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ATTORNEYS GENERAL

SETTLEMENT AGREEMENT

WITH BROOKE GROUP LTD. and

LIGGETT GROUP, INC.

March 15, 1996

This SETTLEMENT AGREEMENT is entered into this 15th day of March, 1996by and among the State of West Virginia, State of Florida, State of Mississippi,Commonwealth of Massachusetts, and State of Louisiana (collectively, "Plaintiffs"),and Brooke Group Ltd. ("Brooke Group"), a Delaware corporation,and Liggett Group, Inc. ("Liggett"), a Delaware corporation.

RECITALS

WHEREAS,

A On or about May 23, 1994, the State of Mississippi, by and throughits Attorney General, Mike Moore, brought an action entitled Moore v.The American Tobacco Co. et al., CN 94-1429, Chancery Court of JacksonCounty, Mississippi, against, among others, the American Tobacco Company,Inc., R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation,Philip Morris, Inc., Liggett & Myers, Inc., Lorillard Tobacco Company,Inc. and United States Tobacco Company and their various parent and relatedcompanies ("Defendants"), asserting claims for, among other things,expenses allegedly arising from tobacco-related matters and injunctiverelief concerning sales of cigarettes to minors (the "MississippiAction").

B. On or about September 20, 1994, the State of West Virginia, by andthrough its Attorney General Darrell V. McGraw, Jr., brought an actionentitled McGraw v. The American Tobacco Co. et al., 94-C-1707, CircuitCourt of Kanawha County, West Virginia, against, among others, the Defendantsasserting similar claims (the "West Virginia Action").

C. On or about February 21, 1995, the State of Florida, by and throughits Attorney General Robert Butterworth, brought an action entitled TheState of Florida, Lawton M. Chiles, Jr., Individually and as Governor ofthe State of Florida, Department of Business and Professional Regulation,and the Agency for Health Care Administration v. The American Tobacco Co.et al., CN 95-1466, Fifteenth Judicial Circuit, Palm Beach County,Florida, against, among others, the Defendants asserting similar claims(the "Florida Action").

D. On or about December 19, 1995, the Commonwealth of Massachusetts,by and through its Attorney General Scott Harshbarger, brought an actionentitled Commonwealth of Massachusetts v. Philip Morris, Inc. et al.,Civil No. 95-7378, Massachusetts Superior Court, against, among others,the Defendants asserting similar claims (the "Massachusetts Action").

E. On or about March 13, 1995, the State of Louisiana, by and throughits Attorney General Richard P. Ieyoub, brought an action entitled RichardP. Ieyoub, Attorney General ex rel., State of Louisiana v. The AmericanTobacco Company, et al., Civil No. 96-1209, 14^th JudicialDistrict Court, Parish of Caleasieu, State of Louisiana, against, amongothers, the Defendants asserting similar claims (the "Louisiana Action").

F. Other States are reportedly planning to bring or are consideringbringing actions similar to the above-mentioned actions.

G. On or about March 12, 1996, Brooke Group, Liggett and the plaintiffsin an action entitled Dianne Castano et al. v. The American TobaccoCompany, Inc. et al., Civil No. 94-1044, United States District Courtfor the Eastern District of Louisiana ("Castano"), enteredinto a national class settlement, subject to, among other things, courtapproval, with respect to a putative class of allegedly nicotine-dependentsmokers and their families.

H. Brooke Group and Liggett have denied, and continue to deny, eachand all of the claims and contentions alleged by the plaintiffs in eachand all of the above-mentioned actions, and have denied, and continue todeny, any wrongdoing or legal liability of any kind.

I. Plaintiffs and Brooke Group and Liggett recognize and support thepublic interest in preventing smoking by, or promotion of smoking to, childrenand adolescents.

J. The Food and Drug Administration ("FDA") has proposed certainnew regulations purportedly concerning the sale and distribution of nicotine-containingcigarettes and smokeless tobacco products to children and adolescents.

K. Brooke Group and Liggett recognize and acknowledge that defendingthe continued prosecution of Castano (or a similar putative classaction) against them through trial and appeals would require considerableresources and expense and would entail uncertainty and risk. Brooke Groupand Liggett have determined that the settlement, in accordance with thisAgreement, of the claims in Castano against them will be beneficialto Brooke Group and Liggett.

L. The Settling States and the Attorneys General recognize and acknowledgethat the continued prosecution of the Attorneys General Actions againstBrooke Group and Liggett through trial and appeals would require considerabletime and expense and would entail uncertainty, risk and delay. The SettlingStates and the Attorneys General have determined that the settlement, inaccordance with this Agreement, of the claims in Attorneys General havedetermined that the settlement, in accordance with this Agreement, of theclaims in the Attorney General Actions against Brooke Group and Liggettwill be beneficial to their respective States.

NOW, THEREFORE, in consideration of the foregoing and of the promisesand covenants set forth in this Agreement, the undersigned Attorneys General,on their own behalf and on behalf of their respective States, and BrookeGroup and Liggett hereby stipulate and agree that the Attorney GeneralActions shall be settled as against Brooke Group, Liggett and upon suchFuture Affiliate becoming bound by this Agreement, a Future Affiliate (asdefined hereinbelow) of Liggett or Brooke Group and that all claims assertedin the Attorney General Actions against Brooke Group, Liggett and suchFuture Affiliate shall be dismissed, all on the terms contained herein,as follows:

1. Definitions.

As used in and solely for the purposes of this Agreement, the followingterms shall have the following respective meanings:

"Affiliate" means a Present Affiliate or a Future Affiliate.

"Agreement" means this Settlement Agreement.

"Attorney General Actions" means the Mississippi Action, theWest Virginia Action, the Florida Action, the Massachusetts Action, andthe Louisiana Action or any similar action commenced by or on behalf ofthe other States against the Defendants.

"Attorney General Settlement Fund" means the fund establishedas provided in Section 5 of this Agreement.

"Attorney General Settlement Fund Board" or "AttorneyGeneral Board" and "Attorney General Board Document" mean,respectively, the entity to be established as provided in Section 5 ofthis Agreement and the document or documents that the Attorneys Generalof the Settling States shall enter into by which the Attorneys Generalof the Settling States, or their respective urban consumers issued by theBureau of Labor Statistics of the U.S. Department of Labor increases ordecreases for the relevant period. The beginning index figure shall bethe consumer price index for March 1996.

"Initial Settling States" means the States of Mississippi,West Virginia, Florida, the Commonwealth of Massachusetts, Louisiana, andthe respective Attorneys General thereof.

"Liggett" means Liggett Group, Inc., and Liggett & Myers,Inc.

"Market Share" means, with respect to a Defendant and a specifiedyear, the domestic market share in that year of all such Defendant's tobaccoproducts, as determined by The Maxwell Consumer Report published by WheatFirst Butcher Singer or a comparable successor report.

"Medicaid Population" means, with respect to a Settling Stateand a specified date, the Medicaid population of such Settling State asreported by the most recent United States Census.

"Non-settling Defendant" means each of the American TobaccoCo., Lorillard Tobacco Company., Philip Morris Inc., R.J. Reynolds TobaccoCompany, Brown & Williamson Tobacco Corp., and United States TobaccoCo., unless and until it becomes a Settling Defendant, as hereinafter defined.

"Parties" means the Plaintiffs, Brooke Group, Liggett andany other Settling Defendant, as hereinafter defined, if, as and when itbecomes bound by this Agreement.

"Present Affiliate" means, with respect to a specified corporation,another corporation, partnership or other entity which as of the date ofthis Agreement, directly or indirectly, controls, is controlled by, oris under common control with, such specified corporation.

"Present Value" means, with respect to a specified amountor amounts, the present value of such amount or amounts as calculated usinga discount rate equal to the yield on 10-year Treasury Notes as reportedin the Wall Street Journal at the time of such calculation.

"Pretax Income," with respect to a specified Settling Defendantother than Liggett, means, for a specified year, the operating income (orequivalent designation) from Domestic Tobacco Operations of the SettlingDefendant and its Present Affiliates, on a consolidated basis, for theSettling Defendant's most recent fiscal year, as reported in filings tothe United States Securities and Exchange Commission or, if there is nosuch filing, as reported by the Settling Defendant's independent outsideauditors. For purposes of the consolidation intended hereby, interest expenseson parent company debt and parent company corporate and other expenses,less amortization of parent company acquisition goodwill, shall be allocatedpro rata to all operating units according to operating income. If GAAPchanges in any material respect during the term of this Agreement so thatthe benefits anticipated by the parties (in light of GAAP applicable onthe date of this Agreement), an appropriate adjustment shall be made tothe formulas and calculations hereunder to achieve the parties' expectationsas of the date hereof.

"Pretax Income," with respect to Liggett, means for a specifiedyear, the "Income before Income Taxes" as determined in accordancewith generally accepted accounting principles (:GAAP") of Liggettfor its most recent fiscal year, as reported in filings to the United Securitiesand Exchange Commission or, if there is no such filing, as reported byLiggett's independent outside auditors. If GAAP changes in any materialrespect during the term of this Agreement so that the benefits anticipatedby the parties (in light of GAAP applicable on the date of this Agreement),an appropriate adjustment shall be made to the formulas and calculationshereunder to achieve the parties' expectations as of the date hereof.

"Proposed Rule" means the regulations proposed by the FDAconcerning the sale and distribution of cigarettes and other products,dated August 9, 1995, published at 21 C.F.R. Parts 801, 803, 804 and 897,and bearing document number 95N-0253.

"Settling Defendants" means Brooke Group, Liggett and, if,as, and when it joins in this Agreement, one Future Affiliate; providedthat in the event of any corporate restructuring, reorganization or spinoffinvolving any Settling Defendant, only the entity or entities which, aftersuch reorganization or spinoff, retains the Domestic Tobacco Operationsof such Settling Defendant shall thereafter be treated as the SettlingDefendant for purposes of the payment obligations of Section 6 of thisAgreement.

"Settling Defendants' Counsel" means the law firm of Kasowitz,Benson, Torres & Friedman L.L.P.

"Settling States" means the Initial Settling States and SubsequentSettling States, if any.

"Smoking Claims Expense" means, with respect to a specifiedyear, the aggregate amount of the out-of-pocket expenses paid during thatyear by a Settling Defendant for the payment of legal fees and costs, includingattorneys' fees and any settlements (other than payments made pursuantto the Castano settlement) or judgments, in connection with litigationarising from smoking-related claims other than the Attorney General Actions,(or other civil cases filed on or before January 1, 1996).

"Subsequent Settling States" means States other than the InitialSettling States which commence an Attorney General Action and which becomebound by this Agreement pursuant to Section 3.1 hereof prior to six monthsfrom the date of this Agreement (unless such six-month period is extendedor reopened at the option of the Settling Defendants).

2. Settlement Purposes Only.

2.1. This Agreement is for settlement purposes only, and neither thefact of, or any provision contained in this Agreement nor any action takenhereunder shall constitute, be construed as, or be admissible in evidenceas, any admission of the validity of any claim, any argument or any factalleged or which could have been alleged by Plaintiffs as to their standingor as to any jurisdictional, constitutional or any other legal or factualissue in any Attorney General Action or alleged or which could have beenalleged in any other action or proceeding of any kind or of any wrongdoing,fault, violation of law, or liability of any kind on the part of any ofthe Settling Defendants or any admission by any of them of any claim orallegation made or which could have been made in any Attorney General Actionor in any other action or proceeding of any kind, or as an admission byany of the Plaintiffs of the validity of any fact or defense asserted againstthem in any Attorney General Action or in any other action or proceedingof any kind.

2.2. Nothing contained in this Agreement shall constitute or be construedas any admission of the validity of the FDA's assertion of jurisdictionover cigarettes or any other product.

3. Parties.

3.1. This Agreement shall be binding, in accordance with the terms hereof,upon Brooke Group, Liggett and the Future Affiliate and the Initial SettlingStates and each Subsequent Settling State upon its execution of a copyof this Agreement; provided that the payment obligations of this Agreementshall be binding only upon the Affiliates of such Settling Defendants whichare engaged in Domestic Tobacco Operations.

3.2 The Settling States shall not seek to enjoin a spinoff or like dispositionof the stock of Nabisco Holdings, Inc. by RJR Nabisco Holdings Corp. inthe event that a slate of nominees proposed by Brooke Group for electionto the RJR Nabisco Holdings Corp. Board of Directors is elected.

4. Advertising Limitations.

4.1. Each Settling Defendant, promptly after the later of the SettlementDate and the date said Settling Defendant becomes bound by this Agreement,shall (i) withdraw its objections and opposition to the Proposed Rule andto the assertion of jurisdiction by the FDA for the sole purpose of promulgatingthe Proposed Rule with respect to all Defendants; (ii) file pleadings orother documents necessary to effectuate such withdrawal; and (ii) withdrawas a party from litigation against state officials in the Settling Statesrelated to the tobacco litigation. By withdrawing said opposition and objections,Settling Defendants do not and shall not be deemed to consent to or acknowledgesuch jurisdiction and do not and shall not be deemed to waive or abandonsaid opposition and objections in the event this Agreement is terminated.Each Settling Defendant, notwithstanding the foregoing, may object to oroppose the Proposed Rule to the extent that compliance is impractical orexcessively expensive. If, prior to the Proposed Rule taking final nonappealableeffect as to the tobacco industry generally, the FDA asserts that it hasacquired or can or should acquire jurisdiction to promulgate or enforcethe Proposed Rule as to a Settling Defendant by virtue of its entry intoor compliance with this Agreement, then, in such event, this Section 4and its subparts shall be null and void ab initio in their entirety.

4.2. Each Settling Defendant shall follow and abide by the provisionsof the Proposed Rule, insofar as they pertain solely to such Settling Defendant'sDomestic Tobacco Operations, as set forth in, and modified by, paragraphs4.2.1 to 4.2.9 hereof until a final determination is reached respectingthe Proposed Rule, at which time the Settling Defendants will be boundby the Rule only insofar as, and to the extent that, the Rule becomes anenforceable obligation binding upon all of the Settling Defendants andnon-settling Defendants.

4.2.1. Proposed Rule § 897.16(a), but only to the extent that suchsection applies to a trade or brand name of a non-tobacco product whichis in use in the United States and has a demonstrated or likely appealto minors; provided that in any dispute hereunder, the Settling Defendantshall have the burden to show compliance with this Subsection in bindingarbitration.

4.2.2. Proposed Rule § 897.16 (b), as proposed.

4.2.3. Proposed Rule § 897.16 (d), except to the extent free samplesare distributed under circumstances where no minors are present or likelyto be present.

4.2.4. Proposed Rule § 897.30 (a), as proposed.

4.2.5. Proposed Rule § 897.30 (b), but only to the extent thatsuch section applies to billboards within 1,000 feet of a clearly markedand state-licensed elementary or secondary school or a clearly marked,outdoor, municipal or other government-operated public playground for children.

4.2.6. Proposed Rule § 897.32 (a), except that the requirementsof such section will be applicable only to a publication whose regularreaders aged less than eighteen years constitute 15% or more of the publication'stotal regular readership; provided that for those publications in whichthe Settling Defendants currently advertise which exceed the 15% limitation,Settling Defendants will, through incremental reduction, meet the requirementsof this section within a period of five ( 5) years.

4.2.7. Proposed Rule § 897.34 (a), to the extent such section appliesto clothing or outerwear or to any items or services, other than clothingor outerwear, which have not prior to the date of this Agreement been marketed,licensed, distributed or sold, and which are more likely to appeal to minorsthan to adults; provided that such section does not apply to any clothing,outerwear, items or services customarily marketed, licensed, distributedor sold at the site and at the time of events permissible under section4.2.9 of this Agreement.

4.2.8. Proposed Rule § 897.34(b), to the extent that gifts or itemsdistributable or redeemable pursuant to this rule are more likely to appealto minors than to adults.

4.2.9. Proposed Rule § 897.34(c), except that such section willbe applicable only to an athletic, musical, artistic or other social orcultural event whose past patrons or attendees aged less than eighteenyears constitute 15% or more of the event's total past patronage or attendance;provided that this section does not apply to any events that Settling Defendantshave sponsored, conducted, engaged or participated in within the last tenyears.

4.3. Notwithstanding anything to the contrary in the Proposed Rule orin this Agreement, each such Settling Defendant will commence compliancewith Section 4.2 of this Agreement, according priority as to complianceto the Initial Settling States and then to Subsequently Settling Statesas soon as reasonably practicable; provided that such Settling Defendantmay limit its compliance to the extent, if any, necessary to ensure thatthe net annual out-of-pocket cost to the Settling Defendant of such compliancenot exceed $1 million; and provided further that such Settling Defendantshall not be obl-igated pursuant hereto to breach pre-existing legal obligations,if any, it may have with respect to the matters covered by Section 4.2(and shall use its reasonable best efforts to minimize the degree to whichany such obligations would impede its full compliance therewith). For purposesof this paragraph, the phrase "net annual out-of-pocket cost"means the excess of (a) the additional out-of-pocket expenditures incurredduring a particular year by a particular Settling Defendant in complyingwith the matters specified in Section 4.2, over (b) savings, if any, inout-of-pocket expenditures realized during such year by such Settling Defendantdirectly from the implementation of the matters covered by Section 4.2.

4.4. If, when and to the extent that the Proposed Rule, in whole orin part, becomes an enforceable legal obligation binding upon all of theDefendants, each Settling Defendant will comply therewith.

4.5. As promptly as reasonably practicable after becoming bound by thisAgreement, each Settling Defendant shall eliminate cartoon characters,such as "Joe Camel", from all of its advertising and promotionalmaterials and activities with respect to tobacco products.

4.6 Each Settling Defendant other than Brooke Group and Liggett shallcontribute to a fund to be administered by the Attorneys General of theSettling States, the amount of $250,000 per year, per Initial SettlingState, for a period of three years from the date such Settling Defendantbecomes bound by this Agreement for the purposes of monitoring the point-of-saleadvertising amounts, types, locations, and proximity to schools, in theInitial Settling States.

5. Attorney General Settlement Fund

5.1 All amounts due and owing by Settling Defendants under this Agreementshall be paid when due into the Attorney General Settlement Fund to beadministered, allocated and distributed by the Attorney General Board toSettling States in accordance with this Agreement and the Attorney GeneralBoard Document; it being understood that payments shall be first appliedby each Settling States to compensate state health care programs bearingthe greatest percentage of state taxpayer contribution.

5.2 Settling Defendants shall have no interest in or responsibilityfor allocations or distributions from the Attorney General Settlement Fundand do not guarantee any earnings or insure against any losses from anyportion of the Attorney General Settlement Fund assets that may be maintainedor administered as provided in Section 5.1 above.

5.3 Liggett shall pay into the Attorney General Settlement Fund (a)for the benefit of the Initial Settling States, an initial amount equalto five million dollars ($5,000,000), of which one million dollars ($1,000,000)shall be payable within five business days of the date of this Agreementand the remaining four million dollars ($4,000,000) shall be paid in equalannual installments, indexed and adjusted for Inflation, over the followingnine years during the term of this Agreement (except that any then remainingunpaid amount under this Section 5.3 (a) shall be due and payable withinsixty (60) days of the date (i) a Future Affiliate becomes bound by thisAgreement or (ii) Liggett defaults on any of its payment obligations underthis Agreement) and (b) in each year beginning in the second year duringthe term of this Agreement (i) for the benefit of the Initial SettlingStates, an annual amount equal to 2.5% of Liggett's Pretax Income and (ii)for the benefit of each Subsequent Settling State, if any, an annual amountequal to the product of (A) the ratio that the Medicaid Population of suchSubsequent Settling State then bears to a total Medicaid Population often million (10,000,000) reduced by the Medicaid Population of the InitialSettling States and (B) 5% of Liggett's Pretax Income; provided, however,that in no event shall the aggregate amount to be paid under clause (b)(ii)of this Section 5.3 ever exceed 5% of Liggett's Pretax Income. The AttorneyGeneral Board shall make all decisions regarding payments to the SettlingStates hereunder.

5.4. The Future Affiliate shall, within sixty (60) days of the datesuch Settling Defendant becomes bound by this Agreement, (a) pay into theAttorney General Settlement Fund, for the benefit of the Initial SettlingStates, an aggregate amount equal to one hundred thirty five million dollars($135,000,000), and (b) make available an amount up to twenty five milliondollars ($25,000,000) to be paid at the direction of the Attorneys GeneralBoard to Subsequent Settling States in connection with their joining thisAgreement.

5.5 The Future Affiliate shall, commencing one year after the date suchSettling Defendant becomes bound by this Agreement and on each anniversaryof such date during the term of this Agreement, pay into the Attorney GeneralSettlement Fund (a) for the benefit of the Initial Settling States, anamount equal to 2.5% of such Settling Defendant's Pretax Income, providedthat the amounts payable under this Section 5.5(a) shall not be less thanthirty million dollars ($30,000,000) per year (except as otherwise providedherein), indexed and adjusted for Inflation, and (b) for the benefit ofeach Subsequent Settling State, if any, an annual amount equal to the productof (i) the ratio that the Medicaid Population of such Subsequent SettlingState then bears to a total Medicaid Population of ten million ($10,000,000)reduced by the Medicaid Population of the Initial Settling States and (ii)5% of the Settling Defendant's Pretax Income; provided, however, that inno event shall the aggregate amount to be paid under clause (b)(ii) ofthis Section 5.5 ever exceed 5% of Liggett's Pretax Income in the aggregate.

5.6 With respect to each Settling State, in the event of the entry ofany final non-appealable monetary judgment in such Settling State's AttorneyGeneral Action (other than by way of settlement) against any one or moreof the Non-Settling Defendants, then each Settling Defendant shall havethe right to reduce the payments it is obligated to make pursuant to thisAgreement to the extent necessary to make (i) the then Present Value ofall amounts theretofore paid and thereafter payable to that Settling Statepursuant to this Agreement by any Settling Defendant per percentage pointof the then Market Share of such Settling Defendant no more than seventy-fivepercent (75%) of (ii) the then Present Value of the dollar amount of suchjudgment per percentage point of the then Market Share of each such Non-SettlingDefendant; provided that such Settling Defendant give written notice ofsuch reduction and the method of calculating such reduction to the SettlingState's Attorney General as soon as practicable after the entry of judgment;and provided further that to the extent any such reduction would reducethe Settling Defendant's annual payment to less than $30 million, indexedand increased for Inflation such Settling Defendant shall have the rightto reduce payments it is obligated to make under this Agreement only tothe extent necessary to make the quotients in Sections 5.6(i) and (ii)equal.

For purposes of this Section 5.6, computations based on future paymentsdue any of the Initial Settling States shall be based on the minimum paymentsin Sections 5.3 and 5.5, indexed and increased for inflation at 5% perannum (computations based on future payments due any Subsequent SettlingStates shall assume, solely for this purpose, that each such state wouldbe entitled to a payment proportional to the total minimum payments duethe Initial States (as so indexed and increased above), adjusted solelyfor relative size of Medicaid Population.

5.7. Each Settling Defendant shall, during the term of this Agreement,have the right to a credit against amounts due in each year pursuant tothis Agreement in an amount equal to fifty percent (50%) of the differencebetween (a) such Settling Defendant's Smoking Claims Expense in the prioryear and (b) such Settling Defendant s Smoking Claims Expense for the twelvemonths prior to the date of this Agreement; provided that the amount ofsuch credit shall not be greater than ten percent of the amounts that wouldotherwise be due from such Settling Defendant in such year; provided furtherthat each Settling Defendant shall have the right to terminate this Agreementwith respect to that Settling Defendant in the event that the amount ofsuch difference is greater than twenty-five percent (25%) of the amountso due from such Settling Defendant in such year; and provided furtherthat such credit shall not apply to the extent that it would render theamounts payable under Section 5.5 less than thirty million dollars ($30,000,000)per year.

5.8. With respect to each Settling Defendant, in each year beginningwith the second year such Settling Defendant becomes bound by this Agreement,the annual payment amount due under Sections 5.3 and 5.5 of this Agreementfrom such Settling Defendant shall be decreased in proportion to any decrease,and (only if there shall have been a prior such decrease) increased inproportion to any increase, in such Settling Defendant's Market Share fromthe prior year; provided, however, that (a) such annual payment amountshall not be so decreased to the extent, if any, that such annual paymentamount in such year is decreased as a result of a decrease in such SettlingDefendant's Pretax Income and (b) such annual payment amount shall neverbe increased such that the aggregate amount of any such increases exceedsthe aggregate amount of any such decreases (and in no event more than themaximum amount set forth in Sections 5.3, 5.4 and 5.5 hereof).

5.9. Insofar as the Castano Settlement Agreement is terminated(and no settlement contemplated by Section 11.2 thereof is entered intoin any putative class action subsequent to Castano), the CastanoCTCIR research fund contemplated by Section 6.4(b) of the CastanoSettlement Agreement shall be administered by the Attorney General Board.At the time a Future Affiliate or other entity becomes bound by this Agreementand the Castano Settlement Agreement to the extent the CTCIR ResearchFund is not funded under the Castano Settlement Agreement, that$10 million shall be paid into the Attorney General Settlement Fund andused for the same or similar purposes set forth in the Castano SettlementAgreement. If at any time under the terms of the Castano SettlementAgreement the funds with regard to the CTCIR Research Fund are due andpayable, all future funds shall be paid under the Castano SettlementAgreement. But if a lapse in the obligation occurs under Castano,the funds shall be paid under this Agreement.

5.10. If the Brooke Group or Liggett fails to consummate a merger orother transaction with a Non-Settling Defendant which results in the creationor acquisition of a Future Affiliate within three years of the date ofthe execution of this Agreement, Liggett shall pay into the Attorney GeneralSettlement Fund $5 million for distribution to each of the Initial SettlingStates on an equal share basis.

5.11. No Non-Settling Defendant may become a future Affiliate if afterthe date of this Agreement that Non-Settling Defendant has by spinoff,sale, or other transaction substantially changed its Domestic Tobacco Operationsso as to result in a material reduction in Market Share caused by suchvoluntary corporate action. No Settling Defendant shall sell, dispose ortransfer any of its cigarette brands or business without first causingthe acquiror, on behalf of itself and its successors, to be bound by allof the obligations of a Settling Defendant hereunder as to such transferredbrand or business.

6. Release.

6.1. Upon the effective date of this Agreement, or, in the case of aFuture Affiliate, the date such Future Affiliate becomes bounds by thisAgreement, for good and sufficient consideration as described herein, eachsuch Settling State and each Attorney General thereof shall for the durationor term of this Agreement (whichever is shorter) be deemed to and herebydoes release, dismiss and discharge each and every civil claim, right,and cause of action (including, without limitation, all claims for damages,restitution, medical monitoring, or any other legal and equitable relief)known or unknown, asserted or unasserted, which they had, now have or mayhereafter have against each such Settling Defendant (including its pastand present parents, subsidiaries, affiliates, employees, directors andshareholders, but only in such capacities, vis-à-vis, each suchSettling Defendant, and downstream distribution entities of Liggett orother Settling Defendant to the extent of their distribution on behalfof Liggett or other Settling Defendant, but not including any individualNon-Settling Defendants or other defendants in the Attorney General Actionsto the extent they would otherwise be part of the foregoing), (i) whichwas asserted in that State's Attorney General Action, and/or (ii) whichwas not asserted in said Action but which is smoking-related or otherwisearises out of, or concerns, the acts, facts, transactions, occurrences,representations, or omissions set forth, alleged, referred to or otherwiseembraced in the complaint of that Settling State's Attorney General Action.

Upon the later of the date of each Settling Defendant becoming boundby this Agreement and the date of each Settling State becoming bound bythis Agreement, for good and sufficient consideration as described herein,each such Settling Defendant shall for the duration or term of this Agreement(whichever is shorter) be deemed to and hereby does release, dismiss anddischarge each and every claim, right, and cause of action (including,without limitation, all claims for damages, restitution, fees, expenses,or any other legal or equitable relief), whether known or unknown, assertedor unasserted, which they had, now have or may hereafter have as of theeffective date of this Agreement against each such Settling State, itspublic officials and employees in connection with, arising out of or relatedto the acts, facts, transactions, occurrences, representations, or omissionsset forth, alleged or referred to or otherwise embraced in the complaintsof the settling Attorney General Actions.

Provided, however, as follows:

1) If this Agreement expires upon completion of its full term, thisrelease shall continue in full force and effect with respect to all releasedclaims through and including the date of such expiration, but only as tosuch claims through and including such date; if this Agreement terminatesfor any reason prior to its full term, this release shall be of no furtherforce and effect and Settling Defendants shall be entitled to a creditto the extent otherwise provided in this Agreement against all claims coveredby the release for the full amount paid by such Settling Defendants hereunder.

2) This release does not pertain or apply to any other existing or potentialdefendant in any present or future Attorney General Actions, except the"Future Affiliate" which joins in and complies with the provisionsof this Agreement, including but not limited to Sections 4 and 5.

6.2. Nothing in this Agreement shall prejudice or in any way interferewith the rights of Settling States or Settling Defendants to pursue allof their rights and remedies against non-settling Defendants or other partiesnot released hereunder.

7. Exclusive Remedy; Dismissal of Action; Jurisdiction of Court.

7.1. Except as otherwise provided in this Agreement, this Agreementshall be the sole and exclusive remedy for any and all released claimsof Settling States released hereby against the Settling Defendants, andupon the later of the date a Settling State becomes bound by this Agreement,each Settling State shall be barred from initiating, asserting, or prosecutingany claims released hereby against each such Settling Defendant.

7.2. On the later of the date each Settling State becomes bound by thisAgreement, each such Settling State shall dismiss without prejudice itscorresponding Attorney General Action as against such Settling Defendant.

7.3. On the later of the date each Settling State becomes bound by thisAgreement and the date a Settling Defendant becomes bound by this Agreement,each such Settling Defendant shall withdraw without prejudice from anyaction brought against any Settling State with respect to claims releasedhereby.

8. Term.

8.1. Unless earlier terminated in accordance with the provisions ofthis Agreement. the duration of this Agreement with respect to each SettlingDefendant shall be twenty-five (25) years from the Settlement Date.

8.2. Each Settling Defendant shall have the right to terminate thisAgreement with respect to that Settling Defendant and with respect to theSettling State in which there is a full and final dismissal on the meritsas to any of the Defendants in that Settling State's Attorney General Action;provided that in the event of any such termination, the payments due fromsuch Settling Defendant pursuant to this Agreement shall be reduced bythe amount payable to that Settling State; provided further that any andall payments made pursuant to this Agreement prior to any such terminationby such Settling Defendant shall be retained by the Attorney General SettlementFund. The Attorney General Board shall provide the Settling Defendant withthe information necessary to determine the amount of such reduction.

8.3. Each Settling Defendant shall have the right to terminate thisAgreement with respect to such Settling Defendant in the event that, inits sole and exclusive discretion, it determines that too many states havefiled Attorney General Actions and have not resolved such cases with respectto the Settling Defendant by becoming bound by this Agreement in accordancewith the terms hereof; provided that such Settling Defendant give writtennotice of such termination to the Attorneys General of the Settling Statesand provided further that any and all payments due up to the date of suchtermination shall be paid and all payments made pursuant to this Agreementprior to the giving of such notice by such Settling Defendant shall beretained by the Attorney General Settlement Fund.

8.4 In the event of a termination of this Agreement with respect toany Settling State by any Settling Defendant, such Settling Defendant shallbe entitled to offset any payments made to such Settling State prior theretoagainst any judgments thereafter obtained by such Settling State againstsuch Settling Defendant in an Attorney General Action.

8.5 If any Settling Defendant subsequently withdraws from this Agreement,or this Agreement, for whatever reason, is terminated other than by reasonof the expiration of its term, then the applicable statute of limitationsor any similar time requirement for a Settling State or a termination SettlingDefendant to file a claim that would otherwise be released hereunder againstor by any Settling Defendant shall be tolled from the date such SettlingState became bound by this Agreement until the later of the time permittedby applicable law or for one year from the date of such termination withthe effect that the parties shall be in the same position as they wereat the time the Settling State filed its original Attorney General Actionwith respect to the statute of limitations.

8.6. Except as may be otherwise specifically provided in this Agreement,a termination by a Settling Defendant hereunder shall have the effect ofrendering this Agreement as having no force or effect whatsoever, nulland void ab initio, and not admissible as evidence for any purposein any pending or future litigation in any jurisdiction.

9. Continuing Enforceability

Unless earlier terminated, as to the Settling States, this Agreementand each provision of or obligation arising from this Agreement shall continueand remain fully executory and enforceable if a Settling Defendant institutesor is subject to the institution against it of any proceeding or voluntarycase under title 11, United States Code, or other proceeding seeking toadjudicate it insolvent or seeking liquidation, winding up, reorganization,arrangement, adjustment, protection, relief or composition of it or itsdebts under any law relating to bankruptcy, insolvency or reorganizationor relief or protection of debtors or other proceeding seeking the entryof an order for relief or the appointment of a receiver, trustee, custodianor other similar official for it or for any part of its property (each,a "Bankruptcy Proceeding"). The Settling States acknowledge andagree that Brooke Group has the right but not the obligation to cure andto perform any and all obligations of Liggett under this Agreement notwithstandingthe occurrence and continuation of any Bankruptcy Proceeding with respectto Liggett; provided, however, that until such time as Liggett decideswhether to reject or assume this Agreement, Brooke Group shall have theobligation to pay the annual installments as provided by Section 5.3(a)hereof and so long as the Brooke Group is paying all amounts due hereunderand no such payments are voidable, then the Settling States waive any andall rights they may have not to accept such cure or performance in anyBankruptcy Proceeding.

10. Entry of Good Faith Bar Order on Contribution and Indemnity Claims.

10.1. The Parties shall request the respective courts in the AttorneyGeneral Actions enter orders barring and prohibiting the commencement andprosecution of any claim or action by any non-settling Defendant againstany Settling Defendant, including but not limited to any contribution,indemnity and/or subrogation claim seeking reimbursement for payments madeor to be made to any Settlement Class member for claims settled under thisAgreement. Settling Defendants shall be entitled to dismissal with prejudiceof any Non-Settling Defendant's claims against them which violate or areinconsistent with this bar, if granted.

10.2. Upon entering into this Agreement, each Settling State shall seekto amend its pleadings, or take such other appropriate steps (including,but not limited to, moving to dismiss third-party claims asserted againsta Settling Defendant), such that each Settling State is seeking only recoveryof amounts from Non-Settling Defendants as to which said Non-Settling Defendantshave no claim or right to contribution or indemnification from SettlingDefendants. The Settling State shall not seek to collect any amount onany judgment against a Non-Settling Defendant to the extent that such Non-SettlingDefendant has a right of contribution or indemnification against any oneof the Settling Defendant. Brooke Group and Liggett represent and warrantto the Settling State that none of them are subject to any agreement orunderstanding, written or otherwise, with any Non-Settling Defendants orany other party that entitles any Non-Settling Defendant to indemnity orcontribution from the Brooke Group or Liggett.

10.3 Should a Settling State receive a final non-appealable monetaryjudgment against a Non-Settling Defendant which then results in the Non-SettlingDefendant being legally entitled to require a Settling Defendant to makepayment toward that judgment, the Settling States shall seek Court approvalto reduce the judgment by an amount sufficient to result in the SettlingDefendant having no obligation toward the judgment.

10.4. In the event that a Settling Defendant has entered into any contractor series of contracts, the effect of which is to render the Settling Defendantliable for all or any portion of a tobacco liability judgment entered againsta Non-Settling Defendant, and to render a Non-Settling Defendant liablefor all or any portion of a tobacco liability judgment entered againstsuch Settling Defendant (a "Reciprocal Payment Arrangement"),the Settling Defendant shall endeavor to terminate such Reciprocal PaymentArrangement or have same judicially declared to be null and void. In theevent that a Settling State obtains a judgment in its Attorney GeneralAction against a Non-Settling Defendant (the "NSD Obligee") which,pursuant to a Reciprocal Payment Arrangement, would have to be paid inwhole or in part by a Settling Defendant, such Settling Defendant shallpermit the Settling State to enter judgment against it in the same or otherAttorney General Action in an amount sufficient to require a Non-SettlingDefendant (the "NSD Obligor") to pay, pursuant to a ReciprocalPayment Obligation, a sum equal to the amount of the judgment against theNSD Obligee which the NSD Obligee claims must be paid by such SettlingDefendant, and such Settling State shall accept an assignment from theSettling Defendant of its right to payment by the NSD Obligor as full satisfactionof said judgment. The NSD Obligee and the NSD Obligor may, but need not,be the same entity.

10.5. In the event that any potential Future Affiliate shall have enteredinto any contract the effect of which is to render the potential FutureAffiliate label for all or any portion of a tobacco liability judgmententered against another Non-Settling Defendant and which is not part ofa Reciprocal Payment Arrangement (a "Unilateral Payment Obligation"),then at the time the potential Future Affiliate seeks to join this Agreement,it will advise the Settling States of the existence of any such contract,and the Settling States and the potential Future Affiliate shall thereuponcooperate in seeking a judicial determination that the Unilateral PaymentObligation is null and void and, until resolution of said request for judicialdeclaration, all payment obligations of the Settling Defendant under thisAgreement will be suspended. In the event that such determination is judiciallydenied, or there is no resolution within a period of one year, the potentialFuture Affiliate may either terminate within thirty (30) days thereafterits election to join this Agreement, or if the potential Future Affiliatefails to so terminate, then it shall join in this Agreement and honor allof its obligations hereunder notwithstanding such Unilateral Payments Obligation.

11. Tax Status of Attorney General Settlement Fund

11.1 The Attorney General Settlement Fund created under this Agreementwill be established and maintained as a Qualified Settlement Fund ("QSF")in accordance with Section 468B of the Internal Revenue Code of 1986, asamended, and the regulations promulgated thereunder. Any Settling Defendantshall be permitted, in its discretion, and at its own cost, to seek a privateletter ruling from the Internal Revenue Service ("IRS") regardingthe tax status of the Attorney General Settlement Fund. The parties agreeto negotiate in good faith any changes to the Agreement which may be necessaryto obtain IRS approval of the Attorney General Settlement Fund as a QSF.

11.2 The Attorney General Board is appointed to act as administratorof the Attorney General Settlement fund. As administrator, such board willundertake the following actions in accordance with the regulations underIRC section 468B: (a) the Board shall apply for the tax identificationnumber required for the Attorney General Settlement Fund; (b) the Boardshall file, or cause to be filed, all tax returns the Attorney GeneralSettlement Fund is required to file under federal or state laws; (c) theBoard shall pay from the Attorney General Settlement Fund all taxes thatare imposed upon the Attorney General Settlement Fund by federal or statelaws; and (d) the Board shall file, or cause to be filed, tax electionsavailable to the Attorney General Settlement Fund, including a requestfor a prompt assessment under IRC section 6501(d) if and when the boarddeems it appropriate to do so.

11.3 The Settling Defendants, as transferors of the Attorney GeneralSettlement Fund, shall prepare and file the information statements concerningtheir settlement payments to the Attorney General Settlement Fund as requiredto be provided to the IRS pursuant to the regulations under IRC section468B.

12. Effect of Default of Any Settling Defendant.

In the event any Settling Defendant fails to make a payment due andowing under the terms of this Agreement, or is in default of this Agreementin any other respect, Plaintiffs' Counsel shall so notify the defaultingSettling Defendant, which shall then be given up to 60 calendar days to"cure" the default. If the defaulting Settling Defendant doesnot "cure" the default in the time provided in this Section 12,the Settling State may apply to the court for relief in additionto any other remedies it may have hereunder.

13. Representations and Warranties.

13.1. Each Settling Defendant represents and warrants that it (i) hasall requisite corporate power and authority to execute, deliver and performthis Agreement and to consummate the transactions contemplated hereby;(ii) the execution, delivery and performance by such Settling Defendantof this Agreement and the consummation by it of the actions contemplatedherein have been duly authorized by all necessary corporate action on thepart of such Settling Defendant; (iii) the Agreement has been duly andvalidly executed and delivered by such Settling Defendant and constitutesits legal, valid and binding obligation; and (iv) this Agreement does notviolate the charter or bylaws of such Settling Defendant or any agreementto which the Settling Defendant (other than the Future Affiliate) is aparty.

13.2 Each Settling State represents and warrants that pursuant to itsstatutory and/or common law authority (i) it has all requisite power andauthority to execute, deliver and perform this Agreement and to consummatethe transactions contemplated hereby; (ii) the execution, delivery andperformance by such Settling State of this Agreement and the consummationby it of the actions contemplated herein have been duly authorized by allnecessary action on the part of such Settling State; and (iii) the Agreementhas been duly executed and authorized by such Settling State and constitutesits legal, valid and binding obligation.

14. Arbitration.

In the event that the Parties are unable to agree, after good faithefforts, as to the determination or calculation for any applicable yearof Market Share or Pretax Income hereunder, such determination or calculationshall be submitted to binding arbitration in accordance with the rulesof the American Arbitration Association.

15. Most Favored Nation.

15.1 It is the intent of the parties hereto that the Settling Defendantsenjoy a preferred position with respect to Non-Settling Defendants, inrecognition of the Settling Defendants' willingness to enter into thisAgreement. Accordingly, it is generally contemplated that settlements whichinvolve all Settling States and a Non-Settling Defendant (a "GroupOther Settlement") or involving one Settling State and a Non-SettlingDefendant (a "Single State Other Settlement") shall meet certainrequirements in terms of the initial, periodic or lump sum payments tobe made by the Non-Settling Defendant (each a "Benchmark Figure").For purposes of this Section, a settlement involving a Non-Settling Defendantand some, but not all, Settling States, shall be deemed a Single StateOther Settlement, and the preferred position of the Settling Defendantshall be governed by subsections 15.1.4, 15.1.5 and 15.1.6 hereof, anddetermined on a state-by-state basis.

15.1.1. In the case of a Group Other Settlement which includes an InitialPayment such as that provided for in Section 5.3 hereof, the BenchmarkFigure shall be that figure which represents three times the Present Valueof the Initial Payment made hereunder, adjusted for Market Share at thetime of such payment. Thus, if at the time of the Initial Payment hereunder,the Future Affiliate had a market share of 20 percent, and made a paymentthe Present Value of which is $150 million, and the Settling States subsequentlyenter into a Group Other Settlement with a Non-Settling Defendant whichhas a market share of 10 percent, the Benchmark Figure for the InitialPayment shall be $225 million. To the extent that the Initial Payment actuallyprovided for in such Group Other Settlement is less than the BenchmarkFigure, the Settling Defendant shall receive a credit in like amount, upto the amount of the present value of the Initial Payment made hereunder,against all future payment obligations hereunder.

15.1.2. In the case of a (i) Group Other Settlement which includes onlya lump sum or periodic payments, and (ii) with respect to the periodicpayments included in a Group Other Settlement which also includes an InitialPayment, if the percentage of Pretax Income payable by a Settling Defendanthereunder is between 2.0 and 5.0 percent, the Benchmark Figure shall bethat amount which constitutes three times the Present Value of all amountspaid or payable by the Settling Defendant hereunder (excluding, if theGroup Other Settlement contains an Initial Payment, the Initial Paymenthereunder), assuming, in the case of future payments, no increase or decreasein Market Share but assuming inflation in revenues, all adjusted for MarketShare. Thus, if the Present Value of Settling Defendant's payments madeor to be made hereunder is $600 million and such Settling Defendant enjoysa Market Share of 20%, the Benchmark Figure for a Non-Settling Defendantwhich at the time of a Group Other Settlement enjoys a Market Share of15% would be $1,350 million. Similarly, the Benchmark Figure for a Non-SettlingDefendant which at the time of a Group Other Settlement enjoys a MarketShare of 5% would be $450 million. To the extent that the Present Valueof the lump sum or periodic payments to be made under a Group Other Settlementis less than the Benchmark Figure, the Settling Defendant shall receivea credit in like amount, up to the amount of any remaining payment obligationshereunder.

15.1.3. In the case of a Group Other Settlement such as described in15.1.2., if the percentage of Pretax Income payable by a Settling Defendanthereunder is in excess of 5.0 percent, the Benchmark Figure computed asin 15.1.2 above, except that the multiplier shall be the quotient yieldedby dividing the percentage of Pretax Income payable by the Settling Defendantplus 10 by the percentage of Pretax Income payable by the Settling Defendant.Thus, if the Settling Defendant is paying 6.0 percent Pretax Income, themultiplier is 6 + 10 divided by 6 = 2-2/3; if the Settling Defendant ispaying 7.5 percent of Pretax Income, the multiplier is 7.5 + 10 dividedby 7.5 = 2-1/3.

15.1.4. In the case of a Single State Other Payment which includes anInitial Payment such as that provided for in Section 5.3 hereof, the BenchmarkFigure shall be that figure which represents three times the present valueof the Initial Payment made hereunder to such Settling State, adjustedfor Market Share at the time of such payment, computed in accordance withSection 15.1.1. To the extent that the Initial Payment actually providedfor in such Single State Other Settlement is less than the Benchmark Figure,the Settling Defendant shall receive a credit in like amount, up to theamount of the present value of the Initial Payment made to the SettlingState hereunder, against all future payment obligations to the SettlingState hereunder.

15.1.5. In the case of a Single State Other Settlement which includesonly a lump sum or periodic payments, and with respect to the periodicpayments included in a Single State Other Settlement which also includesan Initial Payment, if the percentage of Pretax Income payable by a SettlingDefendant to all Settling States hereunder is between 2.5 and 5.0 percent,the Benchmark Figure shall be that amount which constitutes three timesthe Present Value of all amounts paid or payable by the Settling Defendantto the Settling State hereunder (excluding, if the Single State Other Settlementcontains an Initial Payment, (the Initial Payment hereunder), assuming,in the case of future payments, no increase or decrease in Market Sharebut assuming Inflation in revenues, all adjusted for Market Share, computedas set forth in Section 15.1.2. To the extent that the Present Value ofthe lump sum or periodic payments to be made under a Single State OtherSettlement is less than the Benchmark Figure, the Settling Defendant shallreceive a credit in like amount, up to the amount of any remaining paymentobligations to the Settling State hereunder.

15.1.6. In the case of a Single State Other Settlement such as describedin 15.1.5, if the percentage of Pretax Income payable by a Settling Defendantto all Settling States hereunder is in excess of 5.0 percent, the BenchmarkFigure shall be computed as in 15.1.2 above, except that the multipliershall be the quotient yielded by dividing the percentage of Pretax Incomepayable by the Settling Defendant to all Settling States plus 10 by thepercentage of Pretax Income payable by the Settling Defendant to all SettlingStates.

15.1.7. Solely for the purposes of Sections 15.1.5 and 15.1.6, the paymentsdue to each of the Initial Settling States shall be deemed to be equivalentto 0.5% of the Settling Defendant's Pretax Income. In cases of determiningPresent Value of future payments, each Initial Settling State's share shallbe one-fifth of the amount computed in accordance with the second paragraphof Section 5.6 hereof.

15.2 Except as provided in Section 15.1 hereof, in the event that, subsequentto the date of this Agreement, any settlement of any Settling State's AttorneyGeneral Action is reached with any Non-Settling Defendant which is nota Party hereto and such settlement is on any terms more favorable to suchNon-Settling Defendant than are the terms of this Agreement to a SettlingDefendant, such Settling Defendant shall have the right to replace or modifyany or all of the terms of this Agreement with, or add to this Agreement,any or all such more favorable terms.

15.3 In the event that, subsequent to the date of this Agreement, anyof the Settling Defendants enters into a settlement agreement with anyState other than a Settling State on terms relating to the then PresentValue of amounts payable under such settlement agreement, compliance withthe Proposed Rule or cooperation that are more favorable to the State thanthose contained herein (as adjusted for relative Medicaid Population),the Settling States shall have the right with respect to such SettlingDefendant to replace or modify any or all of the terms of this Agreementwith, or add to this Agreement, any or all such more favorable terms (adjustedfor relative Medicaid Populations).

16. Miscellaneous.

16.1 All terms of this Agreement and/or obligations created therebyshall be deemed to include a covenant of good faith and fair dealing onbehalf of all parties.

16.2 Brooke shall provide to the Settling States at the time of executionof this Agreement and at the time the Future Affiliate joins this Agreement,an opinion in form satisfactory to the Settling States from legal counselfor the Brooke Group (or Future Affiliate, as the case may be) as to thedue execution of the Settlement Agreement by the Brooke Group and Liggett(or Future Affiliate, as the case may be) and its enforceability againstthe Brooke Group, Liggett (or Future Affiliate, as the case may be) andsuch other matters contemplated by Section 13.1 (other than the "agreements"references in clause (iv)).

16.3 In the event that a termination occurs pursuant to any sectionsof this Agreement, no Settling State shall be required to return any payment.

16.4. This Agreement, including all Exhibits attached hereto, if any,shall constitute the entire Agreement among the Parties with regard tothe subject of this Agreement and shall supersede any previous agreementsand understandings between the Parties with respect to the subject matterof this Agreement. This Agreement may not be changed, modified, or amendedexcept in writing signed by all Parties.

16.5. With respect to each Settling State, this Agreement shall be construedunder and governed by the laws of such State applied without regard toits laws applicable to choice of law.

16.6. This Agreement may be executed by the Parties in one or more counterpartsand by facsimile, each of which shall be deemed an original but all ofwhich together shall constitute one and the same instrument.

16.7. This Agreement shall be binding upon and inure to the benefitof the Settling States, the Settling Defendants, and their representatives,heirs, successors, and assigns.

16.8. Nothing in this Agreement shall be construed to subject any SettlingDefendant's parent or affiliated company to the obligations or liabilitiesof that Settling Defendant except as otherwise provided herein.

16.9 The headings of the Sections of this Agreement are included forconvenience only and shall not be deemed to constitute part of this Agreementor to affect its construction.

16.10. Any notice, request, instruction, application for Court orderssought in connection with this Agreement or other document to be givenby any Party to any other Party shall be in writing and delivered personallyor sent by registered or certified mail, postage prepaid, if to the SettlingDefendants to the attention of each Settling Defendant's respective representativeand to Plaintiffs' Counsel on behalf of the Settling States. As of thedate of this Agreement, the respective representatives are as follows:

Mike Moore

Attorney General of the State Of Mississippi