PROPOSED SETTLEMENT REACHED IN ACTION FILED AGAINST FLUE CURED TOBACCO COOPERATIVE STABILIZATION CORPORATION; MILLIONS TO BE DISBURSED TO FARMERS IF SETTLEMENT APPROVED

Attorneys for the parties in an action pending in Wake County Superior Court, Lewis, et al v. Flue Cured Tobacco Cooperative Stabilization Corporation, announced the proposed settlement today of a lawsuit in which tobacco farmers sought class action status on behalf of all present and former members of Stabilization since its creation in 1946. The farmers had asked the Court to dissolve Stabilization or order a distribution of its assets.

The Settlement must be approved by the Court. The Parties have requested that the Court certify a Settlement Class for purposes of the Settlement, consisting of all persons and entities that were shareholders or members of Stabilization at any time from June 1, 1946 to the present. If the Settlement is approved, it will resolve claims of Class Members against Stabilization in all outstanding lawsuits. The proposed settlement provides for: (1) the establishment of a Settlement Fund, from which payments will be made to Class Members who produced flue-cured tobacco between 1985-2005; (2) the redemption of Certificates of Interest issued by Stabilization in connection with the sale of tobacco crops from 1967-1973; (3) book allocations to eligible Class Members of Stabilization's paid-in capital; (4) book allocations to Eligible Class Members of Stabilization's retained earnings; and (4) clarification of the conditions of continued membership in Stabilization.

A Settlement Fund, in the minimum amount of $50 million, will be created from the sale of tobacco "ceded" to Stabilization by the USDA as a result of the end of the Federal Tobacco Program. Payments will be made from the Settlement Fund to current and former members who produced and sold flue-cured tobacco between 1985 and 2005, based on the pounds of tobacco sold by each member and the number of years the member actively participated in Stabilization during that twenty-year period. Stabilization will also redeem Certificates of Interest issued in connection with the sale of tobacco crops from the 1967-1973 crop years for all holders who file a timely redemption application.

In addition to the cash payments provided by the Settlement, Stabilization will make an allocation in its books and records of approximately $110 million of paid-in capital to Stabilization members who paid No Net Cost assessment fees during the 1982-1984 crop years. Stabilization will make a further book allocation of approximately $102 million of retained earning to members who produced and sold flue-cured tobacco between 1985 and 2005, based on the pounds of tobacco sold by each member and the number of years the member actively participated in Stabilization during that twenty-year period.

The Plaintiffs are represented by Gary K. Shipman and William G. Wright of Shipman & Wright, L.L.P. and William Robert Cherry, Jr. and Lonnie B. Williams of Marshall Williams & Gorham, L.L.P. of Wilmington, North Carolina; Dennis T. Worley of The McGougan Law Firm in Tabor City, North Carolina; and Terry E. Richardson, Jr. and James L. Ward, Jr. of Richardson, Patrick, Westbrook & Brickman, L.L.C. of Mt. Pleasant, South Carolina.

"The settlement provides substantial benefits for tobacco farmers who have patronized Stabilization over the years," said Worley. "The benefits provided in the Settlement do not depend on a grower's current membership status. With the end of the Federal Tobacco Program, a majority of the remaining tobacco farmers will be growing under direct contracts for cigarette manufacturers or leaf dealers, and will not be as dependent upon the activities of Stabilization as they were before the end of the program. There are other farmers, however, who continue to look to Stabilization to provide marketing alternatives. We believe the Settlement fairly addresses and protects the interests of all farmers."

Donald H. Tucker, Jr., attorney for Stabilization, said that his client was pleased at the prospect of having this litigation terminated, while providing substantial benefits to both current and formers members of Stabilization. "This co-op has been very successful in protecting the interests of tobacco farmers, both large and small, for almost sixty years. This settlement, if approved, will insure that Stabilization can continue to serve its historical role of providing marketing opportunities for its members, and also allow it to focus on new initiatives for the benefit of flue-cured tobacco growers. Stabilization's Board believed that a resolution of this litigation, which will disburse money and allocate interests to those farmers who helped contribute to the co-op's success, was the right thing to do."

Cherry believes that farmers would have faced a difficult legal battle through the Courts, but for the resolution. "We believe we have achieved, through this Settlement, significant benefits and protection for our farmers," Cherry said. "The Settlement will distribute money to farmers that is not necessary for Stabilization's ongoing efforts, and will provide protection and certainty for members in the event the co-op is dissolved in the future."

A detailed notice describing all of the provisions and conditions of the Settlement will be sent to Class Members if the Settlement is preliminarily approved by the Court. The Parties will ask the Court to schedule a final hearing to approve the Settlement approximately sixty (60) days after preliminary approval is obtained.

Most class members will not need to do anything to receive benefits under the Settlement, Shipman said. "We have been able to identify, by name and address, a substantial majority of those tobacco farmers who are eligible to participate in the Settlement Fund. These members or their heirs, will simply receive a check without having to file a formal claim," explained Shipman. For those members holding a Certificate of Interest, a simple form will have to be filled out and submitted to Stabilization in order for the certificates to be redeemed. "The application process is straightforward and is designed to get money into the hands of eligible members as quickly as possible," said Tucker.

If the Settlement receives preliminary approval, and prior to any final hearing, Class members will have an opportunity to "opt out" (elect to exclude themselves) from the Settlement, or to object to the Settlement, by following the procedures described in the Class Notice. The Class Notice will also provide Class Members with a toll free number and a website address through which they can obtain additional information about the Settlement.

Released By: Stabilization 09/26/05