Stock Purchase Agreement

STOCK PURCHASE AGREEMENT


STOCK PURCHASE AGREEMENT, dated as of April 3, 1996, among Liggett-Ducat Ltd., a Russian closed joint stock company (the "Company"), Belgrave Limited, a Gibraltar corporation ("Belgrave"), Eduard Z. Nakhamkin, a citizen of the United States of America ("Nakhamkin"), and Brooke (Overseas) Ltd., a Delaware corporation ("Brooke").


WHEREAS, Brooke desires to purchase from Belgrave, and Belgrave desires to sell to Brooke, 84,540 shares (subject to adjustment as described in Section 1.2(A) below) of the Common Stock of the Company, comprising all of the shares of Common Stock of the Company owned by Belgrave (the "Shares"), on the terms and conditions set forth herein; and


WHEREAS, contemporaneously with the purchase and sale of the Shares pursuant to this Agreement, and as an inducement for Belgrave to sell the Shares to Brooke, Brooke and Belgrave agree to enter into a consulting agreement providing for the provision by Belgrave to Brooke of certain consulting services (the "Consulting Agreement");


NOW THEREFORE, the parties hereto agree as follows:


ARTICLE I


Purchase of Stock


1.1 Purchase of Stock. Subject to the terms and conditions herein set forth and on the basis of the representations, warranties and agreements of the Company and of Belgrave herein contained, Brooke agrees to purchase from Belgrave, and Belgrave agrees to sell to Brooke, the Shares for the Purchase Price (as defined below and subject to adjustment as described in Section 1.2(A) below) as hereinafter set forth. Belgrave shall deliver certificates for the Shares to be sold hereunder duly endorsed in blank, or accompanied by stock powers, to Brooke at the offices of the Company located at 8-10 (Ducat Place) Gasheka Street, Moscow, Russia 125047, at 10:00 A.M. on April 3, 1996, or at such other place, time and date as Brooke and Belgrave may agree upon in writing, the actual time and date on which the Closing hereunder shall occur being herein called the "Closing Date".


1.2 Purchase Price.


(A) The aggregate purchase price for the 84,540 Shares to be purchased by Brooke from Belgrave shall be U.S. $1,268,100 (the "Purchase Price") and shall be payable, by wire transfer to an account designated by Belgrave to Brooke at least 3 business days prior to any payment, as follows:


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(i) U.S. $1,200,000 shall be payable on June 30, 1996;
provided, however, that if, at Brooke's sole option, on such date,
Brooke pays Belgrave U.S. $500,000 then the remaining unpaid balance,
in the amount of U.S. $700,000, shall be payable on September 30, 1996;
and


(ii) U.S. $68,100 shall be payable on December 31, 1996;


provided, however, that in the event one or more of the shareholders of the Company other than Brooke exercise the preemptive right granted to such shareholders in the Charter of the Company to purchase Shares which are the subject of this Agreement, (a) the number of Shares to be purchased by Brooke from Belgrave under this Agreement shall be reduced by the aggregate number of Shares so purchased by the shareholders, (b) the Purchase Price payable by Brooke under this Agreement shall be reduced by an amount equal to U.S. $15.00 multiplied by the aggregate number of Shares so purchased by the shareholders (with such reduction being applied to the payments to be made pursuant to clauses (i) and (ii) above in order of their maturity), and (c) the parties hereto agree to amend the Brooke Note (as defined below) and any other documents deemed necessary by mutual written agreement of Brooke and Belgrave to reflect the reduction in the number of Shares being purchased hereunder and the Purchase Price as described above.


(B) The obligation of Brooke to pay the installments of the Purchase Price to Belgrave shall be evidenced by a promissory note of Brooke (the "Brooke Note") issued by Brooke to Belgrave, in the form of Annex A hereto, which shall be secured by the pledge by Brooke of certain of the Shares purchased by it hereunder pursuant to a pledge agreement (the "Pledge Agreement"), in the form of Annex B hereto.


1.3 Closing Date. On the Closing Date, the parties hereto shall enter into and deliver this Agreement and:


(A) Brooke shall deliver to Belgrave the Brooke Note
evidencing the portion of the Purchase Price set forth in clauses (i)
and (ii) of Section 1.2(A) for the Shares so purchased by Brooke from
Belgrave.


(B) Brooke and Belgrave shall enter into and deliver the
Consulting Agreement, in the form of Annex C hereto, providing for the
provision by Belgrave of consulting services to Brooke.


(C) Brooke shall deliver to Belgrave the Pledge Agreement.


(D) Brooke shall transfer and assign to Belgrave the note
which evidences certain indebtedness of Nakhamkin and Eduard Nakhamkin
Fine Arts, Inc. ("ENFA") under the Agreement dated January 1, 1994 by
and among Brooke Group Ltd., Belgrave, Nakhamkin, ENFA and BGLS Inc.
(the "Belgrave Agreement").


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(E) The Company and Nakhamkin shall enter into a letter
agreement relating to the employment agreement dated as of January 1,
1994 (the "Employment Agreement"), by and between the Company and
Nakhamkin, in the form of Annex D hereto.


(F) Belgrave and Brooke shall enter into and deliver an
agreement, in the form of Annex E hereto, relating to the purchase of
the Shares.


(G) Each of Belgrave and Brooke shall deliver to the other
resolutions of its Board of Directors authorizing this Agreement, the
Consulting Agreement and the agreement referred to in clause (F) above,
and, in the case of Brooke only, the Pledge Agreement and the issuance
of the Brooke Note.


ARTICLE II


Representations and Warranties


2.1 Representations and Warranties by the Company. The Company represents and warrants to, and agrees with, Brooke as follows:


(A) Organization and Qualification, etc. The Company
is a closed joint stock company duly organized, validly
existing and in good standing under the laws of the Russian
Federation, has the power and authority to own its properties
and assets and to carry on its business, and is duly qualified
to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership of its
property or the conduct of its business requires such
qualification. The Company has the power and authority to
enter into this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company, and
constitutes a valid and legally binding agreement of the
Company enforceable in accordance with its terms.


(B) Capital Stock. The authorized capital stock of
the Company consists of 701,000 shares of Common Stock, of
which 700,975 shares are validly issued, fully paid and
nonassessable, and outstanding. All of the outstanding shares
of the capital stock of the Company are owned of record and
beneficially by the shareholders of the Company as set forth
in Schedule A hereto. Other than as described in the proviso
to Section 1.2(A) above, there are no existing options, calls
or commitments of any character relating to the authorized and
unissued capital stock of the Company or any of its
Subsidiaries or to any securities or obligations convertible
into or exchangeable for, or giving any person any right to
subscribe for or acquire from the Company or any of its
Subsidiaries, any shares of capital stock of the Company or
any of its Subsidiaries, and no such convertible or
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