain from selling winery  property),  our diluted  earnings per share were $2.90
per share. We currently  expect fiscal 2007 earnings from continuing  operations
to be $3.10 to $3.30 per diluted  share,  which  represents  growth of 7% to 14%
compared to fiscal 2006 adjusted  earnings from continuing  operations.  The low
end of the range  approximates  our projection of the average  operating  income
growth of our competitors while the high end of the range  approximates our most
recent full year  organic  growth.  The expected  full-year  growth rate is more
moderate compared to fiscal 2006, due in part to an anticipated  increase in our
effective  income tax rate,  small dilution  attributable  to the acquisition of
Chambord,  a greater  number of  outstanding  shares,  and higher  cost of goods
partially  driven by our expectations of higher grape costs from a more moderate
harvest.

RESULTS OF OPERATIONS

Our total company  diluted  earnings per share were $2.60 in fiscal 2006,  which
consisted of $3.20 per diluted share from continuing  operations and a loss from
discontinued  operations.  The following  discussion of the company's results of
continuing  operations  excludes the results related to Lenox,  Inc., which were
previously  included in the Consumer Durables segment,  and have been segregated
from  continuing  operations  and reflected as  discontinued  operations for all
periods presented. See "Discontinued Operations" below.

CONTINUING OPERATIONS

Continuing operations consists primarily of our beverage business.  Our beverage
business  includes  strong brands  representing a wide range of varietal  wines,
champagnes,  and spirits  such as whiskey,  bourbon,  vodka,  tequila,  rum, and
liqueur.  The  largest  market  for our  brands  is the  U.S.,  which  generally
prohibits wine and spirits manufacturers from selling their products directly to
consumers.  Instead,  we sell our products to wholesale  distributors,  who then
sell the products to retailers,  who in turn sell to consumers. We use a similar
tiered  distribution  model in many markets  outside the U.S., but we distribute
our own  products in several  markets,  including  Poland,  the Czech  Republic,
Australia, Korea, Thailand, and China.

Distributors  and  retailers  normally  keep  some  of our  products  on hand as
inventory,  making  it  possible  for  retailers  to sell  more (or less) of our
products  to  consumers  than  distributors  buy from us during  any given  time
period.  Because we  generally  record  revenues  when we ship our  products  to
distributors, our sales do not necessarily reflect actual consumer demand during
any particular  period.  Ultimately,  of course,  consumer demand is critical in
determining our financial results.  Depletions,  which are defined as nine-liter
case  shipments  from  distributors  to  retailers,  are  generally  used in the
beverage alcohol industry as the most  representative  approximation of consumer
demand.

                                       40


Fiscal 2006 Compared to Fiscal 2005

Net sales exceeded $2.4 billion in fiscal 2006, increasing $217 million, or 10%.
The major factors driving this growth were:

                                             Growth
                                            vs. 2005
Trade inventory changes                         2%
Excise tax distribution changes                 2%
Foreign exchange                               (2%)
Australian distribution transition             (1%)
Underlying revenue growth:                      9%
   Volume                    6%
   Price/Mix                 3%
                                              -----
Reported net sales growth                      10%
                                              =====

We believe that  disclosing the 9% underlying  revenue growth for fiscal 2006 is
important  because it more  accurately  reflects the continuing  operations base
performance.

We work  with our  distributor  partners  around  the  world to  enable  them to
maintain proper,  but not excessive,  inventories of our brands and to help them
realize supply chain  efficiencies so that excess  wholesale  inventory does not
create  business cost that must be covered by  incremental  margin.  Ultimately,
however,  given the number of  distributors  and  importers  to whom we sell our
brands,  we do not have control over their buying patterns or the inventory held
at either wholesale or retail levels.  Therefore,  we believe it is important to
provide  visibility  to both the positive and negative  effect that  fluctuating
trade  inventory  levels have on our  reported  results.  We compute this effect
using our historical and estimated  depletion  trends and, as shown in the table
above,  separately identify trade inventory changes in the variance analysis for
our key metrics.

Fiscal 2006 was another exceptional year for Jack Daniel's Tennessee Whiskey, as
volume  increased  for the  fourteenth  consecutive  year,  to over 8.5  million
nine-liter cases. Robust consumer demand continued for this iconic and authentic
American whiskey,  and the brand added 665,000  nine-liter cases globally to its
already  large base,  growing over 8% compared to the prior year.  The brand was
particularly  strong in the U.S.,  with nearly  300,000  nine-liter  cases being
added in the brand's  largest  market.  Internationally,  Jack  Daniel's  posted
volume  gains in all regions of the world,  with  particular  strength in China,
South Africa, France, Germany, Romania, and Canada.

Performance for Southern Comfort was also strong,  as global volumes expanded 5%
for the  second  consecutive  year.  Notable  gains for  Southern  Comfort  were
registered in the U.S.,  South Africa,  and Germany.  Worldwide  depletions  for
Finlandia  accelerated,  growing  15% in fiscal  2006,  led by volume  growth in
Poland,  the brand's  largest  market,  and  double-digit  increases  in Israel,
Russia,  and China. The brand grew modestly in the very competitive U.S. market.
All three of these premium global brands, Jack Daniel's,  Southern Comfort,  and
Finlandia, achieved record sales and profit levels in fiscal 2006.

Overall  volume  performance  was  mixed  for our  mid-priced  regional  brands.
Depletions  grew in the  mid-single  digits for  Korbel and in the  upper-single
digits for Fetzer, the latter brand reversing three years of declines.  Canadian
Mist,  Bolla,  and Early Times all posted volume declines for the year.  Overall
volumes for our  super-premium  developing  brands  were up nearly  20%,  led by
double-digit growth for Sonoma- Cutrer,  Bonterra,  Tuaca, and Woodford Reserve.
Ready-to-drink volumes continued their strong performance,  expanding 9% for the
year, fueled primarily by excellent double-digit gains in Australia.

The following table highlights  worldwide depletion results for our major brands
during fiscal 2006:

                        Nine-Liter       % Change
                       Cases (000s)      vs. 2005
                       ------------     -----------

 Jack Daniel's            8,550              8%
 Total RTDs(1)            3,095              9%
 Fetzer                   2,410              9%
 Southern Comfort         2,400              5%
 Finlandia                2,120             15%
 Canadian Mist            2,035             (4%)
 Bolla                    1,220             (5%)
 Korbel Champagnes        1,215              4%

 (1) RTD (ready-to-drink) volumes include Jack Daniel's, Southern Comfort, and
     Finlandia RTD products.


Gross profit is a key  performance  measure for us. The same  factors  described
above that boosted revenue growth also fueled the 13% (or $151 million) increase
in gross profit,  which surpassed $1.3 billion.  The table below  summarizes the
major factors driving the gross profit growth for the year.

                                             Growth
                                            vs. 2005
Trade inventory changes                         2%
Foreign exchange                               (1%)
Australian distribution transition             (1%)
Underlying gross profit growth:                13%
   Volume                    7%
   Margin/Mix                6%
                                              -----
Reported gross profit growth                   13%
                                              =====

Underlying  gross profit growth,  which was equal to the 13% reported  growth in
gross profit,  was fueled by margin  improvement  and solid consumer  demand for
Jack  Daniel's  (and its family of brands),  Southern  Comfort,  and  Finlandia.
Higher  volumes  and  lower  costs  for  Fetzer,   and  volume  growth  for  our
super-premium developing brands, including Sonoma-Cutrer,  Woodford Reserve, and
Tuaca, also contributed to the underlying growth in gross profit for the year.

Gross margin improved for the third  consecutive year, from 52.5% in fiscal 2005
to 54.0% in fiscal 2006. The major factors driving this  improvement  were price
increases on several brands in various markets, a favorable shift of business to
more profitable regions and brands, and significantly lower costs for wines.

                                       41


      Fiscal          Gross
       Year          Margin
      ------         ------
       1998           50.3%
       1999           51.0%
       2000           52.4%
       2001           53.6%
       2002           52.1%
       2003           50.0%
       2004           51.3%
       2005           52.5%
       2006           54.0%


Advertising  expenses  were up 10% as we  continued  our long  track  record  of
reinvesting  sufficient dollars to build our brands.  Although healthy increases
behind  our  premium  global  brands,  Jack  Daniel's,   Southern  Comfort,  and
Finlandia,  accounted  for most of the increase in  advertising  investments  in
fiscal 2006, we also increased  investments behind our super-premium  developing
brands,  including  Woodford  Reserve  and  Tuaca.  Partially  offsetting  these
increases  in  spending  was the benefit of a stronger  U.S.  dollar on spending
outside  the  U.S.  We  also  stopped  advertising  two  low-carb  wines,  One.6
Chardonnay and One.9 Merlot, in fiscal 2006 and ceased advertising  Glenmorangie
products after our  distribution and marketing  rights  terminated  earlier this
year. On a constant  exchange basis, our advertising costs were up 12% following
an 8% increase in fiscal 2005 (on a constant  exchange basis, or 11% increase on
a reported basis).

Selling,  general,  and administrative  expenses were up 12%,  influenced by the
following factors:
                                              Growth
                                             vs. 2005
Distribution strategy changes                    4%
Higher postretirement costs                      2%
All other                                        6%
                                               -----
Total                                           12%
                                               =====

The "All other"  category  above  includes items such as inflation on salary and
related expenses and third-party advisory fees associated with the evaluation of
a possible  purchase of Allied Domecq.  The overall increase in spending relates
in part to changes in our distribution networks around the world that we believe
will improve our direct  influence over in-market  brand-building  activities in
key markets in  Continental  Europe,  Australia,  and Japan.  Although these new
arrangements  provide incremental gross profit through new margin terms, in many
cases not enough to offset immediately the initial  incremental SG&A investment.
However, these incremental  investments are consistent with our belief, based on
experience in other markets, that exerting more direct influence over our brands
will yield long-term returns well in excess of the cost.

Other income  improved $45 million in fiscal 2006, due primarily to three items.
First,  we received  approximately  $14 million  from LVMH Moet  Hennessy  Louis
Vuitton for the early  termination of our  distribution and marketing rights for
the Glenmorangie  family of brands.  Second, we recorded a gain of approximately
$25 million relating to changes in our Australian distribution operation,  Swift
& Moore  (formerly a joint  venture  between  Allied  Domecq and  Brown-Forman).
Following  Pernod  Ricard's  acquisition  of  Allied,  Pernod  consolidated  the
distribution of their newly acquired brands into their  Australian  distribution
infrastructure,  which  resulted in a payment to us of a  contractual  exit fee.
Third,  we recorded a $5 million gain on the sale of unused Jekel winery  assets
in Monterey,  California.  Although the Jekel brand remains an important part of
our portfolio,  we had previously  moved production of these fine wines to other
California facilities.

Operating income for continuing operations for fiscal 2006 improved 26%, or $117
million.   Positive   factors  driving   operating  income  growth  were  strong
performances from our premium global brands,  the payment received for the early
termination of marketing and distribution  rights for the Glenmorangie family of
brands,  the net gain  related  to the  restructuring  of the  ownership  of our
Australian  distributor,  the gain on the sale of winery  property,  and profits
associated  with higher global trade  inventories.  These positive  factors were
partially offset by the negative effect of a stronger U.S. dollar. The following
chart  summarizes the major factors  driving our 26% growth in operating  income
and identifies our  underlying  operating  income growth for fiscal 2006 of 16%,
which we believe more accurately reflects the base performance of the business.

                                             Growth
                                            vs. 2005
Glenmorangie consideration                      3%
Australian distribution transition              4%
Gain on sale of winery assets                   1%
Trade inventory changes                         5%
Foreign exchange                               (3%)
Underlying operating income growth             16%
                                              -----
Reported operating income growth               26%
                                              =====

Interest expense (net) declined $10 million  compared to fiscal 2005,  primarily
reflecting  favorable  interest  rates and  significantly  higher  average  cash
balances due in part to the September 1, 2005 sale of Lenox,  Inc. Lower average
debt  balances,  reflecting  the  repayment  of  approximately  $280  million of
short-term and medium notes, also reduced interest expense.

Effective tax rate reported for  continuing  operations in fiscal 2006 was 29.3%
compared to 32.6%  reported in fiscal  2005.  The decline in the rate  primarily
reflects the tax benefit  achieved by offsetting  various  capital gains against
the capital loss resulting from the sale of Lenox, Inc. Excluding these benefits
and the  effect  of a  small  asset  impairment  charge  taken  in  fiscal  2005
(associated with a minority  interest in a small Mexican tequila  company),  the
effective  tax rate in fiscal 2006 was 31.8%  compared to 32.4% in fiscal  2005.
The lower rate also  reflects an increase in the mix of business in  lower-taxed
jurisdictions, the changes in tax rates in various countries, and the net effect
of the phase-out of the  extraterritorial  income  exclusion and phase-in of the
new deduction for domestic  production activity as provided by the American Jobs
Creation Act of 2004.

                                       42


Diluted earnings per share for continuing  operations reached a record $3.20, up
15% over fiscal  2005.  Adjusting  results for unusual  items or  timing-related
items (including the same factors  discussed above related to operating  income)
plus the absence of a gain  recorded  in fiscal 2005  related to the sale of our
shares in Glenmorangie plc, diluted earnings per share also increased 15%.

                                                            Growth
                                                           vs. 2005
Reported diluted EPS growth from continuing operations        15%
Adjustments:
   Glenmorangie sale/consideration                            11%
   Trade inventory changes                                    (5%)
   Australian distributor transition                          (5%)
   Gain on sale of winery assets                              (1%)
   All other(1)                                                0%
                                                             -----
Adjusted diluted EPS growth from continuing operations        15%
                                                             =====
(1) Includes lower net interest expense, foreign exchange effects, and tax rate
    changes.

The 15%  adjusted  growth in diluted  earnings  for the year,  which  management
believes more accurately reflects the underlying  operations of the company, was
driven by continued volume growth and margin improvement from our premium brands
(fueled  in part by the  accompanying  significant  increase  in  brand-building
investments),  particularly our leading brand, Jack Daniel's  Tennessee Whiskey.
Solid  volume  and profit  growth  were also  registered  by  Southern  Comfort,
Finlandia,  Jack Daniel's ready-to- drink products, and Fetzer California Wines.
Our super-premium  developing brands such as Sonoma-Cutrer and Woodford Reserve,
recorded impressive  double-digit growth in volume and profits,  contributing to
the  underlying  growth in earnings  for the year.  These  gains were  partially
offset by a stronger U.S. dollar and higher selling, general, and administrative
expenses.

In summary, fiscal 2006 was the third consecutive year of double-digit growth in
reported earnings from continuing operations. All other key performance measures
also  registered   double-digit   gains.   Our  growth  rates  have  accelerated
significantly over the past three years compared to historical performance.

BASIC AND DILUTED EARNINGS PER SHARE. In Note 16 to our  consolidated  financial
statements,  we describe  our 2004  Omnibus  Compensation  Plan and how we issue
stock options under it. In Note 1, under "Stock-Based  Compensation" we describe
how the plan is designed to avoid diluting earnings per share.

                     Continuing Operations Long-Term Trends

                            Gross                             Operating
                            Profit    Advertising    SG&A      Income       EPS
Compound Annual Growth Rate:
35 years since 1971          8.7%         9.8%       8.5%        8.5%      12.0%
25 years since 1981          6.5%         6.7%       7.8%        5.9%      10.0%
15 years since 1991          7.3%         7.8%       7.4%        7.4%      10.2%
10 years since 1996          7.9%         8.3%       8.0%        8.6%      11.6%
 5 years since 2001          8.9%         8.4%       8.0%       12.1%      16.8%
 3 years since 2003         13.3%        11.9%      11.9%       18.5%      25.0%


Fiscal 2005 Compared to Fiscal 2004

Net sales  improved  10%,  or $207  million,  fueled by record  sales and profit
levels for Jack Daniel's,  Southern Comfort,  and Finlandia  (reflecting  higher
volumes,  positive foreign exchange trends, and selected price increases).  Jack
Daniel's  registered  growth  for the  thirteenth  consecutive  year,  as demand
accelerated  globally,  growing 9% or 680,000 cases,  to 7.9 million cases,  the
highest absolute annual volume increase in the brand's long history. Results for
Southern  Comfort  also  picked up pace as the brand  grew 5% for the year,  its
fastest growth rate in 15 years. Worldwide depletions for Finlandia expanded 7%,
driven by a new package  rollout and the  introduction  of a new flavor,  Mango.
Higher volumes from our  super-premium  developing  brands,  including  Woodford
Reserve,   Sonoma-Cutrer,   and  Tuaca,  and  our   ready-to-drink   performance
(particularly  in  Australia)  also  contributed  to the growth in sales for the
year.  Partially  offsetting  these  gains  were lower  volumes  for most of our
midpriced regional brands.

                                       43


Gross  profit grew 13%, or $135  million.  This  growth  resulted  from the same
factors that  generated  revenue  growth.  Gross margin  increased from 51.3% in
fiscal 2004 to 52.5% in fiscal 2005. The major factors driving this  improvement
were the weaker U.S. dollar,  price increases on selected brands, and a shift in
mix toward higher-margin brands.

Advertising  expenses  increased 11% as we increased  brand-building  activities
behind  Jack  Daniel's,   Southern  Comfort,   Finlandia,  and  several  of  our
super-premium developing brands, including Woodford Reserve, Tuaca, Amarula, Don
Eduardo,  and  Sonoma-Cutrer.  Advertising  investments  made in  support of the
introduction of low carbohydrate  wines,  One.6 Chardonnay and One.9 Merlot, and
the negative impact of the weaker U.S. dollar on spending  outside the U.S. also
contributed to the increase in advertising expense.

Selling,  general,  and  administrative  expenses  increased 12%,  influenced by
incremental compensation expense related to the strong performance for the year,
higher  pension  and  postretirement  expenses,  and  spending  associated  with
compliance with Sarbanes-Oxley  legislation and enhanced NYSE listing standards.
In  addition,  expenses  incurred  to  develop a global  distribution  strategy,
third-party  advisory fees related to the exploration of strategic  alternatives
for the Lenox business,  and the negative impact of the weaker U.S. dollar drove
the growth in spending. Excluding these factors, SG&A grew 4%.

Other  income  improved  $6  million  in fiscal  2005 due to the  absence of $10
million in legal  settlement  expenses  incurred  in fiscal  2004  relating to a
lawsuit with Diageo Great Britain  Limited,  which had involved the distribution
of Jack Daniel's in the United Kingdom.  Partially offsetting this item was a $3
million  asset  impairment  charge  recorded  in fiscal 2005  associated  with a
minority interest in a small Mexican tequila company.

Operating  income  reached a record  $446  million in fiscal  2005,  growing $65
million,  or 17%,  reflecting  healthy  underlying growth for our premium global
brands   (fueled  in  part  by  the   accompanying   double-digit   increase  in
brand-building  investments),  the  benefits  of a weaker U.S.  dollar,  and the
absence  of  litigation  settlement  expenses  incurred  in fiscal  2004.  These
positive  factors were  tempered by lower profits from our  mid-priced  regional
wine  and  spirits  brands  and  higher  selling,  general,  and  administrative
expenses.

Diluted  earnings per share increased 40% to $2.77 per share in fiscal 2005, the
largest  percentage  increase in earnings per share in 14 years.  This  increase
resulted  from healthy  underlying  growth for our premium  global  brands,  the
benefits  of a  weaker  U.S.  dollar,  a gain on the sale of our  investment  in
Glenmorangie  plc,  and the  absence of legal  settlement  expenses  incurred in
fiscal 2004.  Tempering earnings growth was a strategic decision to reduce trade
inventories for several of our brands. To reflect more accurately the underlying
operations  of the  company,  management  believes  the  following  analysis  of
reported  earnings per share growth is important,  indicating  the base business
grew 10% in fiscal 2005.
                                                            Growth
                                                           vs. 2004
Reported diluted EPS growth from continuing operations        40%
Adjustments:
   Glenmorangie gain                                         (19%)
   Foreign exchange benefits                                 (10%)
   Trade inventory adjustment                                  4%
   Absence of fiscal 2004 settlement expenses                 (3%)
   All other, net(1)                                          (2%)
                                                             -----
Adjusted diluted EPS growth from continuing operations        10%
                                                             =====
(1) Includes lower net interest expense, tax rate changes, and an impairment
    charge associated with a minority interest in a small Mexican tequila
    company.

                                       44


OTHER KEY PERFORMANCE MEASURES

Our  primary  goal is to  increase  the value of our  shareholders'  investment.
Long-term  growth in the market value of our stock is a good  indication  of our
success in delivering attractive returns to shareholders.

TOTAL SHAREHOLDER  RETURN. A $100 investment in our Class B stock five years ago
would have grown to nearly $270 by the end of fiscal 2006, assuming reinvestment
of all  dividends  and  ignoring  personal  taxes and  transaction  costs.  This
represents an annualized return of 22% over the five-year period,  compared to a
modest 3%  annualized  increase  for the S&P 500. A more  recent  investment  in
Brown-Forman  even  further  outperformed  the  market,  with our  Class B stock
yielding a return of 36% over the one-year period ended April 30, 2006, compared
to a 15% return for the S&P 500.

               Compound Annual Growth in Total Shareholder Return
          (as of April 30, 2006, and including dividend reinvestment)

                                   1 Year       5 Years       10 Years

Brown-Forman Class B shares          36%          22%            16%
S&P 500 index                        15%           3%             9%


RETURN ON AVERAGE  INVESTED  CAPITAL.  Following the sale of the Lenox  business
earlier  this  fiscal  year,  our  overall  return on average  invested  capital
increased significantly.  On a comparative basis, our return on average invested
capital  excluding  cash for  continuing  operations  improved over 2 percentage
points  in fiscal  2006 to 27.5%,  reflecting  double-digit  underlying  organic
growth in the  business,  the  benefit  of a gain  received  on the sale of wine
assets, the exit fee received from Pernod Ricard in our Australian  distribution
operations,  and  consideration  received from LVMH for the  termination  of our
distribution rights to market the Glenmorangie family of brands.  These factors,
coupled with prudent management of invested capital, contributed to the increase
in the return on invested capital. Our return on invested capital including cash
declined in fiscal 2006 to 21.7% as significantly higher levels of cash (largely
reflecting proceeds received from the sale of Lenox) provided returns in the low
single  digits.  Our return on  invested  capital  including  cash has  improved
significantly  since  fiscal  2004,  up 3.6  percentage  points,  outpacing  our
competitors'  returns.  We  believe  our  return on  invested  capital  (whether
including or excluding cash) will continue to improve over the long-term,  given
our  positive  outlook  for  earnings  growth  and  careful  management  of  our
investment base. However, we expect a decline in returns next fiscal year due to
our  acquisition  of Chambord  Liqueur on May 31, 2006,  which is expected to be
dilutive  initially but is projected to enhance our returns over the  long-term,
as we believe the brand has considerable growth potential.

                       Return on Average Invested Capital

                       2004           2005           2006
                       ----           ----           ----

Including cash         18.1%          22.8%          21.7%
Excluding cash         19.2%          25.2%          27.5%


BUSINESS ENVIRONMENT FOR WINE AND SPIRITS

GENERALLY.  The business climate for wine and spirits is good, especially in our
biggest market, the U.S.  Consumption of wine and spirits has grown,  reflecting
in part favorable  demographic  trends.  Wine and spirits have taken some market
share from beer,  especially in the U.S. Although unfavorable margin trends have
reduced the profitability of the wine business despite a rebound in fiscal 2006,
the  spirits  business  continues  to be very  healthy,  especially  for premium
brands.  International  expansion  represents an important  opportunity  for us,
especially given the success in international  markets for Jack Daniel's and, to
a lesser extent, of Southern Comfort and Finlandia Vodka.

GOVERNMENT POLICIES, PUBLIC ATTITUDES.  Against this background of good business
trends,  we remain  conscious  that our ability to market and sell our  beverage
alcohol  products  depends heavily on society's  attitudes  towards drinking and
government  policies that flow from those  attitudes.  This is true in the U.S.,
our  largest  market,  and  around  the  world.  In  particular,   a  number  of
organizations vocally criticize abusive drinking and blame alcohol manufacturers
for problems associated with alcohol misuse.  Specifically,  critics say alcohol
companies market their products to encourage underage drinking.

                                       45


We are extremely careful to market our beverage products only to adults. We were
one of the first companies to adopt a comprehensive marketing code governing the
sale of our wine and spirits brands,  which emphasizes the importance of content
(no appeal to the underaged) and placement (no ads in youth-oriented  media). We
adhere to marketing  codes of the Distilled  Spirits Council of the U.S. and the
Wine Institute. We also contribute significant resources to The Century Council,
an  organization  that we and other  spirits  producers  created to combat drunk
driving and underage drinking.

Illegal  alcohol  consumption  by underaged  drinkers and abusive  drinking by a
minority of adult  drinkers  give rise to public  issues of great  significance.
Alcohol  critics  seek  governmental  measures  to make  beverage  alcohol  more
expensive,  less  available,  and more  difficult to advertise  and promote.  We
disagree that this is a good  strategy to deal with the minority of  individuals
who abuse  alcohol.  In our view,  society is more likely to curb alcohol  abuse
through better  education  about beverage  alcohol and by setting a good example
through moderate drinking than by restricting  alcohol  advertising and sales or
imposing punitive taxation.

Legal or regulatory measures against beverage alcohol (including its advertising
and promotion) could hurt our sales.  Especially in the U.S.,  distilled spirits
are at a marked  disadvantage  to beer and wine in  taxation,  access to network
television  advertising,  and the  number and type of sales  outlets.  Achieving
greater  cultural  acceptance  of our  products and parity with beer and wine in
access to consumers are major goals that we share with other distillers.

POLICY OBJECTIVES.  Broadly speaking,  we seek two things:  normalization of our
beverage  alcohol  products,  so they are  regarded as no  different  than other
consumer  products;  and parity for spirits with beer and wine,  which generally
enjoy  more  favorable  governmental  rules for  distribution  and rates of tax.
Therefore,  in the U.S., we seek greater access to electronic media,  especially
network  television,  which  allows  beer and wine  advertising  but not spirits
advertising.  We seek Sunday sales in those states that still ban them,  for the
convenience of our customers.  We encourage rules that liberalize  international
trade,  so  that  we can  expand  our  international  business.  We  oppose  tax
increases, which make our products more expensive for our consumers, and seek to
diminish the tax advantage enjoyed by beer.

TAXES. Like all goods, beverage alcohol sales are sensitive to higher tax rates.
No  legislation to increase U.S.  federal  excise taxes on distilled  spirits is
currently  pending,  but future tax  increases are always  possible,  as are tax
increases  levied on the broader  business  community.  From time to time, state
legislatures  increase beverage alcohol taxes. The cumulative effect of such tax
increases  over time hurts  sales.  Because  combined  federal  and state  taxes
already  account for more than 50% of the price of a typical  bottle of bourbon,
we  work  for  reasonable  excise  tax  reductions.   Increased  tax  rates  and
advertising  restrictions  also affect beverage alcohol markets outside the U.S.
To date,  those changes have not been significant to our overall  business,  but
that could change.

THE LITIGATION  CLIMATE.  A law firm has filed nine state class action  lawsuits
against spirits,  beer, and wine manufacturers,  including us, alleging that our
marketing  causes  illegal  consumption  of  alcohol  by those  under  the legal
drinking  age.  We  dispute  these  allegations  and  will  defend  these  cases
vigorously.  To date,  the first five courts to  consider  those  lawsuits  have
dismissed them. But adverse developments in these or similar lawsuits could hurt
our beverage business, and the overall industry.

DISTRIBUTION  STRATEGY.  We use a number of different  business models to market
and  distribute  our products  overseas.  But we rely  largely on other  spirits
producers  to  distribute  and market our  products  outside  the U.S.  Although
consolidation  among spirits producers could hinder the distribution of our wine
and  spirits  products in the future,  to date this has rarely  happened.  Other
spirits  companies  typically  seek to distribute  our premium  spirits and wine
brands, and we expect that demand to continue.

EXCHANGE RATES. The strength of foreign  currencies  relative to the U.S. dollar
affects revenues and costs in our international  beverage  business.  This year,
our earnings  were hurt by a stronger  U.S.  dollar,  particularly  in the U.K.,
Australia,  and  Continental  Europe.  We have  hedged  some of our  exposure to
foreign exchange fluctuations in 2007 by entering into foreign currency forwards
and option contracts. If the U.S. dollar appreciates  significantly,  the effect
on our business would be negative for any unhedged portion.

                                       46


DISCONTINUED OPERATIONS

                        Summary of Operating Performance
                (Dollars in millions, except per share amounts)

                                                  2004        2005         2006
                                                  ----        ----         ----

Net sales                                         $557        $502         $134
Operating expenses                                (537)       (493)        (146)
Impairment charge                                   --         (37)         (60)
Transaction costs                                   --          --          (10)
                                                  ----        ----         ----
   Income (loss) before income taxes                20         (28)         (82)
Income tax (expense) benefit                        (8)         (4)           7
                                                  ----        ----         ----
   Net income (loss) from discontinued
    operations                                    $ 12        $(32)        $(75)
                                                  ====        ====         ====
Earnings (loss) per share:
   Basic                                          0.10       (0.26)       (0.61)
   Diluted                                        0.10       (0.26)       (0.61)

In July 2005,  we entered into a definitive  agreement to sell our  wholly-owned
subsidiary  Lenox,  Inc. for $190 million in cash.  The  agreement  followed the
February 2005  announcement  that we were exploring  strategic  alternatives for
Lenox,  including a possible sale. On September 1, 2005, we consummated the sale
of substantially all of Lenox to Department 56, Inc.  ("Department 56") for $196
million.  This total was $6 million  higher than  previously  announced due to a
working capital adjustment provision included in the sale agreement.

After the sale to Department 56, we retained ownership of the Lenox headquarters
building  and property in  Lawrenceville,  New Jersey,  and Brooks & Bentley,  a
former Lenox  subsidiary,  located in the United  Kingdom.  In February 2006, we
sold the  former  Lenox  headquarters  building  and  property  for $9  million,
resulting in a gain of $3 million. We still intend to sell or liquidate Brooks &
Bentley,  the assets and liabilities of which are classified as held for sale in
the accompanying consolidated balance sheets.

In connection with the sale, we recognized a non-cash  impairment  charge of $60
million,  representing  the excess of the carrying value of the net assets being
sold over the sales  proceeds.  This is in addition to the $37 million  non-cash
impairment charge taken in fiscal 2005. We have also recorded  transaction costs
of $10 million, including investment banking fees, transaction success payments,
and legal, tax, and actuarial expenses.

For fiscal  2006,  we reported a net loss from  discontinued  operations  of $75
million,  or $0.61 per diluted  share,  versus a net loss of $32 million for the
same prior-year period. The loss recorded during fiscal 2006 includes a non-cash
impairment charge and fees related to the sale of approximately $0.54 per share.

LIQUIDITY AND CAPITAL RESOURCES

Our ability to generate  cash from  operations  consistently  is one of our most
significant  financial  strengths.  Our  strong  cash  flows  enable  us to  pay
dividends,  pursue brand-building programs, and make strategic acquisitions that
we believe will enhance  shareholder value.  Investment grade ratings of A2 from
Moody's and A from Standard & Poor's provide us with financial  flexibility when
accessing  global  credit  markets.  Cash  flows from  operations  are more than
adequate to meet our  expected  operating  and capital  requirements.  In fiscal
2006, we generated sufficient cash to enable us to fund our capital investments,
repay  approximately  $280  million  in  bonds  and  medium-term  notes,  and to
distribute to our  shareholders  $128 million in dividends while also increasing
cash and cash equivalents.

Cash Flow Summary
(Dollars in millions)                      2004        2005        2006
                                          ------      ------      ------
Operating activities:
   Continuing operations                  $ 279       $ 354       $ 363
   Discontinued operations                   25          42         (19)
                                          ------      ------      ------
                                            304         396         344
Investing activities:
   Sale of discontinued operations           --          --         205
   Sale of investment in affiliate           --          93          --
   Net investment in short-term
    securities                               --          --        (160)
   Additions to property, plant,
    and equipment                           (39)        (45)        (52)
   Acquisition of minority interest          --         (64)         --
   Other                                    (24)         --           3
                                          ------      ------      ------
                                            (63)        (16)         (4)
Financing activities:
   Dividends                                (97)       (111)       (128)
   Net repayment of debt                   (155)        (50)        (55)
   Other                                      7           8          23
                                          ------      ------      ------
                                           (245)       (153)       (160)
                                          ------      ------      ------
Change in cash and cash equivalents       $  (4)      $ 227       $ 180
                                          ======      ======      ======

Cash  provided by  operations  was $344 million in fiscal 2006  compared to $396
million  in fiscal  2005.  This  decrease  was driven  largely by a $61  million
reduction in cash  provided by  discontinued  operations  following  the sale of
Lenox,  Inc.  earlier in the fiscal year. We generated $363 million in cash flow
from the  operating  activities  of  continuing  operations in fiscal 2006, a 3%
increase  compared  with  $354  million  in the  prior  year.  Higher  earnings,
partially  offset by a decrease in deferred  taxes (due in part to taxes paid on
the approximate $280 million of offshore earnings repatriated under The American
Jobs Creation Act) and an increase in working  capital  requirements  drove this
year over year increase. An increase in receivables and inventory reflecting the
growth of the  business,  and the addition of 100%  ownership of our  Australian
distribution operations boosted working capital.

                                       47


Cash used for  investments  in fiscal  2006 was $4  million,  a decrease  of $12
million  compared to fiscal 2005.  The $205 million in proceeds  received on the
sale of  discontinued  operations  was  offset by  capital  spending  and higher
interest-yielding short-term investments.

Cash used for  financing  increased by $7 million as higher net debt  repayments
and an  increase  in  dividend  payments  were only  partially  offset by higher
proceeds from stock option exercises.

                          Fiscal 2006 Cash Utilization

Sources of Cash:
   Operating activities                      33%
   Sale of short-term investments            22%
   Short-term borrowings                     22%
   Sale of discontinued operations           20%
   Stock option exercises                     3%

Uses of Cash:
   Purchase of short-term investments        45%
   Repayment of long-term debt               33%
   Dividends                                 15%
   Capital spending                           7%


In comparing fiscal 2005 with fiscal 2004, cash provided by operations increased
$92 million,  reflecting higher earnings and reductions in working capital. Cash
used for investments  dropped sharply in fiscal 2005, a decrease of $47 million,
as  proceeds  received  on the sale of our  shares in  Glenmorangie  plc  nearly
provided for the capital  investments  for the year and the 2005  acquisition of
the remaining 20% equity stake in Finlandia.

Investments in property,  plant,  and equipment were $39 million in fiscal 2004,
$45 million in fiscal 2005,  and $52 million in fiscal 2006.  Expenditures  over
the three-year  period  included  investments to maintain,  expand,  and improve
efficiencies of our production  operations and to provide  capital  resources to
build our brands.

We  expect  capital  expenditures  for  fiscal  2007  to be $65 to $75  million,
significantly  higher than our spending over the past three fiscal  years.  This
increase  reflects  investments to further expand capacity of our production and
distribution  facilities to meet the continued growing demand for Jack Daniel's.
In addition,  we are ramping up our  investments  in  technology  to enhance our
understanding  of our  consumers.  We will also continue to prioritize  and fund
investments  that improve the efficiency of our production  operations,  enhance
the quality of each our brands,  and build our brands.  We expect to fund fiscal
2007 capital expenditures with cash provided by operations.

In March 2003, we  repurchased  7.9 million  shares of our common stock for $561
million, including transaction costs, through a "Dutch auction" tender offer. We
financed the  repurchase by issuing $600 million in debt;  of this amount,  $250
million was repaid in March 2006, and the remaining $350 million is due in March
2008. We expect to meet the 2008 obligation through cash from operations.

We have access to short-term  capital markets through the issuance of commercial
paper, backed by a bank credit agreement for $400 million that expires in fiscal
2010. The credit agreement  provides us with an immediate and continuing  source
of liquidity.  At April 30, 2006, we had no  outstanding  borrowings  under this
agreement.

We maintain an SEC shelf registration that gives us prompt access to longer-term
financing.  At April  30,  2006,  we had $220  million  available  on our  shelf
registration.

LONG-TERM OBLIGATIONS

We have  long-term  obligations  related to  contracts,  leases,  and  borrowing
arrangements  that we enter into in the normal  course of business  (see Notes 5
and 7 to the  accompanying  consolidated  financial  statements).  The following
table summarizes the amounts of those  obligations as of April 30, 2006, and the
years when those obligations must be paid:

Long-Term Obligations                                      2008-     After
(Dollars in millions)                    Total     2007     2011      2011
                                         -----     ----     ----      ----
Long-term debt                           $ 352     $ --      $350     $  2
Interest on long-term debt                  22       11        10        1
Grape purchase obligations                 131       33        67       31
Operating leases                            46       14        21       11
Postretirement benefit obligations(1)        6        6       n/a      n/a
                                         -----     ----      ----     ----
Total                                    $ 557     $ 64      $448     $ 45
                                         =====     ====      ====     ====

 (1) As of April 30, 2006, we have unfunded pension and other postretirement
     benefit obligations of $99 million. Because the specific periods in which
     those obligations will be funded are not determinable, no amounts related
     to those obligations are reflected in the above table other than the $6
     million of expected contribution in fiscal 2007. Historically, we have
     generally funded these obligations with the minimum annual contribution
     required by ERISA, but we may elect to contribute more than the minimum
     amount in future years.

We expect to meet these obligations with internally generated funds.

MARKET RISKS

Our foreign currency hedging contracts are subject to changes in exchange rates,
our commodity  futures and option  contracts are subject to changes in commodity
prices,  and our debt  obligations  are subject to changes in interest rates. We
discuss these instruments'  sensitivity to market fluctuations below. See Note 5
to our  consolidated  financial  statements for information  regarding our grape
purchase  obligations,  which are also  exposed to  commodity  price  risk,  and
"Critical  Accounting  Estimates"  (page 49) for a discussion of the exposure of
our pension and other postretirement plans to interest rate risks.

Inflationary,  deflationary,  and recessionary conditions affecting these market
risks also affect the demand for and  pricing of our  products.  See  "Important
Information Regarding Forward-Looking Statements" (page 70) for details.

                                       48


FOREIGN  EXCHANGE.  As a result of continued growth in international  sales, our
annual foreign  currency  revenues now exceed our foreign  currency  expenses by
approximately $360 million. To the extent that this foreign currency exposure is
not hedged,  our results of  operations  and financial  position are  positively
affected when the U.S. dollar weakens against foreign  currencies and negatively
affected when the dollar strengthens against them.

However, we routinely use foreign currency forward and option contracts to hedge
our foreign  exchange risk.  Provided the contracts  remain effective in hedging
the foreign exchange risk, we do not recognize any unrealized gains or losses on
the  contracts  in  earnings  until  the  underlying  hedged   transactions  are
recognized in earnings.  At April 30, 2006,  our foreign  currency  hedges had a
total notional  value of $205 million and a net  unrealized  loss of $1 million.
Assuming the contracts remain effective hedges, we estimate that if the value of
the U.S.  dollar  averaged  10%  higher in  fiscal  2007  than the  fiscal  2006
effective  rates for the  currencies  in which we do  business,  our fiscal 2007
operating  income  would  decrease  by $18  million.  Conversely,  a 10% average
decline  in the  value of the  dollar  would  increase  operating  income by $24
million.

COMMODITY  PRICES.  We are  subject  to  commodity  price  volatility  caused by
weather,  supply  conditions,  geopolitical  and economic  variables,  and other
unpredictable  external factors.  We use futures contracts and options to reduce
the volatility of pricing for certain commodities,  primarily corn. At April 30,
2006, we had outstanding  hedge positions on  approximately 4 million bushels of
corn with a negligible  net  unrealized  gain.  We estimate that a 10% change in
commodity  prices would result in negligible  incremental  gain or loss on these
contracts.

INTEREST RATES. Our short-term investments and short-term borrowings are exposed
to the risk of changes in interest  rates.  Based on April 30, 2006  balances of
variable-rate  debt and  investments,  a 1%  increase  in  interest  rates would
decrease our net interest  expense,  which includes  interest income on cash and
short-term investments, by $4 million.

CRITICAL ACCOUNTING ESTIMATES

Our financial  statements  reflect  certain  estimates  involved in applying the
following   critical   accounting   policies  that  entail   uncertainties   and
subjectivity.  Using  different  estimates  could have a material  effect on our
operating results, financial condition, and changes in financial condition.

BRANDS AND GOODWILL.  We have obtained most of our brands  through  acquisitions
from other companies. Upon acquisition, the purchase price is first allocated to
identifiable assets and liabilities,  including intangible brand names, based on
estimated  fair value,  with any remaining  purchase price recorded as goodwill.
Goodwill and brand names with  indefinite  lives are not amortized.  We consider
all of our brand names to have indefinite lives.

We assess our brand  names and  goodwill  for  impairment  at least  annually to
ensure that future cash flows continue to exceed the related book value. A brand
name is impaired if its book value exceeds its fair value. Goodwill is evaluated
for  impairment if the book value of its reporting  unit exceeds its fair value.
Fair value is determined using discounted future cash flows, with  consideration
of market  values for  similar  assets when  available.  If the fair value of an
evaluated  asset is less than its book value,  the asset is written  down to its
estimated fair value.

Considerable  management judgment is necessary to assess impairment and estimate
fair value. The assumptions used in our evaluations,  such as forecasted  growth
rates and cost of capital,  are  consistent  with our internal  projections  and
operating plans.

PROPERTY, PLANT, AND EQUIPMENT. We depreciate our property, plant, and equipment
on a straight-line  basis using our estimates of useful life, which are 20 to 40
years for buildings and  improvements,  3 to 10 years for machinery,  equipment,
furniture, and fixtures, and 3 to 7 years for capitalized software.

                                       49


We assess our property,  plant,  and equipment and other  long-lived  assets for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying value of the asset or asset group may not be recoverable. Fair value is
determined  using  discounted  future cash flows,  with  consideration of market
values for similar  assets  when  available.  If the fair value of an  evaluated
asset is less than its book value, we write it down to its estimated fair value.

Considerable  management judgment is necessary to assess impairment and estimate
fair  value.  Assumptions  used in these  evaluations  are  consistent  with our
internal projections and operating plans.

PENSION AND OTHER  POSTRETIREMENT  BENEFITS.  We sponsor various defined benefit
pension plans as well as postretirement  plans providing retiree health care and
retiree life insurance benefits.  Benefits are based on such factors as years of
service and compensation  level during  employment.  The benefits expected to be
paid are expensed over the employees' expected service. This requires us to make
certain  assumptions to determine the expected benefit,  such as interest rates,
return on plan  assets,  the rate of salary  increases,  expected  service,  and
health care cost trend rates.

The assets,  obligations,  and  assumptions  used to measure pension and retiree
medical  expenses  are  determined  as of  January  31  of  the  preceding  year
("measurement  date").  Because  obligations are measured on a discounted basis,
the discount rate is a significant assumption. It is based on interest rates for
high-quality,  long-term  corporate debt at each measurement  date. The expected
return on pension  plan  assets is based on our  historical  experience  and our
expectations for long-term rates of return.  The other  assumptions also reflect
our  historical  experience  and  management's  best judgment  regarding  future
expectations.  We review our  assumptions on each annual  measurement  date. For
fiscal 2006, we have  increased  the discount rate from 5.80% to 5.95%.  Pension
and  postretirement   benefit  expense  for  fiscal  2007  is  estimated  to  be
approximately $22 million, compared to $16 million for fiscal 2006.

INCOME  TAXES.  Our annual tax rate is based on our income and the statutory tax
rates in the various  jurisdictions  in which we operate.  In fiscal  2006,  our
annual income tax rate for continuing operations was 29.3%, compared to 32.6% in
fiscal  2005.  The tax rate in fiscal  2006  decreased  3.3  percentage  points,
primarily as a result of the tax benefit achieved by offsetting  various capital
gains from  continuing  operations  (see Note 18 to our  consolidated  financial
statements) against the capital loss resulting from the sale of Lenox. The total
Lenox capital loss exceeds the amount of capital gains offset during fiscal 2006
by $53 million.  Currently,  we are unaware of any particular  transactions that
will permit the use of this capital loss  carryforward,  so we have not recorded
any tax benefit  relating to it. The rate also  decreased as a result of the net
effect  of the  phase-out  of the  extraterritorial  income  exclusion  and  the
phase-in of the new deduction for domestic production activities, as provided by
The American Jobs Creation Act of 2004 (the "Act").

Additionally,  the Act,  which was enacted in October  2004,  provided a special
one-time  opportunity  to deduct from taxable  income 85% of certain  qualifying
foreign dividends  repatriated in the U.S. from controlled foreign corporations,
subject  to various  limitations  and  restrictions,  including  qualified  U.S.
reinvestment of such earnings. In this regard, as approved in March by our Board
of Directors,  we repatriated $277 million of foreign earnings that qualified as
dividends under the Act. This one-time 85% dividends-received  deduction allowed
us to  repatriate  earnings  in  excess of those  for  which  the  deferred  tax
liability for undistributed foreign earnings had been established.  The deferred
tax liability  covered all of the  associated  tax expense  attributable  to the
repatriation.  Other than these repatriated  earnings,  we intend to continue to
reinvest  earnings outside the U.S.  indefinitely and so have not recognized any
U.S. tax expense on these earnings. At April 30, 2006, we had approximately $150
million of undistributed international earnings.

Significant  judgment is required in evaluating our tax positions.  We establish
reserves when we believe that certain  positions are likely to be challenged and
may not  succeed,  despite  our belief that our tax return  positions  are fully
supportable.   We  adjust  these   reserves  in  light  of  changing  facts  and
circumstances,  such as the progress of a tax audit. We believe current reserves
are appropriate for all known contingencies, but this situation could change.

Several  years  can  elapse  before  a  particular  matter  for  which  we  have
established a reserve is resolved.  Although predicting the final outcome or the
timing of resolution of any particular  tax matter can be difficult,  we believe
that our  reserves  reflect  the  likely  outcome  of known  tax  contingencies.
Unfavorable  settlement of any  particular  issue could require use of our cash.
Favorable  resolution  would be  recognized  as a reduction to our effective tax
rate at the time of resolution.

CONTINGENCIES.  We operate in a  litigious  environment,  and we get sued in the
normal  course of  business.  Sometimes  plaintiffs  seek  substantial  damages.
Significant  judgment is required in  predicting  the outcome of these suits and
claims, many of which take years to adjudicate.  We accrue estimated costs for a
contingency when we believe that a loss is probable and we can make a reasonable
estimate of a loss, and adjust the accrual as appropriate to reflect  changes in
facts and circumstances.

A law firm has sued  Brown-Forman and many other  manufacturers and marketers of
spirits,  wines, and beer in a series of nine very similar class action lawsuits
seeking damages and injunctive relief from alleged marketing of beverage alcohol
to underage consumers.  The suits allege that the defendants engage in deceptive
and negligent marketing  practices  targeting underage  consumers.  They seek to
recover  on behalf of parents  those  funds  that  their  children  spent on the
illegal  purchase of alcohol as well as  disgorgement  of all  profits  from the
alleged illegal sales. Brown-Forman is vigorously defending these cases. Five of
the suits have been dismissed by trial court and are being  appealed.  Two cases
remain pending on motions to dismiss. Another one was voluntarily dismissed, and
service has not been issued in another.  As we cannot yet predict the outcome of
these claims,  no amounts have been accrued.  However an  unfavorable  result in
these or similar class action  lawsuits could have a material  adverse impact on
our business.

                                       50


                                  Brown-Forman
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (Expressed in millions, except per share amounts)
- --------------------------------------------------------------------------------
Year Ended April 30,                            2004         2005         2006
- --------------------------------------------------------------------------------
Net sales                                      $2,020       $2,227       $2,444
Excise taxes                                      364          417          468
Cost of sales                                     621          640          655
                                               --------------------------------

   Gross profit                                 1,035        1,170        1,321


Advertising expenses                              267          296          325
Selling, general, and administrative expenses     383          430          480
Other expense (income), net                         4           (2)         (47)
                                               --------------------------------
   Operating income                               381          446          563


Gain on sale of investment in affiliate            --           72           --
Interest income                                     2            7           14
Interest expense                                   22           20           18
                                               --------------------------------
   Income from continuing operations
    before income taxes                           361          505          559

Income taxes                                      119          165          164
                                               --------------------------------
   Income from continuing operations              242          340          395

Income (loss) from discontinued operations,
 net of income taxes                               12          (32)         (75)
                                               --------------------------------
   Net income                                  $  254       $  308       $  320
                                               ================================

Basic earnings (loss) per share:
   Continuing operations                       $1.990       $2.791       $3.236
   Discontinued operations                      0.102       (0.259)      (0.612)
                                               --------------------------------
      Total                                    $2.092       $2.532       $2.624
                                               ================================

Diluted earnings (loss) per share:
   Continuing operations                       $1.980       $2.774       $3.202
   Discontinued operations                      0.102       (0.257)      (0.606)
                                               --------------------------------
      Total                                    $2.082       $2.517       $2.596
                                               ================================


The accompanying notes are an integral part of the consolidated financial
statements.


                                       51


                                  Brown-Forman
                           CONSOLIDATED BALANCE SHEETS
          (Expressed in millions, except share and per share amounts)
- --------------------------------------------------------------------------------
April 30,                                                    2005          2006
- --------------------------------------------------------------------------------
Assets
- ------
Cash and cash equivalents                                   $ 295         $ 475
Short-term investments                                         --           160
Accounts receivable, less allowance for doubtful
   accounts of $6 in both 2005 and 2006                       296           328
Inventories:
   Barreled whiskey                                           249           274
   Finished goods                                             102           100
   Work in process                                             81           107
   Raw materials and supplies                                  38            42
                                                           ---------------------
      Total inventories                                       470           523
Current portion of deferred income taxes                       70            81
Current assets held for sale                                  157             9
Other current assets                                           27            34
                                                           ---------------------
Total Current Assets                                        1,315         1,610

Property, plant, and equipment, net                           418           429
Prepaid pension cost                                          130           146
Trademarks and brand names                                    334           325
Goodwill                                                      193           195
Noncurrent assets held for sale                               218             1
Other assets                                                   41            22
                                                           ---------------------
Total Assets                                               $2,649        $2,728
                                                           =====================

Liabilities
- -----------
Accounts payable and accrued expenses                       $ 264        $  293
Accrued income taxes                                           42            48
Short-term borrowings                                          --           225
Current portion of long-term debt                             279            --
Current liabilities held for sale                              53             3
                                                           ---------------------
Total Current Liabilities                                     638           569

Long-term debt, less unamortized
 discount of $1 in both 2005 and 2006                         351           351
Deferred income taxes                                         158           133
Accrued pension and other postretirement benefits              78            78
Noncurrent liabilities held for sale                           83            --
Other liabilities                                              31            34
                                                           ---------------------
Total Liabilities                                           1,339         1,165
                                                           ---------------------
Commitments and contingencies

Stockholders' Equity
- --------------------
Common Stock:
  Class A, voting, $0.15 par value
   (57,000,000 shares authorized;
    56,841,000 shares issued)                                   9             9
  Class B, nonvoting, $0.15 par value
   (100,000,000 shares authorized;
    69,188,000 shares issued)                                  10            10
Additional paid-in capital                                     34            45
Retained earnings                                           1,415         1,609
Accumulated other comprehensive income (loss):
  Pension liability adjustment                                (38)           (5)
  Cumulative translation adjustment                            27            24
  Unrealized loss on cash flow hedge contracts                 --            (1)
Treasury stock, at cost
 (4,141,000 and 3,565,000 shares
  in 2005 and 2006, respectively)                            (147)         (128)
                                                           ---------------------
Total Stockholders' Equity                                  1,310         1,563
                                                           ---------------------
Total Liabilities and Stockholders' Equity                 $2,649        $2,728
                                                           =====================

The accompanying notes are an integral part of the consolidated financial
statements.


                                       52



                                  Brown-Forman
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Expressed in millions)
- --------------------------------------------------------------------------------
Year Ended April 30,                                   2004      2005      2006
- --------------------------------------------------------------------------------
Cash flows from operating activities:
   Net income                                         $ 254     $ 308     $ 320
   Adjustments to reconcile net income to net cash
    provided by (used for) operations:
      Gain on sale of investment in affiliate            --       (72)       --
      Net (income) loss from discontinued operations    (12)       32        75
      Depreciation and amortization                      42        44        44
      Stock-based compensation expense                    6         7         9
      Deferred income taxes                              (6)       (3)      (33)
      Other                                              --         2        (2)
      Change in assets and liabilities, excluding
       the effects of businesses acquired or sold:
         Accounts receivable                            (19)       (4)      (20)
         Inventories                                     13       (29)      (36)
         Other current assets                           (13)       11        (7)
         Accounts payable and accrued expenses          (17)       53         3
         Accrued income taxes                             9        (5)        6
         Noncurrent assets and liabilities               22        10         4
   Net cash provided by (used for) operating
    activities of discontinued operations                25        42       (19)
                                                       -------------------------
      Cash provided by operating activities             304       396       344
                                                       -------------------------

Cash flows from investing activities:
   Proceeds from sale of discontinued operations         --        --       205
   Proceeds from sale of investment in affiliate,
    net of disposal costs                                --        93        --
   Acquisition of minority interest in subsidiary        --       (64)       --
   Purchase of short-term investments                    --        --      (388)
   Sale of short-term investments                        --        --       228
   Additions to property, plant, and equipment          (39)      (45)      (52)
   Proceeds from sale of property, plant,
    and equipment                                        --        --         7
   Computer software expenditures                        (2)       (3)       --
   Trademark and patent expenditures                     (2)       (1)       (1)
   Net cash (used for) provided by investing
    activities of discontinued operations               (20)        4        (3)
                                                       -------------------------
      Cash used for investing activities                (63)      (16)       (4)
                                                       -------------------------

Cash flows from financing activities:
   Net change in short-term borrowings                 (117)      (50)      225
   Repayment of long-term debt                          (38)       --      (280)
   Proceeds from exercise of stock options               12         9        19
   Excess tax benefits from stock options                 2         2         7
   Acquisition of treasury stock                         --        (3)       (3)
   Dividends paid                                       (97)     (111)     (128)
   Net cash used for financing activities
    of discontinued operations                           (7)       --        --
                                                       -------------------------
      Cash used for financing activities               (245)     (153)     (160)
                                                       -------------------------
Net increase in cash and cash equivalents                (4)      227       180

Cash and cash equivalents, beginning of year             72        68       295
                                                       -------------------------
Cash and cash equivalents, end of year                 $ 68      $295      $475
                                                       =========================

Supplemental disclosure of cash paid for:
   Interest                                            $ 21      $ 21      $ 21
   Income taxes                                        $129      $174      $188


The accompanying notes are an integral part of the consolidated financial
statements.

                                       53



                                  Brown-Forman
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
           (Dollars expressed in millions, except per share amounts)
- --------------------------------------------------------------------------------
Year Ended April 30,                                   2004      2005      2006
- --------------------------------------------------------------------------------

Class A Common Stock:
   Balance at beginning of year                         $ 4       $ 9       $ 9
   Stock split (2-for-1 in 2004)                          5        --        --
                                                    ----------------------------
   Balance at end of year                                 9         9         9
                                                    ----------------------------
Class B Common Stock:
   Balance at beginning of year                           6        10        10
   Retirement of treasury stock                          (1)       --        --
   Stock split (2-for-1 in 2004)                          5        --        --
                                                    ----------------------------
   Balance at end of year                                10        10        10
                                                    ----------------------------
Additional Paid-in Capital:
   Balance at beginning of year                          23        28        34
   Stock-based compensation expense                       6         7         8
   Adjustment for stock option exercises                 (3)       (3)       (5)
   Excess tax benefits from stock options                 2         2         8
                                                    ----------------------------
   Balance at end of year                                28        34        45
                                                    ----------------------------
Retained Earnings:
   Balance at beginning of year                       1,492     1,218     1,415
   Retirement of treasury stock                        (420)       --        --
   Stock split (2-for-1 in 2004)                        (10)       --        --
   Loss on issuance of treasury stock                    (4)       (3)       (3)
   Adjustment for stock option exercises                  3         3         5
   Net income                                           254       308       320
   Cash dividends ($0.80, $0.92, and $1.05 per
    share in 2004, 2005, and 2006, respectively)        (97)     (111)     (128)
                                                    ----------------------------
   Balance at end of year                             1,218     1,415     1,609
                                                    ----------------------------
Treasury Stock, at cost:
   Balance at beginning of year                        (593)     (156)     (147)
   Acquisition of treasury stock                         --        (3)       (3)
   Treasury stock issued under compensation plans        16        12        21
   Stock-based compensation expense                      --        --         1
   Retirement of treasury stock (567,000 Class A
    and 5,414,000 Class B shares in 2004)               421        --        --
                                                    ----------------------------
   Balance at end of year                              (156)     (147)     (128)
                                                    ----------------------------
Accumulated Other Comprehensive Income (Loss):
   Balance at beginning of year                         (83)      (14)      (11)
   Net other comprehensive income                        69         3        29
                                                    ----------------------------
   Balance at end of year                               (14)      (11)       18
                                                    ----------------------------
Total Stockholders' Equity                           $1,095    $1,310    $1,563
                                                    ============================
Comprehensive Income:
   Net income                                          $254      $308      $320
   Other comprehensive income (loss):
      Foreign currency translation adjustment            18        11        (3)
      Pension liability adjustment, net of
       tax of $(31), $4, and $(21) in 2004
       2005, and 2006, respectively                      47        (6)       33
      Amounts related to cash flow hedges:
         Reclassification to earnings,
          net of tax of $(3), $(2), and $2 in 2004,
          2005, and 2006, respectively                    5         3        (4)
         Net gain (loss) on hedging instruments,
          net of tax of $1, $3, and $(2) in 2004,
          2005, and 2006, respectively                   (1)       (5)        3
                                                    ----------------------------
            Net other comprehensive income               69         3        29
                                                    ----------------------------
   Total Comprehensive Income                          $323      $311      $349
                                                    ============================

Class A Common Shares Outstanding (in thousands):
   Balance at beginning of year                      28,420    56,841    56,782
   Acquisition of treasury stock                         --       (59)       --
   Stock split (2-for-1 in 2004)                     28,421        --        --
   Treasury stock issued under compensation plans        --        --        47
                                                    ----------------------------
   Balance at end of year                            56,841    56,782    56,829
                                                    ----------------------------
Class B Common Shares Outstanding (in thousands):
   Balance at beginning of year                      32,147    64,747    65,106
   Acquisition of treasury stock                         --        --       (91)
   Stock split (2-for-1 in 2004)                     32,147        --        --
   Treasury stock issued under compensation plans       453       359       621
                                                    ----------------------------
   Balance at end of year                            64,747    65,106    65,636
                                                    ----------------------------
Total Common Shares Outstanding (in thousands)      121,588   121,888   122,465
                                                    ============================

The accompanying notes are an integral part of the consolidated financial
statements.

                                       54


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars expressed in millions, except per share and per option amounts)


1.  ACCOUNTING POLICIES

References  to "FASB"  are to the  Financial  Accounting  Standards  Board,  the
private-sector  organization that establishes financial accounting and reporting
standards, including Statements of Financial Accounting Standards ("SFAS").

PRINCIPLES OF CONSOLIDATION.  Our consolidated  financial statements include the
accounts of all wholly-owned and majority-owned subsidiaries.  We use the equity
method to account  for  investments  in  affiliates  over which we can  exercise
significant  influence  (but not  control).  We carry all other  investments  in
affiliates at cost. We eliminate all intercompany transactions.

CASH EQUIVALENTS.  Cash equivalents  include bank demand deposits and all highly
liquid investments with original maturities of three months or less.

SHORT-TERM   INVESTMENTS.   Short-term   investments  consist  of  auction  rate
securities and  variable-rate  demand notes.  These  instruments  have long-term
underlying  maturities,  but have interest rates that are reset every 90 days or
less,  at which time they can  typically be purchased or sold,  which  creates a
highly liquid market for these instruments.  These investments are classified as
available-for-sale  and recorded at cost, which  approximates  fair value due to
the reset feature.

ALLOWANCE  FOR DOUBTFUL  ACCOUNTS.  We evaluate the  collectibility  of accounts
receivable based on a combination of factors. When we are aware of circumstances
that may impair a specific customer's ability to meet its financial obligations,
we record a specific  allowance to reduce the net  recognized  receivable to the
amount we reasonably believe will be collected.

INVENTORIES.  We  state  inventories  at the  lower  of  cost  or  market,  with
approximately  73% of consolidated  inventories  being valued using the last-in,
first-out  (LIFO)  method.  Other  inventories  are valued  using the  first-in,
first-out  (FIFO) method.  If the FIFO method had been used,  inventories  would
have  been  $141 and $122  higher  than  reported  at April  30,  2005 and 2006,
respectively. FIFO cost approximates current replacement cost.

Whiskey  must be  barrel-aged  for several  years,  so we bottle and sell only a
portion of our whiskey  inventory each year.  Following  industry  practice,  we
classify  all  barreled  whiskey as a current  asset.  We  include  warehousing,
insurance,  ad valorem taxes, and other carrying charges  applicable to barreled
whiskey in inventory costs.

We classify bulk wine inventories as work in process.

PROPERTY,  PLANT, AND EQUIPMENT. We state property, plant, and equipment at cost
less  accumulated  depreciation.  We calculate  depreciation  on a straight-line
basis over the estimated  useful lives of the assets as follows:  20 to 40 years
for  buildings  and  improvements,  3 to  10  years  for  machinery,  equipment,
furniture, and fixtures, and 3 to 7 years for capitalized software costs.

BRAND NAMES AND GOODWILL.  We assess our brand names and goodwill for impairment
at least  annually  to ensure  that  future  cash flows  continue  to exceed the
related book value.  A brand name is impaired if its book value exceeds its fair
value.  Goodwill is evaluated for  impairment if the book value of its reporting
unit exceeds its fair value.  Fair value is determined using  discounted  future
cash  flows,  with  consideration  of market  values  for  similar  assets  when
available.  If the fair value of an evaluated asset is less than its book value,
the asset is written down to its estimated fair value.

FOREIGN  CURRENCY  TRANSLATION.  The U.S. dollar is the functional  currency for
most of our consolidated operations.  For those operations,  we report all gains
and losses from  foreign  currency  transactions  in current  income.  The local
currency is the  functional  currency  for some  foreign  operations.  For those
investments,  we  report  cumulative  translation  effects  as  a  component  of
accumulated  other  comprehensive  income (loss),  a component of  stockholders'
equity.

                                       55


REVENUE  RECOGNITION.  We recognize  revenue when title and risk of loss pass to
the  customer,  which  typically is at the time the product is shipped.  Certain
sales contain customer acceptance provisions that grant a right of return on the
basis of either subjective criteria or specified objective criteria.  Revenue is
recorded net of the estimated cost of sales returns and allowances.

COST OF  SALES.  Cost of  sales  includes  the  costs of  receiving,  producing,
inspecting, warehousing, insuring, and shipping goods sold during the period.

SHIPPING  AND  HANDLING  FEES AND COSTS.  We report  the  amounts we bill to our
customers  for shipping  and  handling as net sales,  and we report the costs we
incur for shipping and handling as cost of sales.

ADVERTISING  COSTS. We expense the costs of advertising during the year in which
the advertisements first take place.

SALES INCENTIVES.  We offer sales discounts and provide consideration to certain
of our distributors under cooperative advertising arrangements. Discounts, which
are recorded as a reduction of net sales, totaled $113, $120, and $159 for 2004,
2005, and 2006, respectively.

SELLING,   GENERAL,   AND  ADMINISTRATIVE   EXPENSES.   Selling,   general,  and
administrative  expenses  include  the costs  associated  with our sales  force,
administrative  staff  and  facilities,   and  other  expenses  related  to  the
non-production functions of our business.

EARNINGS PER SHARE.  Basic earnings per share is based upon the weighted average
number of common  shares  outstanding  during the period.  Diluted  earnings per
share includes the dilutive effect of stock-based compensation awards, including
stock options, stock-settled stock appreciation rights ("SSARs"), and non-vested
restricted stock.

The following table presents  information  concerning basic and diluted earnings
per share:

Year Ended April 30,                                 2004       2005       2006
- --------------------------------------------------------------------------------
Basic and diluted net income (loss):
   Continuing operations                             $242       $340       $395
   Discontinued operations                             12        (32)       (75)
                                                  ------------------------------
      Total                                          $254       $308       $320
                                                  ==============================

Share data (in thousands):
   Basic average common shares outstanding        121,359    121,746    122,094
   Dilutive effect of non-vested restricted stock      --         12         31
   Dilutive effect of stock options and SSARs         627        749      1,314
                                                  ------------------------------
      Diluted average common shares outstanding   121,986    122,507    123,439
                                                  ==============================

Basic earnings (loss) per share:
   Continuing operations                           $1.990     $2.791     $3.236
   Discontinued operations                          0.102     (0.259)    (0.612)
                                                  ------------------------------
      Total                                        $2.092     $2.532     $2.624
                                                  ==============================

Diluted earnings (loss) per share:
   Continuing operations                           $1.980     $2.774     $3.202
   Discontinued operations                          0.102     (0.257)    (0.606)
                                                  ------------------------------
      Total                                        $2.082     $2.517     $2.596
                                                  ==============================

                                       56


STOCK-BASED  COMPENSATION.  In  December  2004,  the FASB  issued  SFAS  123(R),
"Share-Based  Payment,"  which  requires  companies to expense the fair value of
stock  options  and other forms of  stock-based  compensation.  We adopted  SFAS
123(R) during fiscal 2005 by  retroactively  adjusting our financial  statements
for all periods  since fiscal  1997,  when we first began  granting  stock-based
compensation subject to SFAS 123(R).

Our  stock-based  compensation  plan requires that we purchase shares to satisfy
stock-based  compensation  requirements,  thereby  avoiding  future  dilution of
earnings that would occur from issuing  additional  shares.  We acquire treasury
shares from time to time in  anticipation  of these  requirements.  We intend to
hold enough  treasury  stock so that the number of diluted  shares never exceeds
the original  number of shares  outstanding at the inception of the  stock-based
compensation  plan (as adjusted for any share issuances  unrelated to the plan).
The  extent to which the number of diluted  shares  exceeds  the number of basic
shares is  determined  by how much our stock  price  has  appreciated  since the
stock-based  compensation  was awarded,  not by how many treasury shares we have
acquired.

ESTIMATES.  To prepare financial statements that conform with generally accepted
accounting  principles,  our management must make informed estimates that affect
how we report revenues, expenses, assets, and liabilities,  including contingent
assets and  liabilities.  Actual  results could (and probably  will) differ from
these estimates.


2.  DISCONTINUED OPERATIONS

In July 2005,  we entered into a definitive  agreement to sell our  wholly-owned
subsidiary  Lenox,  Inc. for $190 in cash.  The agreement  followed the February
2005  announcement  that we were  exploring  strategic  alternatives  for Lenox,
including a possible  sale.  On September 1, 2005,  we  consummated  the sale of
substantially  all of Lenox to Department 56, Inc.  ("Department  56") for $196.
This total was $6 higher  than  previously  announced  due to a working  capital
adjustment provision included in the sale agreement.

After the sale to Department 56, we retained ownership of the Lenox headquarters
building  and property in  Lawrenceville,  New Jersey,  and Brooks & Bentley,  a
former Lenox  subsidiary,  located in the United  Kingdom.  In February 2006, we
sold the former Lenox headquarters  building and property for $9, resulting in a
gain of $3. We still  intend to sell or liquidate  Brooks & Bentley,  the assets
and  liabilities  of which are  classified as held for sale in the  accompanying
consolidated balance sheets.

In connection with the sale, we recognized a non-cash  impairment charge of $60,
representing  the excess of the carrying value of the net assets being sold over
the sales proceeds.  This is in addition to the $37 non-cash  impairment  charge
taken in fiscal 2005. We have also recorded  transaction costs of $10, including
investment  banking fees,  transaction  success  payments,  and legal,  tax, and
actuarial expenses.

Due to the sale of Lenox,  its results of operations  through  August 2005,  the
associated  impairment  charge, and other transaction costs have been classified
as  discontinued   operations,   net  of  income  taxes,  in  the   accompanying
consolidated statements of operations,  and its assets and liabilities have been
classified as held for sale in the accompanying  consolidated balance sheets. In
financial  statements  issued before July 2005,  Lenox's  operating  results and
assets were presented in the Consumer Durables segment, of which it composed the
major part.  As a result of the sale,  the Consumer  Durables  segment no longer
constitutes a separate reportable segment.

A summary of discontinued operations follows:

- --------------------------------------------------------------------------------
Year Ended April 30,                             2004         2005         2006
- --------------------------------------------------------------------------------
Net sales                                       $ 557        $ 502        $ 134
Operating expenses                               (537)        (493)        (146)
Impairment charge                                  --          (37)         (60)
Transaction costs                                  --           --          (10)
                                                --------------------------------
   Income (loss) before income taxes               20          (28)         (82)

Income tax (expense) benefit                       (8)          (4)           7
                                                --------------------------------
   Net income (loss) from
    discontinued operations                     $  12        $ (32)       $ (75)
                                                ================================


The net assets held for sale consist of the following:

- --------------------------------------------------------------------------------
April 30,                                                    2005          2006
- --------------------------------------------------------------------------------
Current assets:
   Accounts receivable, net                                  $ 48           $ 6
   Inventories                                                104             3
   Other                                                        5            --
                                                           ---------------------
                                                              157             9
                                                           ---------------------
Noncurrent assets:
   Property, plant, and equipment, net                         83            --
   Goodwill                                                    90            --
   Other                                                       45             1
                                                           ---------------------
                                                              218             1
                                                           ---------------------
Current liabilities:
   Accounts payable and accrued expenses                       47             3
   Accrued income taxes                                         6            --
                                                           ---------------------
                                                               53             3
                                                           ---------------------
Noncurrent liabilities:
   Accrued pension and other postretirement benefits           78            --
   Other                                                        5            --
                                                           ---------------------
                                                               83            --
                                                           ---------------------
Net assets held for sale                                     $239           $ 7
                                                           =====================


3.  ACQUISITION OF FINLANDIA VODKA

In December  2004,  we acquired the remaining  capital stock of Finlandia  Vodka
Worldwide Ltd. ("FVW") from the Altia  Corporation of Finland ("Altia") for $64.
The value of FVW consists  primarily of the Finlandia  brand name,  which has an
indefinite  useful  life.  As a result  of this  transaction,  we  allocated  an
additional  $80 to the  Finlandia  brand name (which was  partially  offset by a
deferred income tax liability of $21) and $5 to various other net assets.

As previously disclosed, we acquired 45% of FVW in 2000 and an additional 35% in
2002. The 2002  acquisition  agreement  granted Altia an option to require us to
buy its  remaining  20%  interest  in FVW  during a  two-year  window  beginning
December 31, 2004.  The latest  transaction  reflects  Altia's  exercise of that
option.

                                       57


4.  GOODWILL AND OTHER INTANGIBLE ASSETS

The following  table shows the changes in the amounts  recorded as goodwill over
the past two years:

   Balance as of April 30, 2004                   $188
   Foreign currency translation adjustment           5
                                                  ----
   Balance as of April 30, 2005                    193
   Consolidation of Swift & Moore (Note 18)          4
   Foreign currency translation adjustment          (2)
                                                  ----
   Balance as of April 30, 2006                   $195
                                                  ====

Our other  intangible  assets consist of trademarks and brand names. We consider
all of our trademarks and brand names to have indefinite useful lives.


5. COMMITMENTS

We have  contracted  with  various  growers  and  wineries to supply some of our
future grape and bulk wine requirements. Many of these contracts call for prices
to be determined by market  conditions,  but some contracts  provide for minimum
purchase  prices that may exceed market  prices.  We have  purchase  obligations
related to these  contracts  of $33 in 2007,  $25 in 2008,  $17 in 2009,  $13 in
2010, $12 in 2011, and $31 after 2011.

We made rental payments for real estate,  vehicles,  and office,  computer,  and
manufacturing  equipment under operating leases of $17 in 2004, $16 in 2005, and
$16 in 2006. We have  commitments  related to minimum  lease  payments of $14 in
2007, $9 in 2008, $5 in 2009, $4 in 2010, $3 in 2011, and $11 after 2011.


6. CREDIT FACILITIES

We have a  committed  revolving  credit  agreement  with  various  domestic  and
international  banks for $400 that expires in fiscal 2010. Its most  restrictive
covenant requires that our consolidated total debt to consolidated net worth not
exceed a ratio of 2 to 1. At April 30, 2006, we were well within this covenant's
parameters. At April 30, 2006, we also had $220 of debt securities available for
issuance under an SEC shelf registration.


7. DEBT

Our long-term debt consisted of the following:

April 30,                                              2005           2006
- --------------------------------------------------------------------------------
2.125% notes, due in fiscal 2006                       $249           $ --
3.0% notes, due in fiscal 2008                          349            349
6.82% to 7.38% notes, due in fiscal 2006                 30             --
Variable rate industrial
 revenue bonds, due through 2026                          2              2
                                                 -------------------------------
                                                        630            351
Less current portion                                    279             --
                                                 -------------------------------
                                                       $351           $351
                                                 ===============================

Debt payments  required over the next five fiscal years consist of $350 in 2008.
The weighted  average  interest rates on the  variable-rate  industrial  revenue
bonds were 3.0% and 3.8% at April 30, 2005 and 2006,  respectively.  In addition
to long-term debt, we had short-term borrowings with a weighted average interest
rate of 5.0% outstanding at April 30, 2006.


8. FOREIGN CURRENCY RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS

We use foreign  currency options and forward  contracts,  generally with average
maturities  of less  than one  year,  as  protection  against  the risk that the
eventual  U.S.  dollar  cash  flows  resulting  from our  forecasted  sales  and
purchases of goods and services in foreign currencies will be adversely affected
by  changes  in  exchange  rates.  We  designate  these   derivative   financial
instruments as cash flow hedges.

We  formally  assess  (both at  inception  and at least  quarterly)  whether the
derivative financial instruments are effective at offsetting changes in the cash
flows  of  the  hedged  transactions.  We  defer  the  effective  portion  of  a
derivative's  change in fair value in  Accumulated  Other  Comprehensive  Income
(Loss) until the underlying  hedged  transaction  is recognized in earnings.  We
recognize any  ineffective  portion of the change in fair value  immediately  in
earnings.  No material  gains or losses were  recognized  in earnings due to the
ineffectiveness of cash flow hedges.

We had  outstanding  foreign  currency  options and forward  contracts,  hedging
primarily  British  pound,  Australian  dollar,  euro,  and South  African  rand
revenues,  with  notional  amounts  totaling $212 and $205 at April 30, 2005 and
2006,  respectively.  Our credit exposure is, however, limited to the contracts'
fair value (see Note 9) rather than their notional  amounts.  We minimize credit
exposure by entering into foreign  currency  contracts only with major financial
institutions that have earned investment-grade credit ratings.

                                       58


9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of cash, cash equivalents, short-term investments, and short-term
borrowings approximates the carrying amount due to the short maturities of these
instruments.

We estimate the fair value of long-term debt using  discounted  cash flows based
on our  incremental  borrowing rates for similar debt. The fair value of foreign
currency  contracts is based on quoted market  prices.  A comparison of the fair
values and carrying amounts of these instruments is as follows:


April 30,                              2005                       2006
- --------------------------------------------------------------------------------
                                Carrying      Fair         Carrying       Fair
                                 Amount       Value         Amount       Value
- --------------------------------------------------------------------------------
Assets:
   Cash and cash equivalents      $295        $295           $475         $475
   Short-term investments           --          --            160          160

Liabilities:
   Foreign currency contracts        1           1              1            1
   Short-term borrowings            --          --            225          225
   Long-term debt                  630         617            351          338



10.  BALANCE SHEET INFORMATION

April 30,                                              2005           2006
- --------------------------------------------------------------------------------
Property, plant, and equipment:
   Land                                                $ 79           $ 79
   Buildings                                            272            297
   Equipment                                            403            412
   Construction in process                               23             23
                                                 -------------------------------
                                                        777            811
   Less accumulated depreciation                        359            382
                                                 -------------------------------
                                                       $418           $429
                                                 ===============================

Accounts payable and accrued expenses:
   Accounts payable, trade                             $ 79           $ 90
   Accrued expenses:
      Advertising                                        42             62
      Compensation and commissions                       82             85
      Excise and other non-income taxes                  22             27
      Self-insurance claims                               7              9
      Interest                                            3              1
      Other                                              29             19
                                                 -------------------------------
                                                        185            203
                                                 -------------------------------
                                                       $264           $293
                                                 ===============================


11. TAXES ON INCOME

We incur income  taxes on the  earnings of our domestic and foreign  operations.
The following  table,  based on the locations of the taxable entities from which
sales were  derived  (rather  than the  location  of  customers),  presents  the
domestic and foreign components of our income before income taxes:

Year Ended April 30,                        2004          2005           2006
- --------------------------------------------------------------------------------
United States                               $278          $351           $395
Foreign                                       83           154            164
                                            ------------------------------------
                                            $361          $505           $559
                                            ====================================

The  income  shown  above  was  determined  according  to  financial  accounting
standards.  Because those standards  sometimes differ from the tax rules used to
calculate  taxable  income,  there are  differences  between:  (a) the amount of
taxable income and pretax  financial income for a year; and (b) the tax bases of
assets or liabilities and their amounts as recorded in our financial statements.
As a result,  we recognize a current tax liability for the estimated  income tax
payable on the current tax return,  and  deferred  tax  liabilities  (income tax
payable on income that will be  recognized  on future tax  returns) and deferred
tax assets (income tax refunds from deductions that will be recognized on future
tax returns)  for the  estimated  effects of the  differences  mentioned  above.
Deferred tax assets and  liabilities as of the end of each of the last two years
were as follows:

April 30,                                              2005           2006
- --------------------------------------------------------------------------------
Deferred tax assets:
   Postretirement and other benefits                   $  5           $  2
   Accrued liabilities and other                          6              9
   Inventories                                           57             64
   Capital loss carryforward                             --             21
   Valuation allowance                                   --            (21)
                                             -----------------------------------
   Total deferred tax assets, net                        68             75
                                             -----------------------------------
Deferred tax liabilities:
   Trademarks and brand names                            96             84
   Property, plant, and equipment                        43             43
   Undistributed foreign earnings                        17             --
                                             -----------------------------------
   Total deferred tax liabilities                       156            127
                                             -----------------------------------
Net deferred tax liability                             $ 88           $ 52
                                             ===================================

The valuation  allowance  shown above  relates to the capital loss  carryforward
associated with the sale of Lenox during 2006. Currently,  we are unaware of any
transactions that will permit the use of this carryforward.

Deferred tax liabilities were not provided on undistributed  earnings of certain
foreign  subsidiaries  ($265 and $150 at April 30, 2005 and 2006,  respectively)
because we expect these  undistributed  earnings to be  reinvested  indefinitely
overseas.  If  these  amounts  were  not  considered   permanently   reinvested,
additional deferred tax liabilities of approximately $45 and $26 would have been
provided as of April 30, 2005 and 2006, respectively.

                                       59


The American Jobs  Creation Act (the "Act"),  which was enacted in October 2004,
provided a special  one-time  opportunity  to deduct from taxable  income 85% of
certain  qualifying  foreign  dividends  repatriated  to the United  States from
controlled   foreign   corporations,   subject   to  various   limitations   and
restrictions,  including  qualified U.S.  reinvestment of such earnings.  During
2006,  we  repatriated  $277 of  foreign  earnings  that  represented  qualified
dividends under the Act. This reduced our deferred income tax liability  related
to undistributed foreign earnings by $17.

Total income tax expense for a year includes the tax associated with the current
tax  return  ("current  tax  expense")  and the change in the net  deferred  tax
liability  ("deferred  tax  expense").  Total income tax expense for each of the
last three years was as follows:


Year Ended April 30,                        2004          2005          2006
- --------------------------------------------------------------------------------
Current:
   Federal                                  $ 98          $131          $153
   Foreign                                    20            19            16
   State and local                            12            19            19
                                            ------------------------------------
                                             130           169           188
                                            ------------------------------------

Deferred:
   Federal                                    (5)           --           (22)
   Foreign                                    (2)           (3)           (4)
   State and local                            (4)           (1)            2
                                            ------------------------------------
                                             (11)           (4)          (24)
                                            ------------------------------------
                                            $119          $165          $164
                                            ====================================

Our consolidated  effective tax rate may differ from current statutory rates due
to the  recognition  of  amounts  for  events or  transactions  that have no tax
consequences.  The  following  table  reconciles  our  effective tax rate to the
federal statutory tax rate in the United States:

                                             Percent of Income Before Taxes
- --------------------------------------------------------------------------------
Year Ended April 30,                        2004          2005           2006
- --------------------------------------------------------------------------------
U.S federal statutory rate                  35.0%         35.0%          35.0%
State taxes, net of U.S.
   federal tax benefit                       1.5           1.2            1.3
Income taxed at other than U.S.
   federal statutory rate                   (1.5)         (1.9)          (1.5)
Tax benefit from export sales               (2.2)         (2.0)          (1.6)
Tax benefit from U.S. manufacturing           --            --           (0.7)
Impairment charges                            --           0.2             --
Capital loss benefit                          --            --           (2.8)
Other, net                                   0.3           0.1           (0.4)
                                           -------------------------------------
Effective rate                              33.1%         32.6%          29.3%
                                           =====================================


12. PENSION AND OTHER POSTRETIREMENT BENEFITS

We sponsor various defined benefit pension plans as well as postretirement plans
providing retiree health care and retiree life insurance benefits. The following
discussion  provides  information about our obligations  related to these plans,
the assets dedicated to meeting the  obligations,  and the amounts we recognized
in our  financial  statements as a result of  sponsoring  these plans.  We use a
measurement  date of January 31 to determine the amounts of the plan obligations
and assets presented below.

OBLIGATIONS. We provide eligible employees with pension and other postretirement
benefits based on such factors as years of service and compensation level during
employment.  The pension obligation shown below ("projected benefit obligation")
consists  of: (a) benefits  earned by employees to date based on current  salary
levels ("accumulated  benefit  obligation");  and (b) benefits to be received by
the employees as a result of expected future salary  increases.  (The obligation
for  medical  and life  insurance  benefits  is not  affected  by future  salary
increases).  This table shows how the present  value of our  obligation  changed
during each of the last two years.

                                             Pension           Medical and Life
                                             Benefits         Insurance Benefits
- --------------------------------------------------------------------------------
Year Ended April 30,                      2005      2006        2005      2006
- --------------------------------------------------------------------------------
Obligation at beginning of year           $347      $386        $ 48      $ 47
Service cost                                11        13           1         1
Interest cost                               20        22           3         3
Actuarial loss (gain)                       22         7          (2)        5
Plan amendments                             --         1          --        --
Retiree contributions                       --        --           1         1
Benefits paid                              (14)      (15)         (4)       (4)
                                        ----------------------------------------
Obligation at end of year                 $386      $414        $ 47      $ 53
                                        ========================================

Service cost represents the present value of the benefits  attributed to service
rendered by  employees  during the year.  Interest  cost is the  increase in the
present  value of the  obligation  due to the  passage of time.  Actuarial  loss
(gain)  is the  change  in value of the  obligation  resulting  from  experience
different  from that assumed or from a change in an actuarial  assumption.  (The
actuarial assumptions used are discussed at the end of this note).

                                       60


As shown in the previous  table,  our pension and other  postretirement  benefit
obligations   were  reduced  by  benefit   payments  in  2006  of  $15  and  $4,
respectively. Expected benefit payments over the next ten years are as follows:

                                             Pension           Medical and Life
                                             Benefits         Insurance Benefits
- --------------------------------------------------------------------------------
2007                                           $ 17                  $ 3
2008                                             18                    3
2009                                             19                    3
2010                                             20                    3
2011                                             21                    3
2012-2016                                       116                   19


ASSETS.  We  specifically  invest  certain  assets in order to fund our  pension
benefit  obligations.  Our investment  goal is to earn a total return that, over
time,  will  grow  assets  sufficient  to fund  our  plans'  liabilities,  after
providing  appropriate  levels of contributions  and accepting prudent levels of
investment  risk.  To achieve this goal,  plan assets are invested  primarily in
funds or portfolios of funds actively  managed by outside  managers.  Investment
risk is  managed by  company  policies  that  require  diversification  of asset
classes,  manager  styles,  and  individual  holdings.  We measure  and  monitor
investment risk through quarterly and annual performance  reviews,  and periodic
asset/liability studies.

Asset allocation is the most important method for achieving our investment goals
and is based on our assessment of the plans' long-term return objectives and the
appropriate balances needed for liquidity,  stability, and diversification.  The
allocation  of our  pension  plan  assets at fair value on January  31, 2005 and
2006, and the target allocation for 2007, by asset category, are as follows:


                                                     Asset Allocation
- --------------------------------------------------------------------------------
                                          Actual          Actual          Target
                                           2005            2006            2007
- --------------------------------------------------------------------------------
Equity securities                           71%             71%             70%
Debt securities                             16              16              15
Real estate                                  5               6               5
Other                                        8               7              10
                                        ----------------------------------------
Total                                      100%            100%            100%
                                        ========================================

This table shows how the fair value of the pension  plan assets  changed  during
each of the last two years. (We do not have assets set aside for  postretirement
medical or life insurance benefits).

                                             Pension           Medical and Life
                                             Benefits         Insurance Benefits
- --------------------------------------------------------------------------------
Year Ended April 30,                      2005      2006        2005      2006
- --------------------------------------------------------------------------------
Fair value at beginning of year           $310      $324        $ --      $ --
Actual return on plan assets                16        41          --        --
Retiree contributions                       --        --           1         1
Company contributions                       12        18           3         3
Benefits paid                              (14)      (15)         (4)       (4)
                                        ----------------------------------------
Fair value at end of year                 $324      $368        $ --      $ --
                                        ========================================

                                       61


Consistent  with  our  funding  policy,  we  expect  to  contribute  $5  to  our
postretirement  medical and life insurance  benefit plans in 2007.  While we may
decide to contribute  more, we currently  expect to contribute $1 to our pension
plans in 2007.

FUNDED STATUS.  The funded status of a plan refers to the difference between its
assets and its  obligations.  This amount differs from the amount  recognized on
the balance sheet because,  as discussed  below,  certain changes in the present
value of the obligation and the fair value of the plan assets are amortized over
several years for accounting  purposes.  This table reconciles the funded status
of the plans to the net amount recognized on the balance sheet.

                                             Pension           Medical and Life
                                             Benefits         Insurance Benefits
- --------------------------------------------------------------------------------
April 30,                                 2005      2006         2005     2006
- --------------------------------------------------------------------------------
Assets                                   $ 324     $ 368         $ --     $ --
Obligations                               (386)     (414)         (47)     (53)
                                          --------------------------------------
Funded status                              (62)      (46)         (47)     (53)
Unrecognized net loss                      168       157            5       10
Unrecognized prior service cost              4         5            1        1
Other                                        1         1            1        1
                                          --------------------------------------
Net amount recognized on balance sheet   $ 111     $ 117         $(40)    $(41)
                                          ======================================

The  unrecognized  net loss  for the  pension  plans  primarily  relates  to the
difference  between the actual and  expected  cumulative  return on plan assets.
(See below for assumptions regarding expected return on plan assets).

The net amount is recognized on the consolidated balance sheet as follows:

                                             Pension           Medical and Life
                                             Benefits         Insurance Benefits
- --------------------------------------------------------------------------------
April 30,                                 2005      2006        2005      2005
- --------------------------------------------------------------------------------
Prepaid pension cost                      $130      $146        $ --      $ --
Accrued postretirement benefits            (38)      (37)        (40)      (41)
Other assets                                 2         1          --        --
Accumulated other comprehensive loss        17         7          --        --
                                          --------------------------------------
Net amount recognized on balance sheet    $111      $117        $(40)     $(41)
                                          ======================================

This  table  compares  our  pension  plans  that have  assets in excess of their
accumulated  benefit  obligations  with those  whose  assets are less than their
obligations. (As discussed above, we have no assets set aside for postretirement
medical or life insurance benefits).

                                                   Accumulated       Projected
                                                    Benefit           Benefit
                                 Plan Assets       Obligation        Obligation
- -------------------------------------------------------------------------------
April 30,                        2005   2006       2005   2006      2005   2006
- -------------------------------------------------------------------------------
Plans with assets in
 excess of accumulated
 benefit obligation              $306   $368       $285   $329      $321   $368
Plans with accumulated
 benefit obligation in
 excess of assets                  18     --         56     37        65     46
                                ------------------------------------------------
Total                            $324   $368       $341   $366      $386   $414
                                ================================================

PENSION  (INCOME)  EXPENSE.  This  table  shows the  components  of the  pension
(income) expense  recognized during each of the last three years. The amount for
each year includes  amortization  of the prior service cost,  net loss,  and the
transition asset that was unrecognized as of the beginning of the year.

                                                     Pension Benefits
- --------------------------------------------------------------------------------
Year Ended April 30,                       2004            2005            2006
- --------------------------------------------------------------------------------
Service cost                               $ 10            $ 11            $ 13
Interest cost                                19              20              22
Expected return on plan assets              (33)            (32)            (32)
Amortization of:
   Unrecognized prior service cost            1               1               1
   Unrecognized net loss                     --               3               8
   Unrecognized transition asset             (1)             --              --
                                       -----------------------------------------
Net (income) expense                       $ (4)           $  3            $ 12
                                       =========================================

The prior service cost  represents the cost of retroactive  benefits  granted in
plan  amendments  and is  amortized  on a  straight-line  basis over the average
remaining service period of the employees expected to receive the benefits.  The
net loss results from experience different from that assumed or from a change in
actuarial  assumptions,  and is amortized  over at least that same  period.  The
unrecognized  transition  asset was amortized on a  straight-line  basis through
2004.

The  pension  (income)  expense  recorded  during the year is  estimated  at the
beginning of the year. As a result,  the amount is calculated  using an expected
return on plan assets  rather than the actual  return.  The  difference  between
actual and expected  returns is included in the unrecognized net loss at the end
of the year.

                                       62


OTHER  POSTRETIREMENT  BENEFIT  EXPENSE.  This table shows the components of the
postretirement  medical and life  insurance  benefit  expense that we recognized
during each of the last three years.

                                           Medical and Life Insurance Benefits
- --------------------------------------------------------------------------------
Year Ended April 30,                       2004            2005            2006
- --------------------------------------------------------------------------------
Service cost                                $1              $1              $1
Interest cost                                3               3               3
Amortization of unrecognized net loss        1              --              --
                                       -----------------------------------------
Net expense                                 $5              $4              $4
                                       =========================================

ASSUMPTIONS  AND  SENSITIVITY.  We use  various  assumptions  to  determine  the
obligations and (income) expense related to our pension and other postretirement
benefit plans. The assumptions used in computing  benefit plan obligations as of
the end of the last two years were as follows:

                                             Pension           Medical and Life
                                             Benefits         Insurance Benefits
- --------------------------------------------------------------------------------
In Percent                                2005      2006        2005      2006
- --------------------------------------------------------------------------------
Discount rate                             5.80      5.95        5.80      5.95
Rate of salary increase                   4.00      4.00         --        --
Expected return on plan assets            8.75      8.75         --        --


The assumptions  used in computing  benefit plan (income) expense during each of
the last three years were as follows:

                                          Pension            Medical and Life
                                          Benefits          Insurance Benefits
- --------------------------------------------------------------------------------
In Percent                          2004    2005    2006    2004    2005    2006
- --------------------------------------------------------------------------------
Discount rate                       6.50    6.00    5.80    6.50    6.00    5.80
Rate of salary increase             4.00    4.00    4.00     --      --      --
Expected return on plan assets      8.75    8.75    8.75     --      --      --


The discount  rate  represents  the interest rate used to discount the cash-flow
stream of benefit  payments to a net present  value as of the  current  date.  A
lower  assumed  discount  rate  increases  the  present  value  of  the  benefit
obligation.

The assumed rate of salary  increase  reflects the expected  annual  increase in
salaries as a result of inflation,  merit  increases,  and  promotions.  A lower
assumed rate decreases the present value of the benefit obligation.

The expected return on plan assets  represents the long-term rate of return that
we assume will be earned over the life of the pension  assets,  considering  the
distribution  of  those  assets  among  investment  categories  and the  related
historical rates of return.

                                       63


The assumed healthcare cost trend rates as of the end of the last two years were
as follows:

                                         Medical and Life Insurance Benefits
- --------------------------------------------------------------------------------
In Percent                                       2005           2006
- --------------------------------------------------------------------------------
Healthcare cost trend rate assumed for next year:
   Present rate before age 65                    8.32          10.00
   Present rate age 65 and after                 9.57          10.00


We project  healthcare cost trend rates to decline gradually to 5.0% by 2012 and
to  remain  level  after  that.  Assumed  healthcare  cost  trend  rates  have a
significant effect on the amounts reported for  postretirement  medical plans. A
one percentage point  increase/decrease  in assumed  healthcare cost trend rates
would have increased/decreased the accumulated postretirement benefit obligation
as of April 30, 2006 by $5 and the aggregate service and interest costs for 2006
by $1.

SAVINGS PLANS. We also sponsor various defined  contribution  benefit plans that
in total  cover  substantially  all  employees.  Employees  can  make  voluntary
contributions in accordance with the provisions of their respective plans, which
includes a 401(k) tax deferral option.  We match a percentage of each employee's
contributions  in accordance  with the provisions of the plans.  We expensed $6,
$7, and $7 for matching contributions during 2004, 2005, and 2006, respectively.


13. NET SALES INFORMATION

The following table presents net sales by product category:

                                   2004              2005              2006
- --------------------------------------------------------------------------------
Net sales:
   Spirits                       $1,639            $1,824            $2,049
   Wines                            353               371               363
   Luggage                           28                32                32
                                 -----------------------------------------------
                                 $2,020            $2,227            $2,444
                                 ===============================================

The following table presents net sales by geographic region:

                                   2004              2005              2006
- --------------------------------------------------------------------------------
Net sales:
   United States                 $1,303            $1,346            $1,434
   Europe                           514               637               710
   Other countries                  203               244               300
                                 -----------------------------------------------
                                 $2,020            $2,227            $2,444
                                 ===============================================

Net sales are  attributed  to countries  based on where  customers  are located.
Long-lived assets located outside the United States are not significant.


14.  CONTINGENCIES

We operate in a litigious  environment,  and we get sued in the normal course of
business. Sometimes plaintiffs seek substantial damages. Significant judgment is
required in predicting the outcome of these suits and claims, many of which take
years to adjudicate. We accrue estimated costs for a contingency when we believe
that a loss is probable and we can make a reasonable  estimate of the loss,  and
adjust the accrual as appropriate to reflect changes in facts and circumstances.

A law firm has sued  Brown-Forman and many other  manufacturers and marketers of
spirits,  wines, and beer in a series of nine very similar class action lawsuits
seeking damages and injunctive relief from alleged marketing of beverage alcohol
to underage consumers.  The suits allege that the defendants engage in deceptive
and negligent marketing  practices  targeting underage  consumers.  They seek to
recover  on behalf of parents  those  funds  that  their  children  spent on the
illegal  purchase of alcohol as well as  disgorgement  of all  profits  from the
alleged illegal sales. Brown-Forman is vigorously defending these cases. Five of
the suits have been dismissed by trial court and are being  appealed.  Two cases
remain pending on motions to dismiss. Another one was voluntarily dismissed, and
service has not been issued in another.  As we cannot yet predict the outcome of
these claims, no amounts have been accrued.  However,  an unfavorable  result in
these or similar class action  lawsuits could have a material  adverse impact on
our business.


15. ENVIRONMENTAL MATTERS

We are subject to environmental  regulations in connection with the operation of
our production  facilities and in connection with the transportation of products
we manufacture. Violation of these environmental regulations can result in fines
or  penalties.  As of April 30, 2006,  we do not consider the exposure  from the
risks of such fines or penalties to be material.


16.  STOCK-BASED COMPENSATION

Under our 2004  Omnibus  Compensation  Plan  (the  "Plan"),  we can grant  stock
options and other  stock-based  incentive awards for a total of 5,946,000 shares
of common stock to eligible employees until July 22, 2014. As of April 30, 2006,
awards for 5,095,000 shares remain available for issuance under the Plan. Shares
delivered  to  employees  are limited by the Plan to shares that we purchase for
this purpose. No new shares may be issued.

We grant stock options and SSARs at an exercise  price of not less than the fair
value of the  underlying  stock on the grant date.  Except for the stock options
granted at an exercise price of $50 per share (discussed  below),  stock options
and SSARs granted under the Plan become  exercisable  after three years from the
first day of the fiscal  year of grant and expire  seven  years after that date.
The grant-date  fair values of these awards granted during 2004,  2005, and 2006
were  $9.29,  $10.78,  and $12.59  per award,  respectively.  Fair  values  were
estimated using the Black-Scholes pricing model with the following assumptions:

                                      2004      2005      2006
- --------------------------------------------------------------
Risk-free interest rate               3.6%      4.0%      4.0%
Expected volatility                  24.6%     24.0%     22.0%
Expected dividend yield               1.9%      1.9%      1.9%
Expected life (years)                   6         6         6

                                       64


We have also granted stock options with an exercise  price of $50 per share that
become  exercisable  on May 1, 2006,  and expire on September 1, 2007.  The fair
value of these options was $2.89 per option,  using the Black-  Scholes  pricing
model and assuming a risk-free  interest  rate of 6.0%,  expected  volatility of
18.0%, an expected  dividend yield of 2.2%, and an expected life of eight years.
Approximately 878,000 of these options are outstanding as of April 30, 2006.

We also grant restricted  shares of common stock under the Plan. As of April 30,
2006, there are  approximately  81,000  restricted  shares  outstanding,  with a
weighted-average  remaining restriction period of 3.9 years. The following table
summarizes restricted stock activity during 2006.

                                                     Weighted
                                 Restricted          Average
                                   Shares           Grant Date
                               (in thousands)       Fair Value
- --------------------------------------------------------------
Oustanding at May 1, 2005           36               $39.23
Granted                             47                46.99
Vested                              (2)               39.23
                                   ----
Outstanding at April 30, 2006       81                43.75
                                   ====

The accompanying  statements of operations reflect  compensation expense related
to  stock-based  incentive  awards on a pre-tax basis of $6 in 2004, $7 in 2005,
and $8 in 2006,  partially offset by deferred income tax benefits of $2 in 2004,
$3 in 2005, and $3 in 2006.

A summary of stock option and SSAR activity under the Plan as of April 30, 2006,
and changes during the year then ended is presented below.


                                                        Weighted              Weighted
                                     Shares         Average Exercise      Average Remaining      Aggregate
                                 (in thousands)   Price Per Option/SSAR   Contractual Term    Intrinsic Value
- -------------------------------------------------------------------------------------------------------------
                                                                                        
Outstanding at May 1, 2005           4,895               $37.30
Granted                                430                59.18
Exercised                             (623)               29.22
Forfeited or expired                   (46)               49.26
                                ---------------
Outstanding at April 30, 2006        4,656               $40.28                 4.8                $159
                                ---------------
Exercisable at April 30, 2006        2,115               $31.35                 4.3                $ 91
                                ---------------


The total intrinsic value of options  exercised  during 2004, 2005, and 2006 was
$8, $7, and $23, respectively.

As of April 30,  2006,  there  was $9 of total  unrecognized  compensation  cost
related to  nonvested  stock-based  compensation.  That cost is  expected  to be
recognized over a weighted-average period of 2.7 years.


17.  SALE OF INVESTMENT IN AFFILIATE

During 2005,  we sold our equity stake in  Glenmorangie  plc for proceeds of $93
(net of disposal costs), resulting in a pre-tax gain of $72.


18.  OTHER INCOME

In July 2005,  we  entered  into an  agreement  with LVMH Moet  Hennessey  Louis
Vuitton for the early  termination  of our  long-term  importing  and  marketing
agreements for Glenmorangie  products in the United States,  Canada, and certain
countries in Europe and Asia, effective July 29, 2005. We received approximately
$14 for the early termination, which is included in other income for fiscal 2006
in the accompanying consolidated statement of operations.

In January 2006, we received  proceeds of $25 as compensation  for Pernod Ricard
assuming  the  distribution  of its  brands  from Swift & Moore,  an  Australian
distribution  company  co-owned  by Pernod  Ricard  (following  its  purchase of
Allied-Domecq)  and us. This amount is recorded in other income for fiscal 2006.
Pernod  Ricard  surrendered  its  ownership  interest  in  Swift &  Moore  to us
effective  February 1, 2006,  resulting  in our  becoming  100% owner of Swift &
Moore as of that  date.  Swift & Moore  continues  to  distribute  our brands in
Australia.

In January  2006,  we sold  winery  land and  buildings  in  California  for $7,
resulting in a gain of $5 that is included in other income for fiscal 2006.


19.  SUBSEQUENT EVENT

On May 31,  2006,  we  completed  our  acquisition  of Chambord  Liqueur and all
related  assets  from  Chatam  International   Incorporated  and  its  operating
subsidiary, Charles Jacquin et Cie Inc., for $255 in cash and assumed debt. This
acquisition  includes  the  Chambord  trademark  and  the  French  manufacturing
operations where the product is made.

                                       65


                             REPORTS OF MANAGEMENT

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
Our management is responsible for the preparation,  presentation,  and integrity
of the financial  information  presented in this Annual Report. The consolidated
financial  statements  were prepared in conformity  with  accounting  principles
generally  accepted in the United States of America  (GAAP),  including  amounts
based on management's best estimates and judgments. In management's opinion, the
consolidated   financial  statements  fairly  present  the  Company's  financial
position, results of operations, and cash flows.

The Audit Committee of the Board of Directors,  which is composed of independent
directors,  meets regularly with the independent  registered  public  accounting
firm,  PricewaterhouseCoopers  LLP (PwC), internal auditors, and representatives
of management to review accounting,  internal control  structure,  and financial
reporting  matters.  The internal  auditors and PwC have full and free access to
the  Audit  Committee.  As set  forth  in our  Code of  Conduct  and  Compliance
Guidelines,  we are firmly  committed  to adhering to the highest  standards  of
moral and ethical behaviors in all of our business activities.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management  is  also  responsible  for  establishing  and  maintaining  adequate
internal control over financial  reporting,  as defined in Rule 13a-15(f ) under
the  Securities  Exchange  Act of 1934.  Our  internal  control  over  financial
reporting is designed to provide reasonable  assurance regarding the reliability
of financial reporting and the preparation of financial  statements for external
purposes in accordance with accounting principles generally accepted in the U.S.

Under our supervision, and with the participation of management, we conducted an
evaluation of the effectiveness of the Company's internal control over financial
reporting based on the framework and criteria in "Internal  Control - Integrated
Framework"  issued by the Committee of Sponsoring  Organizations of the Treadway
Commission.  Based on this evaluation,  management  concluded that the Company's
internal  control over  financial  reporting was effective as of April 30, 2006.
Management's  assessment of the effectiveness of the Company's  internal control
over financial reporting as of April 30, 2006, has been audited by PwC as stated
in their report that appears on page 67.




/s/ Paul C. Varga
Paul C. Varga
President and Chief Executive Officer



/s/ Phoebe A. Wood
Phoebe A. Wood
Executive Vice President and Chief Financial Officer

                                       66


            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF BROWN-FORMAN CORPORATION:

We have completed integrated audits of Brown-Forman  Corporation's 2006 and 2005
consolidated  financial  statements  and of its internal  control over financial
reporting as of April 30, 2006, and an audit of its 2004 consolidated  financial
statements in accordance  with the  standards of the Public  Company  Accounting
Oversight  Board  (United  States).  Our  opinions,  based  on our  audits,  are
presented below.

CONSOLIDATED FINANCIAL STATEMENTS: In our opinion, the accompanying consolidated
balance sheets and the related consolidated statements of operations, cash flows
and of  stockholders'  equity  present  fairly,  in all material  respects,  the
financial  position  of  Brown-Forman  Corporation  and  its  subsidiaries  (the
"Company") at April 30, 2006 and 2005,  and the results of their  operations and
their cash flows for each of the three years in the period  ended April 30, 2006
in conformity with accounting principles generally accepted in the United States
of America.  These financial  statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with the standards of the Public Company  Accounting  Oversight Board
(United States).  Those standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material misstatement. An audit of financial statements includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

INTERNAL CONTROL OVER FINANCIAL  REPORTING:  Also, in our opinion,  management's
assessment,  included in Management's  Report on Internal Control over Financial
Reporting  appearing on page 66, that the Company maintained  effective internal
control  over  financial  reporting  as of April  30,  2006,  based on  criteria
established in "Internal Control - Integrated Framework" issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated,
in all material respects, based on those criteria.  Furthermore, in our opinion,
the Company  maintained,  in all material  respects,  effective internal control
over financial reporting as of April 30, 2006, based on criteria  established in
"Internal  Control - Integrated  Framework"  issued by the COSO.  The  Company's
management  is  responsible  for  maintaining  effective  internal  control over
financial  reporting  and for its  assessment of the  effectiveness  of internal
control over financial  reporting.  Our responsibility is to express opinions on
management's  assessment  and on the  effectiveness  of the  Company's  internal
control over financial  reporting  based on our audit. We conducted our audit of
internal  control over financial  reporting in accordance  with the standards of
the Public Company Accounting  Oversight Board (United States).  Those standards
require that we plan and perform the audit to obtain reasonable  assurance about
whether  effective  internal control over financial  reporting was maintained in
all material  respects.  An audit of internal  control over financial  reporting
includes   obtaining  an   understanding  of  internal  control  over  financial
reporting, evaluating management's assessment, testing and evaluating the design
and operating  effectiveness  of internal  control,  and  performing  such other
procedures as we consider  necessary in the  circumstances.  We believe that our
audit provides a reasonable basis for our opinions.

A company's  internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (i) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions of the assets of the company;  (ii)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company;  and (iii) provide  reasonable  assurance  regarding  prevention or
timely  detection  of  unauthorized  acquisition,  use,  or  disposition  of the
company's assets that could have a material effect on the financial statements.

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may deteriorate.




/s/ PricewaterhouseCoopers LLP
Louisville, Kentucky
June 22, 2006

                                       67



               IMPORTANT INFORMATION ON FORWARD-LOOKING STATEMENTS

This  annual  report  contains  statements,   estimates,   or  projections  that
constitute "forward-looking statements" as defined under U.S. federal securities
laws.  Generally,  the words "expect," "believe," "intend,"  "estimate," "will,"
"anticipate," and "project," and similar expressions identify a forward- looking
statement,  which speaks only as of the date the  statement  is made.  Except as
required  by law,  we do not  intend to update  or  revise  any  forward-looking
statements, whether as a result of new information, future events, or otherwise.

We believe that the  expectations  and assumptions  with respect to our forward-
looking  statements  are  reasonable.  But  by  their  nature,   forward-looking
statements involve known and unknown risks, uncertainties and other factors that
in some  cases are out of our  control.  These  factors  could  cause our actual
results to differ materially from  Brown-Forman's  historical  experience or our
present expectations or projections.  Here is a non-exclusive list of such risks
and uncertainties:

 - changes in general economic conditions, particularly in the United States
   where we earn the majority of our profits;
 - lower consumer confidence or purchasing in the wake of catastrophic events;
 - tax increases, whether at the federal or state level or in major
   international markets and/or tariff barriers or other restrictions affecting
   beverage alcohol;
 - limitations and restrictions on distribution of products and alcohol
   marketing, including advertising and promotion, as a result of stricter
   governmental policies adopted either in the United States or internationally;
 - adverse developments in the class action lawsuits filed against Brown-Forman
   and other spirits, beer and wine manufacturers alleging that our industry
   conspired to promote the consumption of alcohol by those under the legal
   drinking age;
 - a strengthening U.S. dollar against foreign currencies, especially the
   British Pound, Euro, and Australian Dollar;
 - reduced bar, restaurant, hotel and travel business in wake of terrorist
   attacks or threats, such as occurred in September 2001 in the U.S. and in
   July 2005 in London;
 - lower consumer confidence or purchasing associated with rising energy prices;
 - a decline in U.S. spirits consumption as might be indicated by recent
   published trends suggesting a slight reduction in the growth rate of
   distilled spirits consumption;
 - longer-term, a change in consumer preferences, social trends or cultural
   trends that results in the reduced consumption of our premium spirits brands;
 - changes in distribution arrangements in major markets that limit our ability
   to market or sell our products;
 - increases in the price of energy or raw materials, including grapes, grain,
   wood, glass, and plastic;
 - excess wine inventories or a further world-wide oversupply of grapes;
 - termination of our rights to distribute and market agency brands included in
   our portfolio;
 - adverse developments as a result of state investigations of beverage alcohol
   industry trade practices of suppliers, distributors and retailers.


                                       70


                                                                     Exhibit 21

                         SUBSIDIARIES OF THE REGISTRANT

                                          Percentage           State or
                                          of Voting          Jurisdiction
Name                                   Securities Owned    of Incorporation
- ----                                   ----------------    ----------------
AMG Trading, L.L.C.                           100%           Delaware
Brown-Forman Arrow Continental
 Europe, L.L.C.                               100%           Kentucky
Brown-Forman Beverages Australia Pty. Ltd.    100%           Australia
Brown-Forman Beverages North Asia, L.L.C.     100%           Delaware
B-F Korea, L.L.C.                             100%           Delaware
Brooks & Bentley Limited                      100%           United Kingdom
Brown-Forman Beverages Europe, Ltd.           100%           United Kingdom
Brown-Forman Beverages Japan, L.L.C.          100%           Delaware
Brown-Forman Thailand, L.L.C.                 100%           Delaware
Canadian Mist Distillers, Limited             100%           Ontario, Canada
Early Times Distillers Company                100%           Delaware
Fetzer Vineyards                              100%           California
Fratelli Bolla International Wines, Inc.      100%           Kentucky
Hartmann Incorporated                         100%           Delaware
Heddon's Gate Investments, Inc.               100%           Delaware
Jack Daniel's Properties, Inc.                100%           Delaware
Mt. Eagle Corporation                         100%           Delaware
Sonoma-Cutrer Vineyards, Inc.                 100%           California
Southern Comfort Properties, Inc.             100%           California
Swift and Moore Pty. Limited                  100%           Australia
Washington Investments, L.L.C.                100%           Kentucky
Woodford Reserve Stables, L.L.C.              100%           Kentucky
Longnorth Limited                             100% (1) (2)   Ireland
Clintock Limited                              100% (1) (3)   Ireland
Voldgade Holdings Ireland Limited             100% (2)       Ireland
Pitts Bay Trading Limited                      75% (3)       Bermuda
BFC Tequila Limited                            67% (3)       Ireland
Jack Daniel Distillery,
   Lem Motlow, Prop., Inc.                    100% (4)       Tennessee
Brown-Forman Korea Ltd.                       100% (5)       Korea
Fratelli Bolla, S.p.A.                        100% (6)       Italy
Brown-Forman Worldwide (Shanghai) Co., Ltd.   100% (7)       China
Brown-Forman Czech & Slovak
 Republics, s.r.o.                            100% (8)       Czech Republic
Brown-Forman Polska Sp. z o.o.                100% (8)       Poland
Brown-Forman Beverages Worldwide,
   Comercio de Bebidas Ltda.                  100% (9)       Brazil
Brown-Forman Worldwide, L.L.C.                100% (9)       Delaware
Amercain Investments C.V.                     100% (10)      Netherlands
Finlandia Vodka Worldwide Ltd.                100% (11)      Finland
Distillerie Tuoni e Canepa Srl                100% (12)      Italy
Voldgade Investment Holdings A/S              100% (13)      Denmark
Brown-Forman Beverages Edinburgh              100% (14)      Scotland
R & J Liqueurs                                100% (15)      France


The companies listed above constitute all active subsidiaries in which
Brown-Forman Corporation owns, either directly or indirectly, the majority of
the voting securities. No other active affiliated companies are controlled by
Brown-Forman Corporation.

 (1)  Includes qualifying shares assigned to Brown-Forman Corporation.
 (2)  Owned by Amercain Investments C.V.
 (3)  Owned by Longnorth Limited.
 (4)  Owned by Jack Daniel's Properties, Inc.
 (5)  Owned by B-F Korea, L.L.C.
 (6)  Owned by Fratelli Bolla International Wines, Inc.
 (7)  Owned by Brown-Forman Beverages North Asia, L.L.C.
 (8)  Owned by Brown-Forman Beverages Edinburgh.
 (9)  Owned 99% by Brown-Forman Corporation and 1% by Early Times Distillers
      Company.
(10)  Owned 95% by Brown-Forman Corporation and 5% by Heddon's Gate
      Investments, Inc.
(11)  Owned by Brown-Forman Beverages Europe, Ltd.
(12)  Owned 55% by Fratelli Bolla International Wines, Inc. and 45% by
      Voldgade Investment Holdings A/S.
(13)  Owned by Voldgade Holdings Ireland Limited.
(14)  Owned 81.8% by Voldgade Investment Holdings A/S and 18.2% by Brown-Forman
      Beverages, Europe, Ltd.
(15)  Acquired May 31, 2006 with acquisition of Chambord Liqueur.




                                                                    Exhibit 23

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statements on Form S-3 (No. 33-12413 and 33-52551) and Form S-8 (No.  333-08311,
333-38649,  333-74567,  333-77903,  333-88925,  333-89294,  and  333-117630)  of
Brown-Forman  Corporation  of our report  dated June 22,  2006  relating  to the
financial statements,  management's  assessment of the effectiveness of internal
control over financial  reporting and the effectiveness of internal control over
financial reporting,  which appears in the Annual Report to Stockholders,  which
is  incorporated  in this  Annual  Report on Form 10-K.  We also  consent to the
incorporation  by reference  of our report  dated June 22, 2006  relating to the
financial statement schedule, which appears in this Form 10-K.



/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Louisville, Kentucky
June 29, 2006




                                                                    Exhibit 31.1

       CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Paul C. Varga, certify that:

1.  I have reviewed this Annual Report on Form 10-K of Brown-Forman Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this report, fairly present in all material respects
    the financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this report.

4.  The registrant's other certifying officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
    financial reporting (as defined in Exchange Act Rules 13a-15(f) and
    15d-15(f)) for the registrant and have:

    a)  Designed such disclosure controls and procedures, or caused such
        disclosure controls and procedures to be designed under our supervision,
        to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others
        within those entities, particularly during the period in which this
        report is being prepared;

    b)  Designed such internal control over financial reporting, or caused such
        internal control over financial reporting to be designed under our
        supervision, to provide reasonable assurance regarding the reliability
        of financial reporting and the preparation of financial statements for
        external purposes in accordance with generally accepted accounting
        principles;

    c)  Evaluated the effectiveness of the registrant's disclosure controls and
        procedures and presented in this report our conclusions about the
        effectiveness of the disclosure controls and procedures, as of the end
        of the period covered by this report based on such evaluation; and

    d)  Disclosed in this report any change in the registrant's internal control
        over financial reporting that occurred during the registrant's most
        recent fiscal quarter (the registrant's fourth fiscal quarter in the
        case of an annual report) that has materially affected, or is reasonably
        likely to materially affect, the registrant's internal control over
        financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our
    most recent evaluation of internal control over financial reporting, to the
    registrant's auditors and the audit committee of the registrant's board of
    directors (or persons performing the equivalent function):

    a)  All significant deficiencies and material weaknesses in the design or
        operation of internal control over financial reporting which are
        reasonably likely to adversely affect the registrant's ability to
        record, process, summarize and report financial information; and

    b)  Any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        control over financial reporting.


Date:   June 29, 2006                           By: /s/ Paul C. Varga
                                                Paul C. Varga
                                                Chief Executive Officer


                                                                    Exhibit 31.2

     CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Phoebe A. Wood, certify that:

1.  I have reviewed this Annual Report on Form 10-K of Brown-Forman Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this report, fairly present in all material respects
    the financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this report.

4.  The registrant's other certifying officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
    financial reporting (as defined in Exchange Act Rules 13a-15(f) and
    15d-15(f)) for the registrant and have:

    a)  Designed such disclosure controls and procedures, or caused such
        disclosure controls and procedures to be designed under our supervision,
        to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others
        within those entities, particularly during the period in which this
        report is being prepared;

    b)  Designed such internal control over financial reporting, or caused such
        internal control over financial reporting to be designed under our
        supervision, to provide reasonable assurance regarding the reliability
        of financial reporting and the preparation of financial statements for
        external purposes in accordance with generally accepted accounting
        principles;

    c)  Evaluated the effectiveness of the registrant's disclosure controls and
        procedures and presented in this report our conclusions about the
        effectiveness of the disclosure controls and procedures, as of the end
        of the period covered by this report based on such evaluation; and

    d)  Disclosed in this report any change in the registrant's internal control
        over financial reporting that occurred during the registrant's most
        recent fiscal quarter (the registrant's fourth fiscal quarter in the
        case of an annual report) that has materially affected, or is reasonably
        likely to materially affect, the registrant's internal control over
        financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our
    most recent evaluation of internal control over financial reporting, to the
    registrant's auditors and the audit committee of the registrant's board of
    directors (or persons performing the equivalent function):

    a)  All significant deficiencies and material weaknesses in the design or
        operation of internal control over financial reporting which are
        reasonably likely to adversely affect the registrant's ability to
        record, process, summarize and report financial information; and

    b)  Any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        control over financial reporting.


Date:   June 29, 2006                           By: /s/ Phoebe A. Wood
                                                Phoebe A. Wood
                                                Chief Financial Officer



                                                                    Exhibit 32

    CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Brown-Forman Corporation ("the Company")
on Form 10-K for the period ended April 30, 2006,  as filed with the  Securities
and  Exchange  Commission  on  the  date  hereof  (the  "Report"),  each  of the
undersigned  hereby  certifies,  pursuant to 18 U.S.C.  Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in the capacity as an
officer of the Company, that:

(1) The Report fully complies with the requirements of Section 13(a) of the
    Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
    respects, the financial condition and results of operations of the Company.



Dated: June 29, 2006

                                           /s/ Paul C. Varga
                                           Paul C. Varga
                                           Chief Executive Officer




                                           /s/ Phoebe A. Wood
                                           Phoebe A. Wood
                                           Executive Vice President
                                            and Chief Financial Officer


A signed  original of this  written  statement  required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.

This  certificate is being  furnished  solely for purposes of Section 906 and is
not being filed as part of the Report.