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Exhibit 10.45
STATE OF ALASKA SETTLEMENT AGREEMENT
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This SETTLEMENT AGREEMENT is entered into this 6th day of May, 1997 by
and among the State of Alaska 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
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WHEREAS,
A. The State of Alaska, 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.
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B. Because of the importance of the agreements and undertakings by
Xxxxxxx and Brooke Group herein to the goals of the State of Alaska, including
the prosecution of the Action against non-settling defendants, the State of
Alaska 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.
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 Alaska and Xxxxxxx and Brooke Group wish to provide in
this Settlement Agreement for the State of Alaska to become a Subsequent
Settling State under the Attorneys
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General Settlement, all in accordance with the terms of this Settlement
Agreement.
E. The State of Alaska 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 Alaska 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.
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 Alaska 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 Alaska
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.
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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 Alaska, and Xxxxxxx and Brooke Group hereby stipulate and
agree that any and all smoking-related claims, including the Action, of the
State of Alaska shall be settled as against Xxxxxxx and Xxxxxx Group all on the
terms contained herein, as follows:
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I. 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 case filed by the State of Alaska in Juneau Xxxxxxxx
Xxxxx, Xxxx Xx. 0XX-00-000 XX.
"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 Alaska and Brooke Group and Xxxxxxx.
"Settling States" means the States listed in Appendix A to the
Attorneys General Settlement and Subsequent Settling States.
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II. SETTLEMENT PURPOSES ONLY.
Section 2 of the Attorneys General Settlement is incorporated herein by
reference.
III. 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.
IV. PUBLIC STATEMENT; COOPERATION; ADVERTISING LIMITATIONS.
Section 4 of the Attorneys General Settlement is incorporated herein by
reference, except as modified below.
A. Promptly after execution of this Settlement Agreement, Xxxxxxx
shall, by and through its Director, Xxxxxxx X. XxXxx, issue in the State of
Alaska 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
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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.
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
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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 view are aimed at children,
it will bring this to the attention of the Attorney General of the
State of Alaska.
5. In accordance with our settlement agreements, Xxxxxxx
agrees to fully cooperate with the State of Alaska in connection with
contemplated lawsuits against the other tobacco companies. To that end,
Xxxxxxx will make available to the State of Alaska 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 Alaska in obtaining prompt court
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adjudication of the rest of the industry's joint privilege claims.
B. Section 4.2 of the Attorneys General Settlement is incorporated
herein by reference.
C.1. Upon execution of this Agreement, each Settling Defendant
shall:
(1) cooperate with the Attorney General of the State
of Alaska 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;
(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 Alaska in identifying and locating any and all persons
known to such Settling Defendant to have documents or
information that is discoverable in such
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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
Alaska 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.
4.3.2. Subject to, and promptly after, the entry of a Protective Order
or a Stipulation Regarding Xxxxxxx Documents
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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 Xxx-
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xxxxxxxx Xxxxxxx 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 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
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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 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.
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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.
V. 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.
VI. 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.
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6.13. Section 6.13 of the Attorneys General Settlement is incorporated
herein by reference.
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VII. 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.
VIII. 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.
IX. TERM.
Section 9 of the Attorneys General Settlement is incorporated herein by
reference, except as modified below.
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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.
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 Alaska shall also be a termination of this
Agreement.
X. CONTINUING ENFORCEABILITY.
Section 10 of the Attorneys General Settlement is
incorporated herein by reference.
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XI. ENTRY OF GOOD FAITH BAR ORDER ON CONTRIBUTION AND INDEMNITY
CLAIMS.
1. Section 11.1 of the Attorneys General Settlement is incorporated
herein by reference.
2. Section 11.2 of the Attorneys General Settlement is incorporated
herein by reference.
3. Section 11.3 of the Attorneys General Settlement is incorporated
herein by reference.
4. Section 11.4 of the Attorneys General Settlement is incorporated
herein by reference.
2. 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.
XII. EFFECT OF DEFAULT OF SETTLING DEFENDANT.
Section 13 of the Attorneys General Settlement is incorporated herein
by reference.
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XIII. 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.
XIV. ARBITRATION.
Section 15 of the Attorneys General Settlement is incorporated herein
by reference.
XV. MOST FAVORED NATION.
16.1. Section 16.1 of the Attorneys General Settlement is incorporated
herein by reference.
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.
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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.
XVI. 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.
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.
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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.
XVII. 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.
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18.6. Section 18.6 of the Attorneys General Settlement is incorporated
herein by reference.
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 ALASKA
By /s/ Xxxxxxx X. XxXxx By /s/ Xxxxx Xxxxxxx
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Xxxxxxx X. XxXxx Xxxxx Xxxxxxx
Attorney General
Date: May 6, 1997 Date: May 6, 1997
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XXXXXXX GROUP, INC.
By /s/ Xxxxxxx X. XxXxx
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Xxxxxxx X. XxXxx
Date: May 6, 1997
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