ESCROW AGREEMENT This…

                                    ESCROW AGREEMENT



       This Escrow Agreement is made and entered into this _____ day of _______, 200__, by

___________________ (the "Company") and_______________________(the "Escrow Agent").



                                           WITNESSETH:

       WHEREAS, a number of States have enacted Non-Participating Manufacturer Statutes

("NPM Statutes") that require Tobacco Product Manufacturers that have not entered into the

Master Settlement Agreement to establish Qualified Escrow Funds, and

       WHEREAS, the Company is a Tobacco Product Manufacturer that has not entered into

the Master Settlement Agreement and intends to comply with such NPM Statutes by establishing

Qualified Escrow Funds with respect to states where the Company's tobacco products are sold.

       NOW THEREFORE, in consideration of the mutual promises contained herein and

other good and valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, the undersigned parties hereto agree as follows:



SECTION 1. Appointment of Escrow Agent.

The Company hereby appoints _______________________ to serve as Escrow Agent under this

Escrow Agreement on the terms and conditions set forth herein. The Escrow Agent warrants that

it is a federally or state chartered financial institution organized and existing under the laws of

the State of _____________, having assets of at least one billion dollars ($1,000,000,000), and is

not an Affiliate of any Tobacco Product Manufacturer as defined in the NPM Statute. By its

execution hereof, the Escrow Agent hereby accepts such appointment and agrees to perform its

duties and obligations set forth herein.




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SECTION 2. Definitions.

       (a) Capitalized terms used in this Escrow Agreement and not otherwise defined herein or

in the Beneficiary State's NPM Statutes shall have the meaning given to such terms in the Master

Settlement Agreement.

       (b) "Account" means an escrow account consisting of segregated sub-accounts for each

Beneficiary State maintained by the Escrow Agent as a Qualified Escrow Fund in which the

funds required to be placed in a Qualified Escrow Fund are deposited in compliance with this

Escrow Agreement.

       (c) "Beneficiary State" means a state that is a party to the Master Settlement Agreement

for whose benefit funds are being escrowed pursuant to this Escrow Agreement. For purposes of

this Escrow Agreement, the initial Beneficiary States are those listed in Attachment "A" hereto

which is hereby incorporated herein by reference, and those other States that the Company and

the Escrow Agent may hereafter agree to include as Beneficiary States. Escrow Agent is

authorized to include other Beneficiary States under this Agreement by written notice from the

Company and is further authorized to revise Attachment "A" from time to time to reflect

additions as instructed by the Company.

       (d) "Master Settlement Agreement" means the settlement agreement (and related

documents) entered into on November 23, 1998 by numerous States and major United States

Tobacco Product Manufacturers, a copy of which has been provided to the Escrow Agent by the

Company.

       (e) "NPM Statutes" or "NPM Statute" are the laws ena cted in each of the States that are

parties to the Master Settlement Agreement and that require a Non-Participating Manufacturer to

establish a Qualified Escrow Fund. The Company shall provide a copy of the NPM Statutes for

each Beneficiary State under this Escrow Agreement to the Escrow Agent.

       (f) "Qualified Escrow Fund" means an escrow arrangement with a U.S. federal or U.S.

state chartered financial institution having no affiliation with any Tobacco Product Manufacturer




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and having assets of at least one billion dollars ($1,000,000,000) where such arrangement

requires that the financial institution hold the escrowed funds' principal for the benefit of

Releasing Parties and prohibits the Tobacco Product Manufacturer placing the funds into escrow

from using, accessing or directing the use of the funds' principal except as consistent with the

applicable NPM Statutes.


SECTION 3. The Escrow Fund and Release of Funds Therefrom.

       (a) From time to time the Company shall tender to the Escrow Agent for deposit in the

Account the funds which the Company is required to place into a Qualified Escrow Fund

pursuant to the NPM Statutes of each Beneficiary State.

       (b) All funds received by the Escrow Agent pursuant to the terms of this Escrow

Agreement shall be held, invested and disbursed in accordance with the terms and conditions of

this Escrow Agreement and the NPM Statutes.

       (c) For each Beneficiary State in which the Company's tobacco products were sold after

enactment of that state's NPM Statute, by April 15 of the year following each year of such

enactment, the Company shall deliver to the Escrow Agent for deposit pursuant to this section

the following amounts (as such amounts are adjusted for inflation pursuant to Exhibit C of the

Master Settlement Agreement) ­ 1999: $.0094241 per Unit Sold; 2000: $.0104712 per Unit

Sold; for each of 2001 and 2002: $.0136125 per Unit Sold; for each of 2003 through 2006:

$.0167539 per Unit Sold; for each of 2007 and each year thereafter: $.0188482 per Unit Sold.

For the year in which the NPM Statute was first enacted, the amount due by April 15 of the

following year shall be based only on those Units Sold on and after the statute's effective date.

       (d) Segregated Multi-State Subaccounts:

               (i)      The Company shall designate to the Escrow Agent the amount to be

placed in the Account and each sub-account for each Beneficiary State based on the Units Sold

therein in accordance with the applicable Beneficiary State's NPM Statute. All funds shall be

held by the Escrow Agent in sub-accounts separate and apart from all other funds and sub-



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accounts of each Beneficiary State, the Escrow Agent, and the Company. The Escrow Agent

shall allocate all funds as designated by the Company and received by the Escrow Agent among

the following Beneficiary States, each with is own separate, segregated sub-account and own
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sub-account number, as follows:

               Sub-account number 1 (Name of Beneficiary State)
               Sub-account number 2 (Name of Beneficiary State)
               Sub-account number 3 (Name of Beneficiary State)
               Sub-account number 4 (Name of Beneficiary State)
               Sub-account number 5 (Name of Beneficiary State)
               Sub-account number 6 (Name of Beneficiary State)
               Sub-account number 7 (Name of Beneficiary State)
               Sub-account number 8 (Name of Beneficiary State)
               Sub-account number 9 (Name of Beneficiary State)
               Sub-account number 10 (Name of Beneficiary State)
               (ii)    The Escrow Agent shall place and hold such funds in such sub-account for

the benefit of the applicable Beneficiary State or any Releasing Party located or residing in the

applicable Beneficiary State. The Escrow Agent may further segregate a particular Beneficiary

State's sub-account to identify the annual escrow payments for the same Beneficiary State for

purposes of release of funds from the same Beneficiary State's sub-account under Section

3(f)(iii).

               (iii)   Within the Account established under this Escrow Agreement, the Escrow

Agent shall maintain a separate sub-account ledger for each Beneficiary State sufficient to enable

tracking of the principal amounts allocated to each of the Beneficiary States under this Escrow

Agreement and all dates, purposes, and amount of deposits, withdrawals, or interest on each sub-

account for each applicable Beneficiary State. The Escrow Agent may also maintain within the

Account a separate sub-account for the benefit of the Company to which interest or appreciation

on the principal (the "Interest Account") may be deposited.

               (iv)    Upon written notice from the Company, the Escrow Agent shall establish

additional sub-accounts for additional Beneficiary States which shall be subject to the terms and

conditions of this Agreement.




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       (e) The Company shall receive the interest or other appreciation on the funds deposited

pursuant to Section 3 as earned. Whenever any interest or other funds are payable under this

Agreement to the Company, such payment shall be subject to the payment of Escrow Agent's

fees, costs and expenses as provided in Section 9.

       (f) The funds deposited pursuant to Section 3 shall be released from the applicable

Beneficiary State's sub-account only under the following circumstances:

               (i)    To pay a judgment or settlement on any Released Claim brought against

the Company by the applicable Beneficiary State or by any Releasing Party located or residing in

the applicable Beneficiary State. Promptly after receiving a written request for release of funds

under this subsection and prior to any such release, the Escrow Agent shall provide written

notice to the Company, to the Releasing Party, and to the Attorney General or Attorney

General's Designee of the applicable Beneficiary State as set forth and defined in Section 13

herein. The notice shall specify in reasonable detail the amount of the funds to be released, the

payee and the basis for the requested release (which shall be provided to the Escrow Agent by

the person requesting payment). The Company and the Attorney General or Attorney General's

Designee of the applicable Beneficiary State as set forth in Section 13 whose sub-account would

be reduced by the release of funds shall provide a written response to the Escrow Agent with

copies to each other, within thirty (30) calendar days from the date of receipt of this notice.

Should the Company or the applicable Beneficiary State timely object in writing to a requested

release of funds under this subsection, the Escrow Agent shall not authorize the requested release

of funds until such objection has been finally resolved. If no objection is received, the Escrow

Agent shall pay the Released Claim after the expiration of the thirty (30) calendar day period.

Funds shall be released from escrow from the sub-account of the applicable Beneficiary State

under this subsection (A) in the order in which they were placed into the applicable Beneficiary

State's sub-account escrow and (B) only to the extent and at the time necessary to make

payments required under such judgment or settlement; or




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               (ii)    To the extent that the Company establishes, pursuant to subsection 3(g),

that the amount required to be placed into escrow in a particular year for the applicable

Beneficiary State was, depending on the la w of such Beneficiary State, greater than either (A)

that State's allocable share of the total payments that the Company would have been required to

make in that year had it been a Participating Manufacturer under the Master Settlement

Agreement (as determined pursuant to section IX(i)(2) of the Master Settlement Agreement, and

before any adjustments or offsets described in Section IX(i)(3) of that Agreement other than the

Inflation Adjustment); or (B) the Master Settlement Agreement payments, as determined

pursuant to Section IX(I) of that Agreement including after final determination of all

adjustments, that the Company would have been required to make on account of such Units Sold

in the Beneficiary State had it been a Participating Manufacturer under the Master Settlement

Agreement (in either case the difference being referred to herein as the "Excess Amount"), such

Excess Amount shall be released and revert back to the Company. To the extent established, the

Escrow Agent shall pay the Excess Amount to the Company upon the joint written instruction of

the Company and the Attorney General or the Attorney General's Designee of the applicable

Beneficiary State as set forth in Section 13 or upon entry of a final binding, non-appealable order

of a court of competent jurisdiction handling such matter after any appeal or any right of appeal

has been exhausted or;

               (iii) To the extent not released from escrow under subsections (i), or (ii), funds

shall be released from escrow and revert back to the Company twenty- five (25) years after the

date on which the applicable annual installments thereof were placed into escrow. The Escrow

Agent shall notify in writing the applicable Beneficiary State of the release of such State's funds

at least thirty (30) days prior to the proposed date of such release of funds.




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       (g) In connection with the release from escrow provided for in subsection 3(f)(ii) of this

Escrow Agreement, the Company shall submit in writing to the Attorney General for the

applicable Beneficiary State the Company's calculation establishing the Excess Amount. If the

applicable Beneficiary State and the Company cannot agree on the existence of an Excess

Amount, or the calculation of the Excess Amount, the dispute shall be resolved in a court of

competent jurisdiction located in the applicable Beneficiary State, or if the laws of any

Beneficiary State so require, then under the applicable Administrative Procedures Act of that

Beneficiary State.

       (h) When the Company has made the first deposit into a Qualified Escrow Fund for the

benefit of a Beneficiary State, the Escrow Agent shall notify the Attorney General of the

applicable Beneficiary State that the Qualified Escrow Fund has been established, and provide to

the Beneficiary State a copy of this Escrow Agreement along with all relevant instructions from

the Company and the amount of the deposit made for the Beneficiary State. Thereafter, at any

time upon the request of the applicable Beneficiary State and in any event on an annual basis by

April 30 of each year, the Escrow Agent shall provide written information to each Beneficiary

State on the amount of deposits and withdrawals made by the Company for the applicable

Beneficiary State's benefit under the Escrow Agreement including the identity of the payor(s) or

payee(s), and the date(s), purpose, and dollar amount(s) of any deposits and withdrawals.

       (i) All amounts credited to an Account or sub-account, except for interest accrued on the

funds which shall be payable to the Company as earned, shall be retained in such Account or

sub-account, until disbursed therefrom in accordance with the provisions of this Escrow

Agreement pursuant to subsections 3(e), 3(f), or Section 8.

       (j) Notwithstanding anything to the contrary contained herein, the Escrow Agent shall

not be authorized to make distributions for any particular Released Claims in excess of the

principal amount held hereunder for the benefit of the applicable Beneficiary State making the

claim (or the Beneficiary State in which the Releasing Party making the claim is ocated or
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resides). The Escrow Agent is prohibited from: (i) exercising set-off, recoupment, or any other

claim or right against any of the principal funds escrowed pursuant to this Escrow Agreement; or

(ii) accessing, or allowing the Company to access, the Account or sub-account of one

Beneficiary State to remove or transfer funds to the Account or sub-account of another

Beneficiary State without the written consent of the Company and the Attorneys General of all

Beneficiary States involved in the request for transfer of funds; provided however, that nothing

contained herein shall prohibit the release or transfer of any funds from the Company's Interest

Account to another Account or sub-account upon written direction of the Company.



SECTION 4. Failure of Escrow Agent to Receive Instructions.

       Except as to responses or objections to notice of a request for payment on any Released

Claim, which shall be governed by subsection 3(f)(i), in the event that the Escrow Agent fails to

receive any written instructions contemplated by this Escrow Agreement, the Escrow Agent shall

refrain from taking any action required to be taken under any section of this Escrow Agreement

pursuant to written instructions until such written instructions are received by the Escrow Agent.

In so refraining, the Escrow Agent shall be fully protected from any liability arising out of its

inaction.


SECTION 5. Investment of Funds by the Escrow Agent.

       The Escrow Agent shall invest and reinvest all amounts from time to time credited to the

Accounts in (a) the Escrow Agent's U.S. Treasury money market fund; (b) direct obligations of,

or obligations the principal and interest on which are unconditionally guaranteed by, the United

States of America; (c) repurchase agreements fully collateralized by securities described in

clause (b) above; (d) money market accounts maturing within 30 days of the acquisition thereof

and issued by a bank or trust company organized under the laws of the United States of America

or of any of the 50 states thereof (a "United States Bank") and having combined capital, surplus

and undistributed profits in excess of $500,000,000; or (e) demand deposits with any United



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States Bank having combined capital, surplus and undistributed profits in excess of

$500,000,000. To the extent practicable, monies credited to any Account or sub-account shall be

invested in such a manner so as to be available for use at the times when monies are expected to

be disbursed by the Escrow Agent and charged to such Account or sub-account. In choosing

among the investment options described in clauses (a) through (e) above, the Escrow Agent shall

comply with any written instructions received from time to time from the Company if mutually

agreed upon by Escrow Agent and Company. In the absence of such written instructions or

mutual agreement on such instructions, the Escrow Agent shall invest such sums in accordance

with clause (a) above.



SECTION 6. Duties and Liabilities of Escrow Agent.

       The Escrow Agent shall have no duty or obligation hereunder other than to take such

specific actions as are required of it from time to time by the provisions of this Escrow

Agreement and it shall incur no liability hereunder or in connection herewith for anything

whatsoever other than any liability resulting from its own gross negligence or willful misconduct

or unlawful acts or omissions. The only duties and responsibilities of the Escrow Agent shall be

the duties and obligations specifically set forth in this Escrow Agreement. The Escrow Agent

has no duty to perform any calculations with respect to the proper amount to be deposited by the

Company in any given year or to insure that the Company deposits the proper amount in any

given year.


SECTION 7. Indemnification of Escrow Agent.

       The Company shall indemnify, hold harmless and defend the Escrow Agent from and

against any and all losses, claims, liabilities, and reasonable expenses, including the reasonable

fees of its counsel, specifically including in- house counsel fees, which it may suffer or incur in

connection with the performance of its duties and obligations under this Escrow Agreement and

including any action taken under Section 19 hereof, except for those losses, claims, liabilities and



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expenses resulting solely and directly from its own gross negligence, willful misconduct, or

unlawful act or omission. The Escrow Agent may seek the advice of counsel at any time and

such reasonable attorney fees shall be in addition to the administrative fees charged by the

Escrow Agent for serving as Escrow Agent and the Escrow Agent may charge such costs against

the interest which accrues on the Escrow Funds if not otherwise paid by the Company, but the

principal in any or all of the Beneficiary States' Accounts and sub-accounts shall not be charged,

used as an offset or otherwise encumbered by the Escrow Agent or the Company.



SECTION 8. Resignation or Removal of Escrow Agent.

       The Escrow Agent may resign at any time by giving the Company and all of the

Attorneys General of the Beneficiary States covered by this Escrow Agreement ninety (90) days'

prior written notice of such intention. The Company may remove the Escrow Agent, as such, by

giving the Escrow Agent and all of the Attorneys General of the Beneficiary States covered by

this Escrow Agreement ninety (90) days' prior written notice of such removal. Upon the

effective date of its resignation or removal, the Escrow Agent will deliver the Escrow Funds held

hereunder only to such successor escrow agent directed by the written instructions of the

Company. After the effective date of its resignation or removal, the Escrow Agent shall have no

duty with respect to the Escrow Funds except to hold such property in safekeeping and to deliver

same to its successor or as is directed in writing by the Company. If no successor escrow agent

has been appointed by the Company within ninety (90) days from the date such notice of

resignation or removal has been given, the Escrow Agent shall be entitled to tender into the

registry or custody of any court of competent jurisdiction located in the applicable Beneficiary

State all or part of the escrowed funds held for the benefit of the applicable Beneficiary State by

giving written notice of such action to the Company and all of the Attorneys General of the

Beneficiary States.




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SECTION 9. Escrow Agent Fees and Expenses.

       The Company shall pay the Escrow Agent its reasonable fees and expenses, including all

reasonable expenses, charges, counsel fees, and other disbursements incurred by it or by its

attorneys, agents and employees in the performance of its duties and obligations under this

Escrow Agreement. Fees, costs and expenses may be paid from interest earned on funds held in

or earned on the Account, but the principal in all Beneficiary States' Accounts and sub-accounts

shall not be charged, used as an offset or otherwise encumbered by the Escrow Agent or the

Company.



SECTION 10. Intended Beneficiaries; Successors.

       No persons or entities other than the Beneficiary States that have enacted NPM Statutes

and Releasing Parties are intended beneficiaries of this Escrow Agreement, and only the

Beneficiary States, the Releasing Parties, the Company and the Escrow Agent shall be entitled to

enforce the terms of this Escrow Agreement. The provisions of this Escrow Agreement shall be

binding upon and inure to the benefit of the undersigned parties hereto and their respective

successors.



SECTION 11. Governing Law.

       This Escrow Agreement shall be construed in accordance with and governed by the laws

of the state where the Escrow Agent is incorporated, except that the applicable Beneficiary

State's NPM Statutes shall only be construed and applied according to, and governed by, the law

of the applicable Beneficiary State.



SECTION 12. Jurisdiction and Venue.

       With the exception of any suit, action or proceeding involving a Beneficiary State or any

Releasing Party located or residing in a Beneficiary State, any suit, action or proceeding seeking




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to interpret or enforce any provision of, or based on any right arising out of, this Escrow

Agreement shall be brought in a court of original jurisdiction for matters involving contract,

equity and damage claims in the State where the Escrow Agent is incorporated.



SECTION 13. Notices.

       All notices required by this Escrow Agreement shall be in writing and shall be deemed to

have been received (a) immediately if sent by facsimile transmission (with a confirming copy

sent the same Business Day by registered or certified mail), or by hand delivery (with signed

return receipt), or (b) the next Business Day if sent by nationally recognized overnight courier, in

any case to the respective addresses as follows:



       If to Company:




       If to the Escrow Agent:



       If to the Beneficiary State(s):

       [Insert names and addresses of Attorneys General Offices of all Beneficiary States here

or on Attachment A to the Agreement and incorporate herein by reference]



       If the Company or the Escrow Agent changes its address for notices required by the

Escrow Agreement, that entity shall immediately notify the other undersigned party and the

Beneficiary States of that change. Written notice required by this Escrow Agreement shall be

deemed sufficient and adequate if sent to the last known address of the Company, Escrow Agent,

or the applicable Beneficiary State in the manner provided under this Section.




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SECTION 14. Severability.

       If any provision of this Escrow Agreement shall under any circumstances be deemed

invalid or inoperative, this Escrow Agreement shall be construed with the invalid or inoperative

provisions deleted and the right s and obligations of the parties shall be construed and enforced

accordingly.



SECTION 15. Amendments.

       This Escrow Agreement may be amended only by written instrument executed by the

Company and the Escrow Agent, provided, however, Attachment "A" may be amended to add

Beneficiary States and new sub-accounts for such added Beneficiary States by written notice to

the Escrow Agent from the Company and the Escrow Agent may amend the list of Beneficiary

States by attachment hereto. The waiver by any party of any breach of this Escrow Agreement

shall not be deemed to be or construed as a waiver of any other breach, whether prior,

subsequent or contemporaneous, of this Escrow Agreement, nor shall such waiver be deemed to

be or construed as a waiver by any other party. The Escrow Agent or the Company shall provide

a copy of each amendment to the Escrow Agreement within thirty (30) days of its execution to

all Beneficiary States.



SECTION 16. Counterparts.

       This Escrow Agreement may be signed in any number of counterparts, each of which

shall be an original, with the same effect as if the signatures thereto were upon the same

instrument. Delivery by facsimile of a signed counterpart shall be deemed delivery for purposes

of acknowledging acceptance hereof.




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SECTION 17. Captions.

       The captions herein are included for convenience of reference only and shall be ignored

in the construction and interpretation hereof.



SECTION 18. Conditions to Effectiveness.

       This Escrow Agreement shall become effective when signed by the Company and

Escrow Agent.



SECTION 19. Resolution of Disputes.

       In the event of any disagreement resulting in adverse claims or demands being made in

connection with the subject matter of this Escrow Agreement, the Escrow Agent may, at its

option, refuse to comply with any claims or demands on it, or refuse to take any other action

hereunder, so long as such disagreement continues, and in any such event, the Escrow Agent

shall not be or become liable in any way or to any person or entity for its failure or refusal to act,

and the Escrow Agent shall be entitled to continue to so refrain from acting until (i) the rights of

all parties have been fully and finally adjudicated by a court of competent jurisdiction, or (ii) all

differences shall have been adjudged and all doubt resolved by agreement among all of the

interested persons, and the Escrow Agent shall have been notified thereof in writing signed by all

such persons. In addition to the foregoing remedies, the Escrow Agent is hereby authorized in

the event of any such disagreement, to petition any state court of competent jurisdiction located

in the capitol city of the applicable Beneficiary State, or such other city as may be agreed to in

writing by the applicable Beneficiary State, for instructions or to interplead the funds or assets so

held into such Court. The undersigned parties agree to the jurisdiction of either of said Courts

over their persons, waive personal service of process, and agree that service of process by

certified or registered mail, return receipt requested, to the address set forth in Section 13 shall

constitute adequate service. The Company agrees that upon final adjudication on such petition




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or interpleader action, the Escrow Agent, its servants, agents, directors, employees or officers

will be relieved of further liability.



SECTION 20. Substitute Form W-9: Qualified Settlement Fund.

        The Company shall provide the Escrow Agent with a correct taxpayer identification

number on a substitute Form W-9 or if it does not have such a number, a statement evidencing its

status as an entity exempt from back-up withholding, within 30 days of the date hereof (and, if it

supplies a Form W-9, indicate thereon that it is not subject to be treated as a Qualified Settlement

Fund for federal or state tax purposes pursuant to Treas. Reg. § 1.468B-1). The Escrow Agent

shall comply with all applicable tax filing, payment and reporting requirements, including,

without limitation, those imposed under Treas. Reg. § 1.468B, and if requested to do so shall join

in the making of the relation-back election under such regulation.



                                                     COMPANY:



                                                     By:

                                                     Title:

                                                     Date: ___________________



                                                     ESCROW AGENT:

                                                     ________________________

                                                     By:

                                                     Title:

                                                     Date: ___________________




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