Common use of State Settlement Agreements Clause in Contracts

State Settlement Agreements. In June 1994, the Mississippi Attorney General brought an action, Moore v. American Tobacco Co., against various industry members, including RJR Tobacco and B&W. This case was brought on behalf of the state to recover state funds paid for health care and other assistance to state citizens suffering from diseases and conditions allegedly related to tobacco use. Most other states, through their attorneys general or other state agencies, sued RJR Tobacco, B&W and other U.S. cigarette manufacturers based on similar theories. The cigarette manufacturer defendants, including RJR Tobacco and B&W, settled the first four of these cases scheduled for trial — Mississippi, Florida, Texas and Minnesota — by separate agreements with each such state. On November 23, 1998, the major U.S. cigarette manufacturers, including RJR Tobacco and B&W, entered into the Master Settlement Agreement with attorneys general representing the remaining 46 states, the District of Columbia, Puerto Rico, Guam, the Virgin Islands, American Samoa and the Northern Marianas. Effective on November 12, 1999, the MSA settled all the health-care cost recovery actions brought by, or on behalf of, the settling jurisdictions and released various additional present and future claims. In the settling jurisdictions, the MSA released RJR Tobacco, B&W, and their affiliates and indemnitees, including RAI, from: • all claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to past conduct arising out of the use, sale, distribution, manufacture, development, advertising, marketing or health effects of, the exposure to, or research, statements or warnings about, tobacco products; and • all monetary claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to future conduct arising out of the use of or exposure to, tobacco products that have been manufactured in the ordinary course of business. Set forth below are tables depicting the unadjusted tobacco industry settlement payment schedule and the settlement payment schedule for RAI’s operating subsidiaries under the State Settlement Agreements, and related information for 2011 and beyond: Unadjusted Original Participating Manufacturers’ Settlement Payment Schedule 2011 2012 2013 2014 2015 - 2016 2017 Thereafter First Four States’ Settlements:(1) Mississippi Annual Payment $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 Florida Annual Payment 440 440 440 440 440 440 440 Texas Annual Payment 580 580 580 580 580 580 580 Minnesota Annual Payment 204 204 204 204 204 204 204 Remaining Jurisdictions’ Settlement: Annual Payments(1) 8,004 8,004 8,004 8,004 8,004 8,004 8,004 Total $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 RAI’s Operating Subsidiaries’ Settlement Expenses and Payment Schedule Settlement expenses $ 2,435 $ 2,370 — — — — — Settlement cash payments $ 2,492 $ 2,414 — — — — — Projected settlement expenses $ >1,800 $ >1,900 $ >1,900 $ >2,000 $ >2,000 Projected settlement cash payments $ >2,500 $ >2,000 $ >1,900 $ >1,900 $ >2,000

State Settlement Agreements. In June 1994, the Mississippi Attorney General brought an action, Moore Xxxxx v. American Tobacco Co., against various industry members, including RJR Tobacco and B&W. This case was brought on behalf of the state to recover state funds paid for health care and other assistance to state citizens suffering from diseases and conditions allegedly related to tobacco use. Most other states, through their attorneys general or other state agencies, sued RJR Tobacco, B&W and other U.S. cigarette manufacturers based on similar theories. The cigarette manufacturer defendants, including RJR Tobacco and B&W, settled the first four of these cases scheduled for trial — Mississippi, Florida, Texas and Minnesota — by separate agreements with each such state. On November 23, 1998, the major U.S. cigarette manufacturers, including RJR Tobacco and B&W, entered into the Master Settlement Agreement with attorneys general representing the remaining 46 states, the District of Columbia, Puerto Rico, Guam, the Virgin Islands, American Samoa and the Northern Marianas. Effective on November 12, 1999, the MSA settled all the health-care cost recovery actions brought by, or on behalf of, the settling jurisdictions and released various additional present and future claims. In the settling jurisdictions, the MSA released RJR Tobacco, B&W, and their affiliates and indemnitees, including RAI, from: • all claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to past conduct arising out of the use, sale, distribution, manufacture, development, advertising, marketing or health effects of, the exposure to, or research, statements or warnings about, tobacco products; and • all monetary claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to future conduct arising out of the use of or exposure to, tobacco products that have been manufactured in the ordinary course of business. Set forth below are tables depicting is the unadjusted tobacco industry settlement payment schedule and the settlement payment schedule for RAI’s operating subsidiaries under the State Settlement Agreements, and related information for 2011 2012 and beyond: Unadjusted Original Participating Manufacturers’ Settlement Payment Schedule 2011 2012 2013 2014 2015 - 2016 2017 Thereafter First Four States’ Settlements:(1) Mississippi Annual Payment $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 Florida Annual Payment 440 440 440 440 440 440 440 Texas Annual Payment 580 580 580 580 580 580 580 Minnesota Annual Payment 204 204 204 204 204 204 204 Remaining Jurisdictions’ Settlement: Annual Payments(1) 8,004 8,004 8,004 8,004 8,004 8,004 8,004 Total $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 RAI’s Operating Subsidiaries’ Settlement Expenses and Payment Schedule Settlement expenses $ 2,435 $ 2,370 — — — — — Settlement cash payments $ 2,492 $ 2,414 — — — — — Projected settlement expenses $ >1,800 $ >1,900 $ >1,900 $ >2,000 $ >2,000 Projected settlement cash payments $ >2,500 $ >2,000 $ >1,900 $ >1,900 $ >2,000:

State Settlement Agreements. In June 1994, the Mississippi Attorney General brought an action, Moore v. American Tobacco Co., against various industry members, including RJR Tobacco and B&W. This case was brought on behalf of the state to recover state funds paid for health care and other assistance to state citizens suffering from diseases and conditions allegedly related to tobacco use. Most other states, through their attorneys general or other state agencies, sued RJR Tobacco, B&W and other U.S. cigarette manufacturers based on similar theories. The cigarette manufacturer defendants, including RJR Tobacco and B&W, settled the first four of these cases scheduled for trial — Mississippi, Florida, Texas and Minnesota — by separate agreements with each such state. On November 23, 1998, the major U.S. cigarette manufacturers, including RJR Tobacco and B&W, entered into the Master Settlement Agreement with attorneys general representing the remaining 46 states, the District of Columbia, Puerto Rico, Guam, the Virgin Islands, American Samoa and the Northern Marianas. Effective on November 12, 1999, the MSA settled all the health-care cost recovery actions brought by, or on behalf of, the settling jurisdictions and released various additional present and future claims. In the settling jurisdictions, the MSA released RJR Tobacco, B&W, and their affiliates and indemnitees, including RAI, from: • all claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to past conduct arising out of the use, sale, distribution, manufacture, development, advertising, marketing or health effects of, the exposure to, or research, statements or warnings about, tobacco products; and • all monetary claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to future conduct arising out of the use of or exposure to, tobacco products that have been manufactured in the ordinary course of business. Set forth below are tables depicting is the unadjusted tobacco industry settlement payment schedule and the settlement payment schedule for RAI’s operating subsidiaries under the State Settlement Agreements, and related information for 2011 2012 and beyond: Unadjusted Original Participating Manufacturers’ Settlement Payment Schedule 2011 2012 2013 2014 2015 - 2016 2017 Thereafter First Four States’ Settlements:(1) Mississippi Annual Payment $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 Florida Annual Payment 440 440 440 440 440 440 440 Texas Annual Payment 580 580 580 580 580 580 580 Minnesota Annual Payment 204 204 204 204 204 204 204 Remaining Jurisdictions’ Settlement: Annual Payments(1) 8,004 8,004 8,004 8,004 8,004 8,004 8,004 Total $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 RAI’s Operating Subsidiaries’ Settlement Expenses and Payment Schedule Settlement expenses $ 2,435 $ 2,370 — — — — — Settlement cash payments $ 2,492 $ 2,414 — — — — — Projected settlement expenses $ >1,800 $ >1,900 $ >1,900 $ >2,000 $ >2,000 Projected settlement cash payments $ >2,500 $ >2,000 $ >1,900 $ >1,900 $ >2,0009,364

State Settlement Agreements. In June 1994, the Mississippi Attorney General brought an action, Moore v. American Tobacco Co.Co. , against various industry members, including RJR Tobacco and B&W. This case was brought on behalf of the state to recover state funds paid for health care and other assistance to state citizens suffering from diseases and conditions allegedly related to tobacco use. Most other states, through their attorneys general or other state agencies, sued RJR Tobacco, B&W and other U.S. cigarette manufacturers based on similar theories. The cigarette manufacturer defendants, including RJR Tobacco and B&W, settled the first four of these cases scheduled for trial — Mississippi, Florida, Texas and Minnesota — by separate agreements with each such state. On November 23, 1998, the major U.S. cigarette manufacturers, including RJR Tobacco and B&W, entered into the Master Settlement Agreement with attorneys general representing the remaining 46 states, the District of Columbia, Puerto Rico, Guam, the Virgin Islands, American Samoa and the Northern Marianas. Effective on November 12, 1999, the MSA settled all the health-care cost recovery actions brought by, or on behalf of, the settling jurisdictions and released various additional present and future claims. In the settling jurisdictions, the MSA released RJR Tobacco, B&W, and their affiliates and indemnitees, including RAI, from: • all claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to past conduct arising out of the use, sale, distribution, manufacture, development, advertising, marketing or health effects of, the exposure to, or research, statements or warnings about, tobacco products; and • all monetary claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to future conduct arising out of the use of or exposure to, tobacco products that have been manufactured in the ordinary course of business. Set forth below are tables depicting the unadjusted tobacco industry settlement payment schedule and the settlement payment schedule for RAI’s operating subsidiaries under the State Settlement Agreements, and related information for 2011 2010 and beyond: Unadjusted Original Participating Manufacturers’ Settlement Payment Schedule 2011 2012 2013 2014 2015 - 2016 2017 Thereafter First Four States’ Settlements:(1) Mississippi Annual Payment $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 Florida Annual Payment 440 440 440 440 440 440 440 Texas Annual Payment 580 580 580 580 580 580 580 Minnesota Annual Payment 204 204 204 204 204 204 204 Remaining Jurisdictions’ Settlement: Annual Payments(1) 8,004 8,004 8,004 8,004 8,004 8,004 8,004 Total $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 RAI’s Operating Subsidiaries’ Settlement Expenses and Payment Schedule Settlement expenses $ 2,435 $ 2,370 — — — — — Settlement cash payments $ 2,492 $ 2,414 — — — — — Projected settlement expenses $ >1,800 $ >1,900 $ >1,900 $ >2,000 $ >2,000 Projected settlement cash payments $ >2,500 $ >2,000 $ >1,900 $ >1,900 $ >2,000:

State Settlement Agreements. In June 1994, the Mississippi Attorney General brought an action, Moore v. American Tobacco Co., against various industry members, including RJR Tobacco and B&W. This case was brought on behalf of the state to recover state funds paid for health care and other assistance to state citizens suffering from diseases and conditions allegedly related to tobacco use. Most other states, through their attorneys general or other state agencies, sued RJR Tobacco, B&W and other U.S. cigarette manufacturers based on similar theories. The cigarette manufacturer defendants, including RJR Tobacco and B&W, settled the first four of these cases scheduled for trial — Mississippi, Florida, Texas and Minnesota — by separate agreements with each such state. On November 23, 1998, the major U.S. cigarette manufacturers, including RJR Tobacco and B&W, entered into the Master Settlement Agreement with attorneys general representing the remaining 46 states, the District of Columbia, Puerto Rico, Guam, the Virgin Islands, American Samoa and the Northern Marianas. Effective on November 12, 1999, the MSA settled all the health-care cost recovery actions brought by, or on behalf of, the settling jurisdictions and released various additional present and future claims. In the settling jurisdictions, the MSA released RJR Tobacco, B&W, and their affiliates and indemnitees, including RAI, from: • all claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to past conduct arising out of the use, sale, distribution, manufacture, development, advertising, marketing or health effects of, the exposure to, or research, statements or warnings about, tobacco products; and • all monetary claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to future conduct arising out of the use of or exposure to, tobacco products that have been manufactured in the ordinary course of business. Set forth below are tables depicting the unadjusted tobacco industry settlement payment schedule and the settlement payment schedule for RAI’s operating subsidiaries under the State Settlement Agreements, and related information for 2011 2009 and beyond: Unadjusted Original Participating Manufacturers’ Settlement Payment Schedule 2009 2010 2011 2012 2013 2014 2015 - 2016 2017 Thereafter and thereafter First Four States’ Settlements:(1) Mississippi Annual Payment $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 Florida Annual Payment 440 440 440 440 440 440 440 Texas Annual Payment 580 580 580 580 580 580 580 Minnesota Annual Payment 204 204 204 204 204 204 204 Remaining JurisdictionsStates’ Settlement: Annual Payments(1) 8,004 8,004 8,004 8,004 8,004 8,004 8,004 Growers’ Trust(2) 295 295 — — Offset by federal tobacco buyout(2) (295 ) (295 ) — — Total $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 RAI’s Operating Subsidiaries’ Settlement Expenses and Payment Schedule Settlement expenses $ 2,540 $ 2,496 $ 2,435 $ 2,370 — — — — — Settlement cash payments $ 2,249 $ 2,519 $ 2,492 $ 2,414 — — — — — Projected settlement expenses $ >1,800 $ >1,900 $ >1,900 $ >2,000 $ >2,000 2,400 Projected settlement cash payments $ >2,500 $ >2,000 $ >1,900 $ >1,900 $ >2,0002,400

State Settlement Agreements. In June 1994, the Mississippi Attorney General brought an action, Moore v. American Tobacco Co., against various industry members, including RJR Tobacco and B&W. This case was brought on behalf of the state to recover state funds paid for health care and other assistance to state citizens suffering from diseases and conditions allegedly related to tobacco use. Most other states, through their attorneys general or other state agencies, sued RJR Tobacco, B&W and other U.S. cigarette manufacturers based on similar theories. The cigarette manufacturer defendants, including RJR Tobacco and B&W, settled the first four of these cases scheduled for trial — Mississippi, Florida, Texas and Minnesota — by separate agreements with each such state. On November 23, 1998, the major U.S. cigarette manufacturers, including RJR Tobacco and B&W, entered into the Master Settlement Agreement with attorneys general representing the remaining 46 states, the District of Columbia, Puerto Rico, Guam, the Virgin Islands, American Samoa and the Northern Marianas. Effective on November 12, 1999, the MSA settled all the health-care cost recovery actions brought by, or on behalf of, the settling jurisdictions and released various additional present and future claims. In the settling jurisdictions, the MSA released RJR Tobacco, B&W, and their affiliates and indemnitees, including RAI, from: • all claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to past conduct arising out of the use, sale, distribution, manufacture, development, advertising, marketing or health effects of, the exposure to, or research, statements or warnings about, tobacco products; and • all monetary claims of the settling states and their respective political subdivisions and other recipients of state health-care funds, relating to future conduct arising out of the use of or exposure to, tobacco products that have been manufactured in the ordinary course of business. Set forth below are tables depicting the unadjusted tobacco industry settlement payment schedule and the settlement payment schedule for RAI’s operating subsidiaries under the State Settlement Agreements, and related information for 2011 2009 and beyond: Unadjusted Original Participating Manufacturers’ Settlement Payment Schedule 2009 2010 2011 2012 2013 2014 2015 - 2016 2017 Thereafter and thereafter First Four States’ Settlements:(1) Mississippi Annual Payment $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 $ 136 Florida Annual Payment 440 440 440 440 440 440 440 Texas Annual Payment 580 580 580 580 580 580 580 Minnesota Annual Payment 204 204 204 204 204 204 204 Remaining JurisdictionsStates’ Settlement: Annual Payments(1) 8,004 8,004 8,004 8,004 8,004 8,004 8,004 Base Foundation Funding — — — Growers’ Trust(2) 295 295 — Offset by federal tobacco buyout(2) (295 ) (295 ) — Total $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 $ 9,364 RAI’s Operating Subsidiaries’ Settlement Expenses and Payment Schedule Settlement expenses $ 2,435 2,540 $ 2,370 — — — — 2,496 — Settlement cash payments $ 2,492 2,249 $ 2,414 — — — — 2,519 — Projected settlement expenses $ >1,800 $ >1,900 $ >1,900 $ >2,000 $ >2,000 2,500 Projected settlement cash payments $ >2,500 $ >2,000 $ >1,900 $ >1,900 $ >2,0002,500