Admission by Liggett
‘a critical turning point’

By Star-Bulletin staff and wire reports
Friday, March 21, 1997

For a tobacco company to admit that smoking is addictive and causes cancer is "a critical turning point" in the legal offensive by 22 states against the tobacco industry, said the Honolulu attorney who represents the state in its lawsuit to recoup millions of dollars spent treating smoking-related health problems.

"The next step is to get these documents in the public eye," said Gary Galiher in response to the Liggett Group agreement announced this week.

Hawaii attorney general Margery Bronster was with other states' attorneys at a news conference in Washington, D.C., yesterday to announce the terms of the Liggett settlement.

The smallest of the five major tobacco companies completed its defection from the rest of the industry yesterday, agreeing to settle lawsuits in 22 states and to help state prosecutors go after the nation's biggest cigarette manufacturers.

The settlement was seen as a historic turning point in the three-decade-long war on smoking in this country, the first step in changing the way cigarettes are sold and consumed. For the first time, a tobacco company has admitted that nicotine is addictive, that smoking causes cancer and that the industry targets young people.

Those admissions, together with thousands of pages of damning documents and the promised testimony of current and former employees, is expected to help both state and federal prosecutors bring the big tobacco companies to their knees.

"All they're selling is free-based nicotine," said Galiher, who was contracted to handle the case when the state filed a lawsuit in February against the manufacturers and their research and public relations arms.

"It should be regulated as a drug and they shouldn't be able to pander to children."


The Castano Ligett Settlement

            CASTANO SETTLEMENT



This SETTLEMENT AGREEMENT is entered into this 12h day

of March , 1996 by and between Dianne Castano and Ernest Perry,

the putative representative plalntiffs (collectively,

"Plaintiffs") in Dianne Castano, et al. v. The American Tobacco

Company, Inc., et al., Civil No. 94-1044, United States District

Court for the Eastern District of Louisiana ( "Castano"), for

themselves and on behalf of the plaintiff settlement class as

hereinafter defined ("Settlement Class"), and Brooke Group Ltd.

("Brooke Group"), a Delaware corporation, and Liggett Group, Inc.

("Liggett"), a Delaware corporation.



RECITALS



               WHEREAS,



              A. On March 29, 1994, a putative class action

complaint was filed to commence the Castano action against, among

others, The American Tobacco Company, Inc., R.J. Reynoldd 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

related companies, asserting claims on behalf of a putative class

of allegedly nicotine-dependent smokers and their families,

seeking among other things, compensatory and punitive damages, as

well as certain equitable relief.



              B. On February 17, 1995, in an Order and Reasons

published at 160 F.R.V. 544 (E.D. La. 1995), the District Court

conditionally certified Castano as a class action.

+             C. On July 26, 1995, the United States Court of

Appeals for the Fifth Clx+uit granted the defendants in Castano

leave to appeal the District Court's decision conditionally

certifying Castano as a class action. That appeal is presently

pendiing .



              D. Brooke Group and Liggett have denied, and continue

to deny each and all of the claims and contentions alleged by

the plaintiffs in the Castano case, have denied, and continue to

deny, that Castano has been, or could be, properly certified as a

trial class action and have denied, and continue to deny, any

wrongdoing or any legal liability of any kind.



              E. Plaintiffs and Brooke Group and Liggett recognize

and suppo+t the public interest in preventing smoking by, or

promotion of smoking to, children and adolesccnts.



              F . The Food and Drug Administration ("FDA") has

proposed certain new reguiations purported1y concerning the sale

and d1stribution of nicotine-containing cigarettes and smokeless

tobacco products to children and adolescents.



               G. Brooke Group and Liggett recognize and

acknowledge

that defending the continued prosecution of Castano (or a similar

putative class action) against them through tria1 and appea1s

would require considerab1e resources and expense and would entail

uncertainty and risk. Brooke Group and Liggett have determined

                      

that the settlement, in accordance with this Agreement, of the

claims in Castano against them will be beneficial to Brooke Group

and Liggett.



  ~       H.   Plaintiffs recognize and acknowledge that the

continued prosecution of Castano against Brooke Group and Liggett

through trial and appeals would require considerable time and

expense and would entail uncertainty, risk and delay.  Plaintiffs

have determined that the settlement, in accordance with this

Agreement, of the claims in Castano against Brooke Group and

Liggett will he beneficial to the class.



         NOW, THEREFORE, in consideration of the foregoing and

ff the promises and covenants set forth in this Agreement,

Plaintiffs, on their own behalf and on behalf oi the Settiement

Class, and Brooke Groupa+nd Liggett hereby stipulate and agree

that, conditional upon the approval of the District Court as

required by the Federal Rules of Civil Procedure and as provided

herein, Castano shall be settled as against Brooke Group, Liggett

and a Future Affiliate (as defined hereinbelow) of Liggett or

Brooke Group and that all claims asserted by or on behalf of

class members in Castano against Brooke Group, Liggett and such

Future Affiliate shall be dismissed with prejudice, all on the

terms contained herein, as follows:



   1. Definitions.



             As used in and solely for the purposes of this

Agreement, the following terms shall have the following

respective meanings:





             "Affiliate" means a Present Affiliate or a Future

Affiliate.



             "Agreement" means this Settlement Agreement.



             "Approved Smoking Cessation Programs" means a smoking

cessation treatment or program applied by the Castano Board.



            "Brooke Group" means Brooke Group, Ltd. and its Present

Affiliates other than Liggett.

+          "Castano" means the above-captioned acion, Clvil No.

94-1044, pending in the United States Distict Court for the

Eastern District of Louisiana.



           "Castano Center for Tobacco Control Innovation And

Research" ("Castano CTCIR") and "CTCIR Document" mean,

respectively, the entity to be established as provided in

Section 6 of this Agreement and the docucent attached hereto as

Exhibit 8.



          "Castsno Defendants" means Thc American Tobacco Co.,

Lorillard Tobacco Co., Philip Morris Inc., R.J. Reynolds Tohacco

Co., Brown & Williamson Tobacco Corp., Liggett & Myers, Inc. and

United States Tobacco Co.





         "Castano Plaintiffs Legal Committee" means the

attorneys appointed by the District Court as plaintiffs' class

counsel and designated in Castano as Plaintiffs' Legal Committee.



         "Castano Settlement Fund Boar" ("Castano Board") and

"Castano Board Document" mean, respectively, the entity to be

established as provided in Section 6 of this Agreement and the

document annexed hereto as Exhibit A, approved by the District

Court to adminlster the Settlement Fund provided for under the

terms of this Agreement.



+         "District Court" means the United States District Court

for the Eastern District of Louisiana.



         "Domestic Tobacco Operations" means the manufacture

and/or sale of cigarettes in the United States and its

possessions.



         "Eligible Settlement Class Members" means the

Sett1ement class membexs defined in Section 6.2.2 of this

Agreement.

+         "Fairness Hearing" means the hearing to be conducted by

the District Court in conneetion with the determination of the

fairness, adequacy and. reasonableness of this Agreement under

Fed. R, Civ. P. 23.



            "Final Order and Judgment" means the order to be

entered by the District Court, in a form which is mutually

agreeable to the Parties, approving this Agreement without

material alterations, as fair, adequate and reasonable under Fed.

R. Civ. P. 23, confirming the Settlement Class certification

under Fed. R. Civ. P. 23, and making such other findings and

determiations as the District Court deems necessary and

appropriate to effectuate the terms of this Agreement.



         "First Opt Out Period" means the period commencing on

the Initial Notice Date and extending for a period of time as

provided in Section 7.3 hereof.



         "Future Affiliate" means any entity, other than an

entity with a Market Share greater than 30%, which is a defendant

in Castano and which, with the prior written approval of Brooke

Group, subsequent to the date, and during the term, of this

Agreement:  directly or indirectly acquires or is acquired by

Liggett or Brooke Groupi which directly or indirectly acquires

all or sustantially all of the stock or assets of Liggett or

Brooke Group; all or substantially all of whose stock or assets

are directly or indirectly acquired by Brooke Group or Liggett

or directly or indirectly merges or otherwise combines with

Brooke Group or Liggett.



          "Initial Notice" means, with respect to a Settling

Defendant, the written notice document to be provided by such

Settling Defendant to Settlement Class members as defined in

Section 7.1 of this Agreement.



          "Initial Notice Date" means, with respect to a Settling

Defendant, the first date upon which Initial Notice is given by

such Settling Defendant to the settlement Class pursuant to

Section 7.1 of this Agreement.



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

Myers, Inc.



          "Market Share" means, with respect to a Castano

Defendant and a specified year, the domestic market share in that

year of all of such defendant's tobacco products, as determined

by The Maxwell Consumer Report published by Wheat First Butcher

Singer.



          "Medical Practitioner" means, with respect to a

Settlement Class member, the medical practitioner referred to in

the definition of Regular Smoker in this Section 1.



          "Notice Period" means the Initial Notice Period or a

Subsequent Notice Period.



          "Parties" means the Plaintiffs, Brooke Group, Liggett

and any other settling Defendant, as hereinafter defined, if, as

and when it becomes bound by thls Agreement.



         "Preliminary Approval" means the District Court's

conditional certification of the Settlement Class, preliminary

approval of this Agreement, approval of the form of notice to the

Settlement Class pursuant to Fed. R. Civ. P. 23 (or the setting

of a date for the approval or submission for approval of the form

of such notice), and entry of an order substantially in the form

of Exhibit C hereto.



         "Present Affiliate" means, with respect to a specified

corporation, another corporation, partnership or other entity

which as of the date of this Agreement, directly or indirectly,

controls, is controlled by, or is under common control with, such

specified corporation.



         "Present Value" means, with respect to a specified

amount or amounts, the present value of such amount or amounts as

calculated using a discount rate equal to the yield on 10-year

Treasury Notes as reported in the Wall Street Journal at the time

of such calculation.



         "Pretax Income", with respect to a specified Settling

defendant other than Liggett means, for a specified year the

operating income or equivalent designations from domestic

Tobacco Operations of the Settling Defendant and its Present

Affiliates, on a consolidated basis, for the Settling Defendant's

most recent fiscal year, as reported in filings to the United

States Securities and Exchange Commission or, if there is no such

filing, as reported by the Settling Defendant's independent

outside auditors.  For purposes of the consolidation intended

hereby, parent company debt and parent company corporate and

other expenses, less amortization of parent company acquisition

goodwill, shall be allocated pro rata to all operating units

according to operating income.



         "Pretax Income", with respect to Liggett, means for a

specifled year, the operating income af Liggett for its most

recent fiscal year, as reported in filings to the United States

Securities and Exchange Commission or, if there is no such

filing, as reported by Liggett's independent outside auditors.



        "Proposed Rule" means the regulations proposed by the

FDA concerning 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.



    "Regular Smokers" means:



    (a)  all cigarette smokers who have been diagnosed by a

medical practitioner as nicotine-dependent; and



    (b)  all regular cigarette smokers who were or have

been advised by a medical practitioner that

smoking has had or will have adverse health

consequences who thereafter do not or have not

quit smoking; and



    (c)  all cigarette smokers who claim or are claimed to

be addicted to cigarette smoking; and



    (d)  all cigarette smokers who have smoked regularly

for at least an aggregate of one year.



    "Settlement Class" means, as of each date during the

term of this agreement, a settlement class composed of



    (a)  all past and present Regular smokers in the United

States, its territories, possessions and the

Commonnwealth of Puerto Rico; and



    (b) the estates, representatives, and administrators

of these Regular Smokers; and



    (c)  the spouses, children, relatives and "significant

others" of these Regular Smokers as their heirs or

survivors;

provided that excluded from such settlement class are (a) all

persons who, in accordance with the terms of this Agreement and

under such procedures, conditions and deadlines may be

established by the District Court in connection with this

agreement, executive a timely request for exclusion (Opt-Out) from

the Settlment class; and (b) offices, directors or employees of

any of the Castano Defendants.

+   "Settlement Date" means the date on which all of the

following shall have occurred: (a) the entry of the Final Order

and Judgment without material modification and (b) the

achievement of finality for the Final Order and Judgment by

virtue of that order having become final and non-appealable

through (i) the expiration of all appropriate appeal periods

without an appeal having been filed, (ii) the final affirmance of

the Final Order and argument o appeal o+ final di+missal or denial

of all such appeals, including petitions for review, rehearing or

certiorari; or (iii) final disposition of any proceedings,

including any appeals, resulting from any appeal from the entry

of the Final Order and Judgment.



            "Settlement Fund" means the fund established in

accordance with the terms of Section 6 of thls Agreement.



            "Settling Defendants" means Brooke Group, Liggett and

one Future Affiliate of Brooke Group or Liggett, provided that in

the event of any corporate restructuring, reorganization or

spinoff involving any Settling defendant, only the corporation

which, after such reorganization or spinoff, retains the Domestic

Tobacco operations of such Settling defendant shall thereafter be

treated as the Settling Defendant for purposes of the payment

obligations of Section 6 of this Agreement.



          "Settllng Defendants' Counsel" means the law firm of

Kasowitz, Benson, Torres + Friedman L.L.P.



           "Smoking Claims Expense" means, with respect to a

specified year, the aggregate amount of the out-of-pocket

expenses paid during that year by a Settling Defendant for the

payment of legal fees and costs, including attorneys' fees and

any settlements or judgments in connection with litigation

aising from smoking-related claims other than Castano, Attorney

General Actions, or other civil cases filed on or before January

1, 1996.



        "Subsequent Notice" means, with respect to a Settling

Defendant, the written notice to be provided by such Settling

Defendant to Settlement Class members as defined and provided by

Section 7.4 of this Agreement.



         "Subsequent Notice Dates" means the dates defined in

Section 7.4 hereof.



         "Subsequent Opt Out Period" means the period commencing

of a Subsequent Notice Date and extending for a reasonble period

of time as provided in Section 7.5 hereof.





  2. Settlement Purposes Only.

+         2.1. This agreement is for settlement purposes only,

and neither the fact of, nor any provision contained in, this

Agreement nor any action taken hereunder shall constitute, be

construed as, or be admissible in evidence as, any admission of

the validity of any claim, any argument or any fact alleged or

which could have been alleged by Plaintiff in Castano or alleged

or which could have been alleged 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 of the Settling

Defendants or any admission by any of them of any claim or

allegation made or which could have been made in Castano or in

any other action or proceeding of any kind, or as any admission by

any of the Plaintiffs, members of the Settlement Class or Castano

Plaintiffs' Legal Committee of the validity of any fact or

defense asserted or which could have been asserted against them

in Castano or in any other action or proceeding of any kind.



         2.2. Any preliminary or final certification of a

Settlement Class pursuant to the terms of this agreement shall

not constitute and shall not be construed as an admission on the

part of any Settling Defendant that this action, or any other

proposed or certified class action, is appropriate for trial

class treatment pursuant to Fed. R. Civ. P. 23 or any other

action statute or rule.  This Agreement is without prejudice to

the rights of Settling Defendants to (a) oppose trial class

certification in this action,  and seek decertification or

modification of the trial class as certified in the order of

February 17, 1995, or (b) oppose certification in any other

proposed or certified class action.



         2.3   Nothing contained in this Agreement shall

constitute or be construed as any admission of the validity of

the FDA's assertion of jurisdiction over cigarettes or any other

product.



                  3.   Submission for Preliminary Approval.



         Promptly after execution of this Agreement, the Parties

shall jointly submit this Agreement, through their respective

attorneys, to the District Court for Preliminary Approval and

jointly more in the District Court to lift the stay as to

Settling Defendants for the limited purpose of considering

such approval. Further, Liggett shall move in the Fifth Circuit

Court of Appeals for leave to withdraw without prejudice its

interlocutory appeal of the District Court's February 17,

1995 order of trial class certification.



4. Parties.



         4.1.  This Agreement shall be binding, in

accordance with the terms hereof, upon Plaintiffs, the

Settlement Class, Brooke Group, Liggett and each other

Settling Defendant; provided that the payment obligations

of this Agreement shall be binding only upon the Affiliates

of such Settling Defendants which are engaged in Domestic

Tobacco Operations.



         4.2.  Plaintiffs and the Settlement Class shall

not seek to enjoin a spinoff or like disposition of the

stock of Nabisco Holdings Inc. by RJR Nabisco Holdings

Corp. in the event that a slate of nominees proposed by

Brooke Group for election to the RJR Nabisco Holdings Corp.

Board of Directors is elected.



5.   Advertising Limitations.



         5.1.  Each Settling Defendant, promptly after the

later of the Settlement Date and the date said Settling

Defendant becomes bound by this Agreement, shall withdraw

its objections and opposition to the Proposed Rule and to

the assertion of jurisdiction by the FDA for the sole

purpose of promulgating the Proposed Rule with respect to

all Castano Defendants.  By withdrawing said opposition and

objections, Settling Defendants do not and shall not be

deemed to consent to or acknowledge such jurisdiction and

do not and shall not be deemed to waive or abandon said

opposition and objections in the event this Agreement is

terminated.  Each Settling Defendant, notwithstanding the

foregoing, may object to or oppose the Proposed Rule to the

extent that compliance is impractical or excessively

expensive.  If, prior to the Proposed Rule taking final

nonappealable effect as to the tobacco industry generally,

the FDA asserts that it has acquired or can or should

acquire jurisdiction to promulgate or enforce the Proposed

Rule as to a Settling Defendant by virtue of its entry into

or compliance with this Agreement then, in such event, this

Section 5 and its subparts shall be null and void ab initio

in their entirety.



         5.2.  Each Settling Defendant shall follow and

abide by the provisions of the Proposed Rule, insofar as

they pertain solely to such Settling Defendant's Domestic

Tobacco Operations, as set forth in, and modified by,

paragraphs 5.2.1 to 5.2.9 hereof until a final

determination is reached respecting the Proposed Rule, at

which time the Settling Defendants will be bound by the

Rule only insofar as, and to the extent that, the Rule

becomes an enforceable obligation binding upon all of the

Settling Defendants and non-settling Defendants.



         5.2.1.  Proposed Rule Section 897.16 (a), but only

to the extent that such section applies to a trade or brand

name of a non-tobacco product which is in use in the United

States and has a demonstrated or likely appeal to minors;

provided that in any dispute hereunder, the Settling

Defendant shall have the burden to show compliance with

this Subsection in binding arbitration.



         5.2.2.  Proposed Rule Section 897.16(b), as

proposed.



         5.2.3.  Proposed Rule Section 897.16(d), except to

the extent free samples are distributed under circumstances

where no minors are present or likely to be present.



         5.2.4.  Proposed Rule Section 897.30(a), as

proposed.



         5.2.5.  Proposed Rule Section 897.30(b) but only

to the extent that such section applies to billboards

within 1,000 feet of a ~clearly marked and state-licensed

elementary or secondary school or a clearly marked,

outdoor, municipal or other government-operated public

playground for children.



         5.2.6.  Proposed Rule Section 897.32(a), to the

extent that the requirements of such section will be

applicable only to a publication whose regular readers aged

less than eighteen years constitute 15% or more of the

publication's total regular readership; provided that for

those publications in which the Settling Defendants

currently advertise which exceed the 15% limitation,

Settling Defendants will, through incremental reduction,

meet the requirements of this section within a period of

five (5) years.



         5.2.7.  Proposed Rule Section 897.34(a), to the

extent such section applies to clothing or outerwear or to

any items or services, other than clothing or 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 minors than to adults; provided that

such section does not apply to any clothing, outerwear,

items or services customarily marketed, licensed,

distributed or sold at the site and at the time of events

permissible under section 5.2.9 of this Agreement.



         5.2.8.  Proposed Rule Section 897.34(b), to the

extent that gifts or items distributable or redeemable

pursuant to this rule are more likely to appeal to minors

than to adults.



         5.2.9.  Proposed Rule Section 897.34(c), except

that such section will be applicable only to an athletic,

musical, artistic or other social or cultural event whose

past patrons or attendees aged less than eighteen years

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 Defendants have sponsored,

conducted, engaged or participated in within the lass ten

years.



         5.3. Notwithstanding anything to the contrary in

the Proposed Rule or in this Agreement, each such Settling

Defendant will commence compliance with Section 5.2 of this

Agreement as soon as reasonably practicable; provided that

such Settling Defendant may limit its compliance to the

extent, if any, necessary to ensure that the net annual

out-of-pocket cost to the Settling Defendant of such

compliance not exceed $1 million; and provided further that

such Settling Defendant shall not be obligated pursuant

hereto to breach pre-existing legal obligations, if any, it

may have with respect to the matters covered by Section 5.2

(and shall use its reasonable best efforts to minimize the

degree to which any such obligations would impede its full

compliance therewith). For purposes of this paragraph,  the

phrase "net annual out-of-pocket cost" means the excess of

(a) the additional out-of-pocket expenditures incurred

during particular year by a particular Settling Defendant

in complying with the matters specified in Section 5.2,

over (b) savings, if any, in out-of-pocket expenditures

realized during such year by such Settling Defendant

directly from the implementation; of the matters covered by

Section 5.2.



         5.4.  If, when and to the extent that the Proposed

Rule, in whole or in part, becomes an enforceable legal

obligation binding upon all of the Castano Defendants, each

Settling Defendant will comply therewith.



         5.5. As promptly as reasonably practicable after

becoming bound by this Agreement, each Settling Defendant

shall eliminate cartoon characters, such as "Joe Camel",

from all of its advertising and promotional materials and

activities with respect to tobacco products.



6.  Castano Board; Castano CTCIR; Settlement Fund.



         6.1. The Castano Plaintiffs Legal Committee,

Brooke Group and Liggett with the approval of the District

Court, shall establish (a) in accordance with the Castano

Board Document annexed hereto as Exhibit A, the Castano

Board and (b) in accordance with the Castano CTCIR Document

annexed hereto as Exhibit B, the Castano CTCIR.



         6.2.  Except as may otherwise be provided herein,

all amounts due and owing by each Settling Defendant under

this Agreement shall be paid when due into the Settlement

Fund to be administered, allocated and distributed to

Eligible Settlement Class Members by the Castano Board in

accordance with this Agreement and the Castano Board

Document and under the continuing jurisdiction and

supervision of the District Court



         6.2.1.  To the extent practicable, the Castano

Board shall accord claims priority in the order received

from Eligible Settlement Class Members, in accordance with

the terms of the Castano Board Document and this Agreement.



         6.2.2.  A person shall be an Eligible Settlement

Class Member with respect to a Settling Defendant under

this Agreement only if such person is a member of the

Settlement Class with respect to one or more brands of

cigarettes of such Settling Defendant.



         6.2.3.  In order to obtain reimbursement pursuant

to Section 6.4 hereof from a Settling Defendant, an

Eligible Settlement Class Member must submit to the Castano

Board an affidavit or other written statement under penalty

of perjury setting forth (a) facts demonstrating that such

person qualifies under Section 6.2.2 hereof (including but

not limited to the identity of the Settling Defendant's

brands), (b) facts demonstrating that such person is or was

after the Settlement Pate enrolled in an Approved Smoking

Cessation Program (including but not limited to the name

and address of the person's Medical Practitioner, if any,

and the identity and location of such program) and (c) any

other facts or information which the Castano Board may

require to ensure that such person is an Eligible

Settlement Class Member. The Castano Board shall have the

authority to determine whether and under what circumstances

an Eligible Settlement Class Member may receive

compensation or reimbursement for more than one Approved

Smoking Cessation Program.  In so determining, the Castano

Board shall take into account the number of applicants in

any given year, the availability of funds to compensate

Eligible Settlement Class Members for more than one

Approved Smoking Cessation Program, and a good faith

adherence on the part of the Eligible Settlement Class

Members to the regimen and requirements of the Approved

Smoking Cessation Programs.



         6.3.  Settling Defendants shall have no interest

in or responsibility for allocations or distributions from

the Settlement Fund and do not guarantee any earnings or

insure against any losses from any portion of the

Settlement Fund assets that may be maintained or

administered by the Castano Board as provided in Section

6.2 above.



         6.4.  Each Settling Defendant shall, beginning

thirty (30) days from the later of the Settlement Date and

the date such Settling Defendant becomes bound by this

Agreement, (a) pay into the Settlement Fund periodic

payments sufficient on an ongoing basis to reimburse

one-half of the cost of Approved Smoking Cessation Programs

for Eligible Settlement Class Members, plus reasonable

administrative costs for the Castano Board and (b) except

for Brooke Group and Liggett, pay into the Castano CTCIR an

amount equal to no more than $5 million in the first year

of the term hereof and, subject to the approval and control

of the Castano Board, no more than $10 million in each

subsequent year up to the fifteenth year from the date of

this Agreement to fund research by the Castano CTCIR

concerning tobacco cessation programs and prevention of

smoking by minors; provided that the maximum aggregate

payment due in any year during the term of this Agreement

from each Settling Defendant shall be no more than 5% of

the Settling Defendant's Pretax Income and in no event more

than fifty million dollars ($50,000,000) (such fifty

million dollar amount to be adjusted annually in accordance

with changes in the Consumer Price Index reported by the

United States Government); and provided further that, for

purposes of this Section 6.4, Brooke Group and Liggett

shall be treated as a single entity, the payment obligation

of which is based upon the Pretax Income of Liggett only.

Each Settling Defendant other than Brooke Group and Liggett

shall, within 60 days of the later of the entry of the

Final Order and Judgment and the date such Settling

Defendant becomes bound by this Agreement, advance to the

Settlement Fund twenty-five million dollars ($25,000,000).

The advance payment shall be used to pay the costs and

expenses incurred in establishing the Castano Board and the

CTCIR Board and to fund the initial operations of each,

including dissemination of information and notice to

Eligible Settlement Class Members.  Such Settling

Defendant's advance payment shall be (a) credited against

any amounts due from such Settling Defendant under this

Agreement and (b) in the event of a termination of this

Agreement, any unspent portion of such advance payment

shall be promptly returned to such Settling Defendant.



         6.5.  In the event of the entry of any final

monetary Judgment in Castano (other than by way of

settlement) against any one or more of the Castano

Defendants, then each Settling Defendant shall have the

right to reduce the payments it is obligated to make

pursuant to this Agreement to the extent necessary to make

(i) the then Present Value of all amounts theretofore paid

and thereafter payable pursuant to this Agreement by any

Settling Defendant per percentage point of the then Market

Share of such Settling Defendant no more than seventy-five

percent (75%) of (ii) the then Present Value of the dollar

amount of such judgment per percentage point of the then

Market Share of each such non-settling Defendant; provided

that such Settling Defendant give written notice of such

reduction and the method of calculating such reduction to

the Castano Board and the Castano Plaintiffs Legal

Committee as soon as practicable after the entry of such

judgment.



         6.6.  Each Settling Defendant shall, during the

term of this Agreement, have the right to a credit against

amounts due in each year pursuant to this Agreement in an

amount; equal to fifty percent (50%) of the difference

between (a) such Settling Defendant's Smoking Claims

Expense in the prior year and (b) such Settling Defendant's

Smoking Claims Expense for the twelve months prior to the

date of this Agreement; provided that the amount of such

credit shall not be greater than ten percent of the amounts

that would otherwise be due from such Settling Defendant in

such year; provided further that each Settling Defendant

shall have the right to terminate this Agreement with

respect to that Settling Defendant in the event that the

amount of such difference is greater than twenty-five

percent of the amount so due from such Settling Defendant

in such year (any and all payments made pursuant to this

Agreement prior to such termination shall be

nonrefundable); and provided further that such Settling

Defendant, as soon as practicable after the end of such

year, give written notice of the right to any such credit

and the method of calculating such credit to the District

Court, the Castano Board and the Castano Plaintiffs Legal

Committee.



         6.7.  With respect to each Settling Defendant, in

each year beginning with the second year such Settling

Defendant becomes bound by this Agreement, the annual

payment amount due under Section 6.4 of this Agreement from

such Settling Defendant shall be decreased in proportion to

any decrease, and (only if there shall have been a prior

such decrease) increased in proportion to any increase, in

such Settling Defendant's Market Share from the prior year;

provided, however, that (a) such annual payment amount

shall not be so decreased to the extent, if any, that such

annual payment amount in such year is decreased as a result

of a decrease in such Settling Defendant's Pretax Income

and (b) such annual payment amount shall never be increased

such that the aggregate amount of any such increases

exceeds the aggregate amount of any such decreases (and in

no event more than the maximum amount set forth in Section

6.4 hereof); and provided further that such Settling

Defendant, as soon as practicable after the end of such

year, give written notice of any such decrease or increase

and the method of calculating it to the District Court, the

Castano Board and the Castano Plaintiffs Legal Committee.



7.  Notice to the Settlement Class.



         7.1.  Upon the later of Preliminary Approval and

the date a Settling Defendant becomes bound by this

Agreement, and as the District Court may direct, each

Settling Defendant shall cause notice of the settlement

embodied herein (the "Initial Notice") to be given to the

members of the Settlement Class.



         7.2. The Castano Plaintiffs Legal Committee shall

establish at its sole cost a 1-900 number in order to

receive the calls and inquiries of Settlement Class members

regarding this Agreement.  All income from such calls

shall, subject to District Court supervision and

discretion, be used first to defray Castano litigation

costs, then to defray the administration costs of any

approved settlement, and lastly to further fund the Castano

CTCIR



         7.3.  With respect tO each Settling Defendant, the

Initial Notice, in a form to be approved by the District

Court, shall be disseminated as provided in this Section 7

over the course of a period not to exceed 120 days from the

Initial Notice Date, subject to approval by the District

Court.



         7.4.  At the end of each successive five-year

interval during the term of this Agreement ("Subsequent

Notice Dates"), each Settling Defendant shall cause notice

of the settlement embodied herein (the "Subsequent Notice")

to be given to the members of the Settlement Class.



         7.5.  Each Subsequent Notice, in a form to be

approved by the District Court, shall be disseminated over

the course of four periods each not to exceed 60 days from

each applicable Subsequent Notice Date.



8.   Settlement Class Members' Right of

Exclusion/Inclusion.



         8.1. A Settlement Class member may opt out of the

Settlement Class at any time during the First Opt Out

Period. In order to exercise the opt out right set forth in

this Section 8.1, the Settlement Class member must

complete, personally sign and return a request for

exclusion in the form of, or containing substantially all

of the information contained in, Exhibit P hereto.  Such

request must be postmarked on or before the end of the

First Opt Out Period.  Except as provided in Section 8.2 of

this Agreement, any Settlement Class member who has not so

elected will be a Settlement Class member for all purposes

under this Agreement.  Any Settlement Class member who

elects to opt out of the Settlement Class pursuant to this

Section 8.1 shall not be entitled to relief under or be

affected by this Agreement.



         8.2.  A person who is not an Eligible Settlement

Class Member during the First Opt Out Period may opt out of

the Settlement Class only during the first Subsequent Opt

Out Period after such person becomes an Eligible Settlement

Class Member. In order to exercise the opt out right set

forth in this Section 8.2, the Settlement Class member must

complete, personally sign and return to the Castano Board

a request for exclusion in the form of (or containing

substantially all of the information contained in) Exhibit

D.  Such exclusion shall include an affidavit or other

written statement under penalty of perjury that the maker

of such affidavit or other statement was neither a smoker

or user of cigarettes of such Settling Defendant nor

otherwise an Eligible Settlement Class Member hereunder

during any previous Notice Period hereunder.  Such request

must be postmarked on or before the expiration of such

first Subsequent Opt Out Period.  Any such Settlement Class

member who has not so elected will be a Settlement Class

member for all purposes under this Agreement.  Any such

Eligible Settlement Class Member who elects to opt out of

the Settlement Class pursuant to this Section 8.2 shall not

be entitled to relief under or be affected by this

Agreement.



         8.3. The Castano Board may, in its discretion.

allow any person who has elected to opt out pursuant to

Section 8.1 or 8.2 of this Agreement to withdraw that

election.



9.   Release.



         9.1. Upon the later of the Settlement Date and the

date each Settling Defendant becomes bound by this

Agreement, for good and sufficient consideration as

described herein, all members of the Settlement Class,

collectively and individually, on behalf of themselves, the

persons they represent, their heirs, executors,

administrators, trustees, beneficiaries, agents, attorneys,

successors and assigns shall be deemed to and do hereby

release, dismiss and discharge each and every claim, right,

and cause of action (including, without limitation, all

claims for damages, medical expenses, restitution, medical

monitoring, or any similar legal or equitable relief, under

federal, state or common law) which they had, now have, or

may hereafter have against each Settling Defendant

(including its past, present and future parents,

subsidiaries, affiliates and downstream distribution

entities, and their past, present and future agents,

servants, attorneys, employees, officers, directors,

shareholders, and beneficial owners) which is based on

harm, injury or damages claimed by members of the

Settlement Class to be caused by addiction to or dependence

upon cigarettes which contain nicotine or which is asserted

in the Castano action in connection with, or arising out of

the acts, facts, transactions, occurrences, representations

or omissions set forth, alleged, referred to or otherwise

embraced in the complaint in Castano premised, in whole or

in part, on the claimed addictive or dependence-producing

nature of nicotine contained in cigarettes or the damage,

harm or injury caused by the condition or claimed condition

of addiction or dependence resulting from the use of

cigarettes which contain nicotine; it being understood

that, as a result of such release, a Settlement Class

member who does not opt out may not claim as a basis for a

current or future personal injury or wrongful death claim

against a Settling Defendant that addiction to or

dependence upon cigarettes containing nicotine was the

proximate cause or a contributing proximate cause of that

injury.  This release does not extend to claims arising

after the termination of this Agreement.



         9.2.  Nothing in this Agreement shall Prejudice or

in any way interfere with the rights of the Plaintiffs,

Settlement Class members, and the Settling Defendants to

pursue all of their rights and remedies against

non-settling Castano Defendants.



10.  Exclusive Remedy; Dismissal of Action; Jurisdiction of

Court



         10.1.  This Agreement shall be the sole and

exclusive remedy for any and all released claims of

Settlement Class members against the Settling Defendants,

and upon the later of entry of the Final Order and Judgment

by the District Court and the date a Settling Defendant

becomes bound by this Agreement, each Settlement Class

member shall be barred from initiating, asserting, or

prosecuting any released claims against each Settling

Defendant.



         10.2.  On the later of the Settlement Date and the

date a Settling Defendant becomes bound by this Agreement,

the Castano action shall be dismissed as against each

Settling Defendant. Settlement Class members may not

commence or prosecute actions against such Settling

Defendant on claims released pursuant to this Agreement

once the Final Order and Judgment is entered, or the date

such Settling Defendant becomes bound by this Agreement,

whichever comes later.  The Castano Plaintiffs Legal

Committee agree to provide reasonable cooperation to stay

or dismiss, as appropriate, any action of any Settlement

Class member for such released claims pending in state or

federal court against any of the Settling Defendants.



         10.3.  The District Court shall retain exclusive

and continuing jurisdiction of Castano, all Parties,

Settlement Class members and Settling Defendants, to

interpret and enforce the terms, conditions, and

obligations of this Agreement.  Nothing in this Agreement

shall be construed to divest or limit the jurisdiction of

the District Court with respect to claims which are alleged

or may be alleged by the Castano class against non-

settling Castano Defendants.



11.  Term.



         11.1.  Unless earlier terminated in accordance

with the provisions of this Agreement, the duration of this

Agreement with respect to each Settling Defendant shall be

twenty-five (25) years from the Settlement Date.



         11.2.  Each Settling Defendant shall have the

right to terminate this Agreement with respect to that

Settling Defendant in the event of a full and final denial

of trial class certification in Castano as to any of the

Castano Defendants; provided that to exercise such right of

termination, the Settling Defendant must give written

notice of such termination to the District Court and to the

Castano Plaintiffs Legal Committee within thirty (30) days

of such denial provided further that any and all payments

made pursuant to this Agreement prior to the giving of such

notice by such Settling Defendant shall be nonrefundable;

and provided further that in the event of such termination

and in the event that the Plaintiffs and/or the Castano

Plaintiffs Legal Committee commence another putative class

action against the Castano Defendants in any other forum

which is substantially similar to or includes the

Settlement Class, Plaintiffs, the Castano Plaintiffs Legal

Committee, and each Settling Defendant shall enter into a

class settlement of such other putative class action on

substantially the same terms as this Agreement



         11.3.  Each Settling Defendant shall have the

right to terminate this Agreement with respect to such

Settling Defendant in the event that the number of persons

who exclude themselves from the Settlement Class during any

Notice Period is, in the sole and exclusive discretion of

such Settling Defendant, excessive; provided that such

Settling Defendant give written notice of such termination

to the District Court, the Castano Plaintiffs Legal

Committee and the Castano Board and provided further that

any and all payments made pursuant to this Agreement prior

to the giving of such notice by such Settling Defendant

shall be nonrefundable.



         11.4.  The performance of this Agreement is

expressly contingent upon the District Court's issuance of

the Final Order and Judgment.  If the District Court fails

to issue such order within a sixty-day period following

conclusion of the Fairness Hearing, each Settling Defendant

may elect to terminate this Agreement with respect to such

Settling Defendant within twenty (20) business days of the

end of such period.



         11.5.  Sections 9.1, 10.1 and 10.2 of this

Agreement shall survive any termination of this Agreement

with respect to any and all Eligible Settlement Class

Members who shall have completed at least one Approved

Smoking Cessation Program under this Agreement.



         11.6.  Except as may be otherwise specifically

provided in this Agreement, a termination by a Settling

Defendant hereunder shall have the effect of rendering this

Agreement as having no force or effect whatsoever, null and

void ab initio, and not admissible as evidence for any

purpose in any pending or future litigation in any

jurisdiction.



12.  Continuing Enforceability



         Unless earlier terminated, as to the Settlement

Class, this Agreement and each provision of or obligation

arising from this Agreement shall continue and remain fully

executory and enforceable if a Settling Defendant

institutes or is subject to the institution against it of

any proceeding or voluntary case under title 11, United

States Code, or other proceeding seeking to adjudicate it

insolvent or seeking liquidation, winding up,

reorganization, arrangement, adjustment, protection, relief

or composition of it or its debts under any law relating to

bankruptcy, insolvency or reorganization or relief or

protection of.debtors or other proceeding seeking the entry

of an order for relief or the appointment of a receiver,

trustee, custodian or other similar official for it or for

any part of its property (each, a "Bankruptcy Proceeding").

Brooke Group has the right but not the obligation to cure

and to perform any and all obligations of Liggett under

this Agreement notwithstanding the occurrence and

continuation of any Bankruptcy Proceeding with respect to

Liggett; provided, however, that until such time as Liggett

decides whether to reject or assume this Agreement, Brooke

Group shall have the obligation to pay the annual

installments as provided by Section 6.4 hereof and any and

all rights the Settlement Class may have not to accept such

cure or performance in any Bankruptcy Proceeding are

waived.



13   Entry of Good Faith Bar Order on Contribution and

Indemnity Claims: Indemnification.



         13.1.  The Parties shall request that the District

Court enter an order barring and prohibiting the

commencement and prosecution of any claim or action by any

non-settling Castano Defendant against any Settling

Defendant, including but not limited to any contribution,

indemnity and/or subrogation claim seeking reimbursement

for payments made or to be made to any Settlement Class

member for claims settled under this Agreement. Settling

Defendants shall be entitled to dismissal with prejudice of

any such non-settling Castano Defendant's claims against

them which violate or are inconsistent with this bar.



         13.2.  Any Settlement Class member making a claim

against a non-settling person for what would be a claim

settled under this Agreement if asserted against a Settling

Defendant shall indemnify and hold harmless each Settling

Defendant from any claim ever asserted against such

Settling Defendant arising from such claim.



         13.3.     Claims by or on behalf of any Settlement

Class members against any non-settling Castano Defendants

are not released and shall not be barred, precluded,

limited, or reduced as a consequence of this Agreement or

the subsequent award and distribution of funds to such

Settlement Class members from the Settlement Fund, except

if and to the extent required under federal or state law

applicable under choice-of-law doctrines in the forum in

which any such claims may be instituted or pursued.



14.  Expenses and Fees.



         14.1.  All expenses incurred in administering this

Agreement, including cost of Initial and Subsequent Notices

and costs of implementing and administering the CTCIR,

shall be paid from the Settlement Fund.



         14.2.  The reasonable fees and expenses of the

District Court, shall be paid by the Settling Defendants

separate and apart from the Settlement Fund.



         14.3.  Class Representatives shall be paid an

appropriate and reasonable amount by the Settling

Defendants separate and apart from the Settlement Fund,

subject to the approval of the District Court.



         14.4.  In the event of a failure by the District

Court to issue the Final Order and Judgment or a decision

by any Settling Defendant to exercise its right to withdraw

pursuant to Section 11.3 or 11.4 of this Agreement, the

Settling Defendants will bear, in accordance with the terms

of this Agreement, the costs of the Initial Notice incurred

to such point (in the case of Brooke Group and Liggett not

to exceed a total of $1 million; provided that Brooke

Group, Liggett and Plaintiffs shall each have the right to

terminate this Agreement in the event that the District

Court orders Initial Notice costing in excess of

$1,000,000, unless Brooke Group and/or Liggett and/or

Plaintiffs agree to pay such excess.)



15.  Tax Status of Settlement Fund.



         15.1.  The Settlement Fund created under this

Agreement will be established and maintained as a Qualified

Settlement Fund ("QSF") in accordance with Section 468B of

the Internal Revenue Code of 1986, as amended, and the

regulations promulgated thereunder.  Any Settling Defendant

shall be permitted, in its discretion, and at its own cost,

to seek a private letter ruling from the Internal Revenue

Service ("IRS") regarding the tax status of the Settlement

Fund.  The parties agree to negotiate in good faith,

subject to District Court approval, any changes to the

Agreement which may be necessary to obtain IRS approval of

the Settlement Fund as a QSF.



         15.2.  The Castano Board is appointed to act as

administrator of the Settlement Fund.  As administrator,

the Castano Board will undertake the following actions in

accordance with the regulations under IRC section 468B:

(a) the Castano Board shall apply for the tax

identification number required for the Settlement Fund; (b)

the Castano Board shall file, or cause to be filed, ail tax

returns the Settlement Fund is required to file under

federal or state laws; (c) the Castano Board shall pay from

the Settlement Fund all taxes that are imposed upon the

Settlement Fund by federal or state laws; and (d) the

Castano Board shall file, or cause to be filed, tax

elections available to the Settlement Fund, including a

request for a prompt assessment under IRC sec. 6501(d) if

and when the Castano Board deems it appropriate to do so.



         15.3.  The Settling Defendants, as transferors of

the Settlement Fund, shall prepare and file the information

statements concerning their settlement payments to the

Settlement Fund as required to be provided to the IRS

pursuant to the regulations under IRC section 468B.



16.  Court's Settlement Approval Order.



         This Agreement is subject to and conditioned upon

the issuance by the District Court, following the Fairness

Hearing, of a Final Order and Judgment granting final

approval of the Agreement in accordance with Fed. R. Civ.

P. 23 (e).



17.  Effect of Default of Any Settling Defendant.



         In the event any Settling Defendant fails to make

a payment due and owing under the terms of this Agreement,

or is in default Of this Agreement in any other respect,

the Castano Plaintiffs Legal Committee shall so notify the

District Court. The defaulting Settling Defendant shall

then be given up to 60 calendar days to "cure" the default.

If the defaulting Settling Defendant does not "cure" the

default in the time provided in this Section 17, the

Castano Plaintiffs Legal Committee may apply to the

District Court for relief.



18.  Representations and Warranties.



         Each Settling Defendant represents and warrants

that it (i) has all requisite corporate power and authority

to execute, deliver and perform this Agreement and to

consummate the transactions contemplated hereby; (ii) the

execution, delivery and performance by such Settling

Defendant of this Agreement and the consummation by it of

the actions contemplated herein have been duly authorized

by all necessary corporate action on the part of such

Settling Defendant; and (iii) this Agreement has been duly

and validly executed and delivered by such Settling

Defendant and constitutes its legal, valid and binding

obligation.



19.  Arbitration.



         19.1.  In the event that the Parties are unable to

agree, after good faith efforts, as to the determination or

calculation for any applicable year of Market Share or

Pretax Income hereunder, such determination or calculation

shall be submitted to binding arbitration under the

supervision of the District Court.



         19.2.  The Castano Plaintiffs Legal Committee

shall during the term of this Agreement have the right, at

its sole cost, to have an independent auditor review the

Settling Defendants' compliance with their payment

obligations under this Agreement; provided that any such

review will not be binding upon such Settling Defendants.



20.  Most Favored Nation.



         20.1.  In the event of any settlement of Castano

with any Castano Defendant not a Party hereto (an "Other

Settlement"), the payments due from each Settling Defendant

in each year under this Agreement shall be reduced to the

extent, if any, necessary to ensure that (a) the percentage

in each year of each Settling Defendant's Pretax Income

represented by such payments under this Agreement is at

least ten percentage points less than (b) the percentage in

such year of such Castano Defendant's Pretax Income

represented by the average annual payments due from such

Castano Defendant under such Other Settlement; provided

further that, without the prior written consent of each

Settling Defendant, Plaintiffs and the Settlement Class

will not enter into any Other Settlement with any Castano

Defendant under which the percentage referred to in Section

20.1(b) is fewer than five percentage points more than the

percentage referred to in Section 20.1(a).



         20.2.  In the event of any Other Settlement, any

terms of which are more favorable to such Castano Defendant

than are the terms of this Agreement to a Settling

Defendant, such Settling Defendant shall have the right, in

addition to its rights under Section 20.1 hereof, to

replace or modify any or all of such terms of this

Agreement with, or add to this Agreement, any or all such

more favorable terms.



         20.3.     The respective rights of each Settling

Defendant under Sections 20.1 and 20.2 hereof are

cumulative and not exclusive of each other.



21.  Miscellaneous.



         21.1.  This Agreement, including all Exhibits

attached hereto, shall constitute the entire Agreement

among the Parties with regard to the subject of this

Agreement and shall supersede any previous agreements and

understandings between the Parties with respect to the

subject matter of this Agreement.  This Agreement may not

be changed, modified, or amended except in writing signed

by all parties, subject to District Court approval.



          21.2.  This Agreement shall be construed under

and governed by the laws of the State of Louisiana applied

without regard to its laws applicable to choice of law.



          21.3.  This Agreement may be executed by the

Parties in one or more counterparts, each of which shall be

deemed an original but all of which together shall

constitute one and the same instrument.



          21.4.  Upon the Settlement Date, Brooke Group and

Liggett shall:



          (1) cooperate with the Castano Plaintiffs Legal

Committee in that they will take no steps to impede or

frustrate the Castano Plaintiffs Legal Committee

investigations into, or prosecutions of, any of the

non-settling Castano Defendants, so as to secure the just,

speedy and inexpensive determination of Castano against the

non-settling Castano Defendants,



          (2)  cooperate in and facilitate reasonable

non-party discovery from Brooke Group or Liggett in

connection with Castano, provided that such information is

not disclosed to any third parties except as required by

law, without the written consent of Brooke Group or

Liggett, and provided that such cooperation shall not be

deemed a waiver of applicable privileges;



          (3)  will review the issues relating to discovery

propounded by the Castano Plaintiffs Legal Committee

against Brooke Group or Liggett, confer with the Castano

Plaintiffs Legal Committee and, if appropriate, take

reasonable steps to facilitate judicial determinations of

the privileged nature of any documents or other information

within the possession, custody or control of Brooke Group

or Liggett which have been sought in discovery by the

Castano Plaintiffs Legal Committee,



         (4)  insofar as Brooke Group or Liggett have or

obtain any material information concerning any fraudulent

or illegal conduct on the part of any parties, including

non-settling Castano Defendants or their agents, designed

to frustrate or defeat the Castano Plaintiffs against the

non-settling Defendants, or which have the effect of

unlawfully suppressing evidence relevant to Castano, such

information will be disclosed to the appropriate judicial

and regulatory agencies.



         21.5.  This Agreement shall be binding upon and

inure to the benefit of the Settlement Class, the Settling

Defendants, and their representatives, heirs, successors,

and assigns.



         21.6.  Nothing in this Agreement shall be

construed to subject any Settling Defendant's parent or

affiliated company to the obligations or liabilities of

that Settling Defendant.



         21.7.  The headings of the Sections of this

Agreement are included for convenience only and shall not

be deemed to constitute part of this Agreement or to affect

its construction.



         21.8.  Any notice, request, instruction,

application for District Court approval or application for

District Court orders sought in connection with this

Agreement or other document to be given by any Party to any

other Party shall be in writing and delivered personally or

sent by registered or certified mail, postage prepaid, if

to the Settling Defendants to the attention of each

Settling Defendant's respective representative and to the

Castano Plaintiffs Legal Committee on behalf of Settlement

Class members, or to other recipients as the District Court

may specify.  As of the date of this Agreement, the

respective representatives are as follows:



Castano Plaintiffs Legal Committee



Mr. Peter J. Butler, Sr.

Plaintiffs' Legal Committee

Energy Centre - 3Oth Floor

1100 Poydras Street

New Orleans, LA  70163



Mr. Wendell H. Gauthier

Gauthier & Murphy

3500 N. Hullen

Metairie, LA  70002



Hare, Wynn, Newell & Newton

The ParkWoods Bldg.

402 Office Park Dr., Suite 200

Birmingham, AL  35223



Brooke Group and Liggett



Mr. Bennett S. Lebow

Brooke Group Ltd.

International Place

100 S.E. Second Street

Miami, Florida  33131



Mr. Marc E. Kasowitz

Mr. Daniel R. Benson

Kasowitz, Benson, Torres & Friedman, L.L.P.

875 Third Avenue

New York, New York  10022



Mr. Michael L. Hirschfeld

Milbank, Tweed, Hadley & McCloy

1 Chase Manhattan Plaza

New York, New York  10005-1413



          The above designated representatives may be

changed from time to time by any Party upon giving notice

to all other Parties in conformance with this Section 21.8.



         21.9.  References to or use of a singular noun or

pronoun in this Agreement shall include the plural, unless

the context implies otherwise



               IN WITNESS WHEREOF the Parties have executed

this Agreement as of the day and date first written above.



CASTANO PLAINTIFFS LEGAL COMMITTEE



By :  Don Barrett

Date:  March 12, 1996



By:  Richard M. Heimann

Date:   March 12, 1996



By:  Russ Hermann

Date:  March 12, 1996



 BROOKE GROUP LTD.



By:  Bennett S. Lebow

Date:  March 12, 1996



 LIGGETT GROUP, INC.



By: Bennett S. Lebow

Date:  March 12, 1996




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