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EXHIBIT 10.1
STATE OF NEVADA SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT is entered into this 15th day of
September, 1997 by and among the State of Nevada and Brooke Group Ltd., a
Delaware corporation ("Brooke Group"), Xxxxxxx & Xxxxx Inc., a Delaware
corporation ("Xxxxx"), and Xxxxxxx Group, Inc., a Delaware corporation (which,
with Xxxxx, is hereinafter referred to as "Xxxxxxx").
RECITALS
WHEREAS,
A. The State of Nevada, by and through its Attorney General
(the "Attorney General"), has brought a civil action (the "Action") against,
among others, the American Tobacco Company, Inc., BAT Industries, Plc, British
American Tobacco Company, X.X. Xxxxxxxx Tobacco Company, Xxxxx & Xxxxxxxxxx
Tobacco Corporation, Xxxxxx Xxxxxx, Inc., Xxxxxxx & Xxxxx, Inc., Lorillard
Tobacco Company, Inc., and United States Tobacco Company and their various
parent and related companies ("Defendants"), asserting claims for, among other
things, expenses allegedly arising from tobacco-related matters and injunctive
relief concerning sales of cigarettes to minors.
B. Because of the importance of the agreements and
undertakings by Xxxxxxx and Brooke Group herein to the goals of the State of
Nevada, including the prosecution of the Action against non-settling defendants,
the State of Nevada has agreed to extend financial settlement terms to Xxxxxxx
and Xxxxxx Group which will not be offered to any other Defendant, all as set
forth in this Settlement Agreement.
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C. On March 20, 1997, seventeen States, by and through their
Attorneys General, and Xxxxxxx and Brooke Group entered into a settlement (the
"Attorneys General Settlement") of the actions brought by such States, pursuant
to which Xxxxxxx agreed to make certain payments, comply with certain proposed
regulations restricting the marketing and sale of cigarettes to minors and to
offer certain significant cooperation in connection with the prosecution of
their respective actions against the other Defendants; all in accordance with
the terms of the Attorneys General Settlement, a copy of which is annexed hereto
as Appendix A.
D. The State of Nevada and Xxxxxxx and Brooke Group wish to
provide in this Settlement Agreement for the State of Nevada to become a
Subsequent Settling State under the Attorneys General Settlement, all in
accordance with the terms of this Settlement Agreement.
E. The State of Nevada acknowledges and agrees that this
Settlement Agreement, including the cooperation provisions thereof, are
important to the prosecution of its Action against non-settling Defendants.
F. The State of Nevada and Xxxxxxx and Xxxxxx Group recognize
and support the public interest in preventing smoking by, and preventing the
promotion of smoking to, children and adolescents.
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X. Xxxxxxx and Brooke Group have denied, and continue to deny
any wrongdoing or any legal liability of any kind in all of the above-mentioned
actions.
H. The State of Nevada recognizes and acknowledges that the
cooperation being provided for in this Settlement Agreement would be valuable to
the prosecution of claims against the tobacco industry. Further, the State of
Nevada acknowledges that the change in warning labels provided for in this
Settlement Agreement is a step towards properly informing consumers more fully
of the truth about cigarettes and the consequences of smoking, as is the
statement by Xxxxxxx also provided for herein.
NOW, THEREFORE, in consideration of the foregoing and of the
promises and covenants set forth in this Agreement, the undersigned Attorney
General, on behalf of the State of Nevada, and Xxxxxxx and Brooke Group hereby
stipulate and agree that any and all smoking-related claims, including the
Action, of the State of Nevada shall be settled as against Xxxxxxx and Xxxxxx
Group all on the terms contained herein, as follows:
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1. Definitions.
Capitalized terms used herein shall have the meanings assigned
to them in Section 1 of the Attorneys General Settlement, except as set forth
below or defined elsewhere in this Agreement:
"Action" means the action entitled State of Nevada v. Xxxxxx
Xxxxxx Inc., et al., Nev. Dist., 2nd Jud. Dist. (Washoe Cty., Nevada).
"Agreement" means this Settlement Agreement.
"Attorney General Actions" means those actions settled
pursuant to the Attorneys General Settlement or any similar action commenced by
or on behalf of a State against the Defendants.
"Attorneys General Settlement" means the settlement agreement
entered into on March 20, 1997 by seventeen Settling States and Settling
Defendants, a copy of which is annexed hereto as Exhibit A.
"Parties" means the State of Nevada and Brooke Group and
Xxxxxxx.
"Settling States" means the States listed in Appendix A to the
Attorneys General Settlement and Subsequent Settling States.
2. Settlement Purposes Only.
Section 2 of the Attorneys General Settlement is incorporated
herein by reference.
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3. Parties.
3.1. Section 3.1 of the Attorneys General Settlement is
incorporated herein by reference.
3.2. Section 3.2 of the Attorneys General Settlement is
incorporated herein by reference.
4. Public Statement; Cooperation; Advertising Limitations.
Section 4 of the Attorneys General Settlement is incorporated herein by
reference, except as modified below.
4.1 Promptly after execution of this Settlement Agreement,
Xxxxxxx shall, by and through its Director, Xxxxxxx X. XxXxx, issue in the State
of Nevada a public statement substantially in the following form and substance:
I am, and have been for a number of years, a Director of
Xxxxxxx Group Inc., a manufacturer of cigarettes. Cigarettes were identified as
a cause of lung cancer and other diseases as early as 1950. I, personally, am
not a scientist. But, like all of you, I am aware of the many reports concerning
the ill-effects of cigarette smoking. We at Xxxxxxx know and acknowledge that,
as the Surgeon General and respected medical researchers have found, cigarette
smoking causes health problems, including lung cancer, heart and vascular
disease and emphysema. We at Xxxxxxx also know and acknowledge that, as the
Surgeon General, the Food and Drug Administration and respected medical
researchers have found, nicotine is addictive.
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Xxxxxxx will continue to engage in the legal activity of
selling cigarettes to adults, but will endeavor to ensure that these adult
smokers are aware of the health risks and addictive nature of smoking. As part
of our efforts, we will do the following:
1. In accordance with a court-approved settlement, Xxxxxxx
will set up a fund to compensate equitably those who claim to have been
injured by our products.
2. Xxxxxxx will add a prominent warning to each of our
packages of cigarettes and all of our cigarette advertising stating
that "Smoking is Addictive".
3. Xxxxxxx supports and will not challenge Food and Drug
Administration regulations concerning the sale and distribution of
nicotine-containing cigarettes and smokeless tobacco products to
children and adolescents. Accordingly, Xxxxxxx has agreed to comply
with many of these regulations even before they apply to the tobacco
industry generally.
4. Xxxxxxx has instructed its advertising and marketing people
to scrupulously avoid any and all advertising or marketing which would
appeal to children or adolescents. Xxxxxxx acknowledges that the
tobacco industry markets to "youth," which means those under 18 years
of age, and not just those 18-24 years of age. Xxxxxxx condemns this
practice and will not market to children. Xxxxxxx agrees that if it
sees industry advertisements which in its
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view are aimed at children, it will bring this to the attention of the
Attorney General of the State of Nevada.
5. In accordance with our settlement agreements, Xxxxxxx
agrees to fully cooperate with the State of Nevada in connection with
contemplated lawsuits against the other tobacco companies. To that end,
Xxxxxxx will make available to the State of Nevada all relevant
documents and information, including documents subject to Xxxxxxx'x own
attorney-client privileges and work product protections, and will
assist the State of Nevada in obtaining prompt court adjudication of
the rest of the industry's joint privilege claims.
4.2 Section 4.2 of the Attorneys General Settlement is incorporated
herein by reference.
4.3.1. Upon execution of this Agreement, each Settling
Defendant shall:
(1) cooperate with the Attorney General of the State
of Nevada in that such Settling Defendant will take no steps
to impede or frustrate civil investigations into, or civil
prosecutions of, any of the Non-settling Tobacco Companies, so
as to secure the just, speedy and inexpensive determination of
all such smoking-related claims against said non-settling
persons and entities;
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(2) cooperate in and facilitate reasonable non-party
discovery from Settling Defendants in connection with the
Action;
(3) actively assist the Attorney General of the State
of Nevada in identifying and locating any and all persons
known to such Settling Defendant to have documents or
information that is discoverable in such proceedings, to
actively assist said counsel in interviewing and obtaining
documents and information from all such persons, and to
encourage such person to cooperate with the Attorney General;
and shall actively assist the Attorney General in interpreting
documents relating to Attorney General Actions against
Non-settling Tobacco Companies; and
(4) insofar as such Settling Defendant has or obtains
any material information concerning any fraudulent or illegal
conduct on the part of any parties, including Non-settling
Tobacco Companies, their agents, or their co-defendants
designed to frustrate or defeat the claims of the State of
Nevada against such parties, companies, agents or
co-defendants, or which have the effect of unlawfully
suppressing evidence relevant to smoking claims, disclose such
information to the appropriate judicial and regulatory
agencies.
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4.3.2. Subject to, and promptly after, the entry of a
Protective Order or a Stipulation Regarding Xxxxxxx Documents by the court in
which the Action is pending, each Settling Defendant shall:
(1) promptly provide all documents and information
that are relevant to the subject matter of the Action or which
are likely to lead to admissible evidence in connection with
claims asserted in the Action, subject to the provisions of
Section 4.3.2(2) hereof;
(2) waive any and all applicable attorney-client
privileges and work product protections with respect to such
documents and information. Such waiver shall not extend to (a)
documents and information not relevant to the subject matter
of the Action or not likely to lead to admissible evidence in
connection with such an action or (b) documents subject to a
joint defense or other privilege or protection which Settling
Defendants cannot legally waive unilaterally, except that the
waiver by the Settling Defendant shall apply, to the extent
permitted by law, to its own joint defenses or other
privileges. To the extent that a Settling Defendant has a good
faith belief, or one or more Non-settling Tobacco Companies
claims, that documents to be provided pursuant to Section
4.3.2(1) hereof may be subject to a joint defense or other
privilege (or a
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claim of such privilege) of one or more of the Non-settling
Tobacco Companies, such documents shall be deposited under
seal for in camera inspection by the court in which the Action
is pending, together with a statement to such court that such
Settling Defendant has concerns as to whether some or all of
such documents should be protected from discovery, and the
Parties agree to request that such court shall retain
jurisdiction to resolve that issue. Xxxxxxx will participate
in proceedings, including by way of court appearances or
declarations, concerning issues of whether such documents are
discoverable;
(3) offer their employees, and any and all other
individuals over whom they have control, and help locate
former employees, to provide witness interviews of such
employees and to testify, in depositions and at trial; it
being understood and agreed that Xxxxxxx will waive and hereby
does waive any and all applicable confidentiality agreements
to the extent such confidentiality agreements would restrict
testimony under this Agreement, if any, to which such
witnesses may be subject; and
(4) demand from its past or current national legal
counsel all documents and information obtained by them in the
course of representation of any Settling Defendant which in
any way relates to the cooperation
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required in paragraphs 4.3.1(1) - 4.3.2(3) above, which should
be provided to the Settling States as provided under this
paragraph.
4.3.3. Section 4.3.3 of the Attorneys General
Settlement is incorporated herein by reference.
4.3.4. Section 4.3.4 of the Attorneys General
Settlement is incorporated herein by reference.
4.4. Section 4.4 of the Attorneys General Settlement is
incorporated herein by reference.
4.5. Section 4.5 of the Attorneys General Settlement and
subparts 4.5.1, 4.5.2, 4.5.3, and 4.5.4 thereof are incorporated herein by
reference.
4.6. Section 4.6 of the Attorneys General Settlement is
incorporated herein by reference.
4.7. Section 4.7 of the Attorneys General Settlement is
incorporated herein by reference.
4.8. Section 4.8 of the Attorneys General Settlement is
incorporated herein by reference.
4.9. Section 4.9 of the Attorneys General Settlement is
incorporated herein by reference.
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5. Global Settlement.
5.1. Section 5.1 of the Attorneys General Settlement is
incorporated herein by reference.
5.2. Section 5.2 of the Attorneys General Settlement is
incorporated herein by reference.
5.3. Subject to and in accordance with applicable law, in the
event of a Global Settlement which does not impose financial terms, financial
obligations or financial conditions as to Brooke Group and Xxxxxxx which are
more onerous on, or less favorable to, Brooke Group and Xxxxxxx than those of
this Settlement Agreement (at least to the extent Xxxxxxx'x Market Share does
not exceed 3%; such Market Share limitation being included solely for purposes
of this Section 5.3), and pursuant to which Brooke Group and Xxxxxxx receive a
limitation of liability for smoking-related claims, and any other benefits
conferred thereunder, at least to the same extent as received by the
Non-settling Tobacco Companies, Xxxxxxx agrees to abide by the provisions of
such Global Settlement that pertain to the pricing of Cigarettes.
6. Settlement Fund.
6.1. Section 6.1 of the Attorneys General Settlement is
incorporated herein by reference.
6.2. Section 6.2 of the Attorneys General Settlement is
incorporated herein by reference.
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6.3. Section 6.3 of the Attorneys General Settlement and
subparts 6.3.1 and 6.3.2 thereof are incorporated herein by reference.
6.4. Section 6.4 of the Attorneys General Settlement is
incorporated herein by reference.
6.5. Section 6.5 of the Attorneys General Settlement is
incorporated herein by reference.
6.6. Section 6.6 of the Attorneys General Settlement is
incorporated herein by reference.
6.7. Section 6.7 of the Attorneys General Settlement is
incorporated herein by reference.
6.8. Section 6.8 of the Attorneys General Settlement is
incorporated herein by reference.
6.9. Section 6.9 of the Attorneys General Settlement is
incorporated herein by reference.
6.10. Section 6.10 of the Attorneys General Settlement is
incorporated herein by reference.
6.11. Section 6.11 of the Attorneys General Settlement is
incorporated herein by reference.
6.12. Section 6.12 of the Attorneys General Settlement is
incorporated herein by reference.
6.13. Section 6.13 of the Attorneys General Settlement is
incorporated herein by reference.
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7. Release.
7.1. Section 7.1 of the Attorneys General Settlement is
incorporated herein by reference.
7.2. Section 7.2 of the Attorneys General Settlement is
incorporated herein by reference.
7.3. Section 7.3 of the Attorneys General Settlement is
incorporated herein by reference.
7.4. Section 7.4 of the Attorneys General Settlement is
incorporated herein by reference.
8. Exclusive Remedy; Dismissal of Action;
Jurisdiction of Court.
8.1. Section 8.1 of the Attorneys General Settlement is
incorporated herein by reference.
8.2. Section 8.2 of the Attorneys General Settlement is
incorporated herein by reference.
8.3. Section 8.3 of the Attorneys General Settlement is
incorporated herein by reference.
9. Term.
Section 9 of the Attorneys General Settlement is incorporated herein by
reference, except as modified below.
9.1. Section 9.1 of the Attorneys General Settlement is
incorporated herein by reference.
9.2. Section 9.2 of the Attorneys General Settlement is
incorporated herein by reference.
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9.3. Section 9.3 of the Attorneys General Settlement is
incorporated herein by reference.
9.4. Section 9.4 of the Attorneys General Settlement is
incorporated herein by reference.
9.5. Section 9.5 of the Attorneys General Settlement is
incorporated herein by reference.
9.6. Section 9.6 of the Attorneys General Settlement is
incorporated herein by reference.
9.7. The duration of this Agreement shall be co-extensive with
the duration of the Attorneys General Settlement. The exercise of any right
under the Attorneys General Settlement to terminate the Attorneys General
Settlement with respect to the State of Nevada shall also be a termination of
this Agreement.
10. Continuing Enforceability.
Section 10 of the Attorneys General Settlement is incorporated herein
by reference.
11. Entry of Good Faith Bar Order on Contribution and Indemnity Claims.
11.1. Section 11.1 of the Attorneys General Settlement is
incorporated herein by reference.
11.2. Section 11.2 of the Attorneys General Settlement is
incorporated herein by reference.
11.3. Section 11.3 of the Attorneys General Settlement is
incorporated herein by reference.
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11.4. Section 11.4 of the Attorneys General Settlement is
incorporated herein by reference.
12. Tax Status of Settlement Fund.
12.1. Section 12.1 of the Attorneys General Settlement is
incorporated herein by reference.
12.2. Section 12.2 of the Attorneys General Settlement is
incorporated herein by reference.
12.3. Section 12.3 of the Attorneys General Settlement is
incorporated herein by reference.
13. Effect of Default of Settling Defendant.
Section 13 of the Attorneys General Settlement is incorporated herein
by reference.
14. Representations and Warranties.
14.1. Section 14.1 of the Attorneys General Settlement is
incorporated herein by reference.
14.2. Section 14.2 of the Attorneys General Settlement is
incorporated herein by reference.
15. Arbitration.
Section 15 of the Attorneys General Settlement is incorporated
herein by reference.
16. Most Favored Nation.
16.1. Section 16.1 of the Attorneys General Settlement is
incorporated herein by reference.
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16.1.1. Section 16.1.1 of the Attorneys General Settlement is
incorporated herein by reference.
16.1.2. Section 16.1.2 of the Attorneys General Settlement is
incorporated herein by reference.
16.1.3. Section 16.1.3 of the Attorneys General Settlement is
incorporated herein by reference.
16.1.4. Section 16.1.4 of the Attorneys General Settlement is
incorporated herein by reference.
16.1.5. Section 16.1.5 of the Attorneys General Settlement is
incorporated herein by reference.
16.1.6. Section 16.1.6 of the Attorneys General Settlement is
incorporated herein by reference.
16.2. Section 16.2 of the Attorneys General Settlement is
incorporated herein by reference.
16.3. Section 16.3 of the Attorneys General Settlement is
incorporated herein by reference.
17. Future Affiliate.
17.1. Section 17.1 of the Attorneys General Settlement is
incorporated herein by reference.
17.2. Section 17.2 of the Attorneys General Settlement and
subparts (a) and (b) thereof are incorporated herein by reference.
17.3. Section 17.3 of the Attorneys General Settlement is
incorporated herein by reference.
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17.4. Section 17.4 of the Attorneys General Settlement is
incorporated herein by reference.
17.5. Section 17.5 of the Attorneys General Settlement is
incorporated herein by reference.
17.6. Section 17.6 of the Attorneys General Settlement is
incorporated herein by reference.
17.7. Section 17.7 of the Attorneys General Settlement is
incorporated herein by reference.
17.8. Section 17.8 of the Attorneys General Settlement is
incorporated herein by reference.
17.9. Section 17.9 of the Attorneys General Settlement is
incorporated herein by reference.
18. Miscellaneous.
18.1. Section 18.1 of the Attorneys General Settlement is
incorporated herein by reference.
18.2. Section 18.2 of the Attorneys General Settlement is
incorporated herein by reference.
18.3. Section 18.3 of the Attorneys General Settlement is
incorporated herein by reference.
18.4. Section 18.4 of the Attorneys General Settlement is
incorporated herein by reference.
18.5. Section 18.5 of the Attorneys General Settlement is
incorporated herein by reference.
18.6. Section 18.6 of the Attorneys General Settlement is
incorporated herein by reference.
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18.7. Section 18.7 of the Attorneys General Settlement is
incorporated herein by reference.
18.8. Section 18.8 of the Attorneys General Settlement is
incorporated herein by reference.
18.9. Section 18.9 of the Attorneys General Settlement is
incorporated herein by reference.
18.10. Section 18.10 of the Attorneys General Settlement is
incorporated herein by reference.
18.11. Section 18.11 of the Attorneys General Settlement is
incorporated herein by reference.
18.12. Section 18.12 of the Attorneys General Settlement is
incorporated herein by reference.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the day and date first written above.
BROOKE GROUP LTD. STATE OF Nevada
By /s/ Xxxxxxx X. XxXxx By /s/ Xxxxxxx Xxx Del Papa
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Bennett S. XxXxx Xxxxxxx Xxx Del Papa
Attorney General
Date: 9/15/97 Date: 9/17/97
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XXXXXXX GROUP, INC.
By /s/ Xxxxxxx X. XxXxx
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Xxxxxxx X. XxXxx
Date: 9/15/97
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