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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 23, 1998
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UST Inc.
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(Exact Name of Registrant as Specified in Charter)
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Delaware 0-17506 06-1193986
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
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100 West Putnam Avenue, Greenwich, Connecticut 06830
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203) 661-1100
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ITEM 5. OTHER EVENTS.
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On November 23, 1998, Registrant's subsidiary, United States Tobacco
Company, entered into a smokeless tobacco master settlement agreement (the
"Settlement Agreement") with 45 state attorneys general and 5 U.S. territories
to resolve the remaining health care cost recovery cases initiated by various
attorneys general currently pending against Registrant. Subject to final court
approval in the respective states, the Settlement Agreement requires Registrant
to adopt various marketing and advertising restrictions and make payments
expected to total between $100 and approximately $200 million over ten years -
depending on various factors - for programs to reduce youth usage of tobacco
and combat youth substance abuse and for enforcement purposes. In addition, the
Settlement Agreement provides for payment by Registrant of legal costs in the
amount of $5 million. Registrant intends to record a charge of approximately
$15 million in the fourth quarter of 1998 for payments to the enforcement fund,
the payment of legal fees, and the first on-going payment to the public
education fund due in 1999 related to Registrant's 1998 shipments and market
share, as defined in the Settlement Agreement. The balance of the future
on-going payments related to Registrant's market share will be charged to
expense in the period the related shipments occur. The Settlement Agreement is
filed herewith as Exhibit 10 and incorporated herein by reference.
ITEM 7. EXHIBITS.
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(c) Exhibits
10. Smokeless Tobacco Master Settlement Agreement between
State Attorneys General and U.S. territories and
United States Tobacco Company, entered into on
November 23, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UST Inc.
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(Registrant)
Date: November 25, 1998 By: /s/ DEBRA A. BAKER
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Name: Debra A. Baker
Title: Senior Vice President
and Secretary
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EXHIBIT INDEX
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Item No. Exhibits
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10. Smokeless Tobacco Master Settlement Agreement between State
Attorneys General and U.S. territories and United States Tobacco
Company, entered into on November 23, 1998.
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SMOKELESS TOBACCO MASTER SETTLEMENT
AGREEMENT
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SMOKELESS TOBACCO
MASTER SETTLEMENT AGREEMENT
TABLE OF CONTENTS
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I. RECITALS................................................................ 1
II. DEFINITIONS............................................................. 3
(a) "Account"........................................................ 3
(b) "Adult".......................................................... 3
(c) "Adult-Only Facility"............................................ 3
(d) "Affiliate"...................................................... 3
(e) "Agreement"...................................................... 3
(f) "Bankruptcy"..................................................... 3
(g) "Brand Name"..................................................... 4
(h) "Brand Name Sponsorship"......................................... 4
(i) "Business Day"................................................... 5
(j) "Cartoon"........................................................ 5
(k) "Cigarette"...................................................... 6
(l) "Cigarette Master Settlement Agreement".......................... 6
(m) "Claims"......................................................... 6
(n) "Consent Decree"................................................. 6
(o) "Court".......................................................... 7
(p) "Escrow"......................................................... 7
(q) "Escrow Agent"................................................... 7
(r) "Escrow Agreement"............................................... 7
(s) "Final Approval"................................................. 7
(t) "Foundation"..................................................... 7
(u) "Independent Auditor"............................................ 8
(v) "Inflation Adjustment"........................................... 8
(w) "Market Share"................................................... 8
(x) "MSA Execution Date"............................................. 8
(y) "NAAG"........................................................... 8
(z) "National Public Education Fund"................................. 8
(aa) "Non-Participating Manufacturer"................................. 8
(bb) "Notice Parties"................................................. 9
(cc) "Original Participating Manufacturer"............................ 9
(dd) "Outdoor Advertising"............................................ 9
(ee) "Participating Manufacturer"..................................... 10
(ff) "Prime Rate"..................................................... 10
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(gg) "Released Claims"................................................ 11
(hh) "Released Parties"............................................... 11
(ii) "Releasing Parties".............................................. 12
(jj) "Settling State"................................................. 12
(kk) "Smokeless Tobacco Products"..................................... 13
(ll) "State".......................................................... 13
(mm) "State-Specific Finality"........................................ 13
(nn) "Subsequent Participating Manufacturer".......................... 14
(oo) "Tobacco Product Manufacturer"................................... 14
(pp) "Tobacco Products"............................................... 15
(qq) "Tobacco-Related Organizations".................................. 15
(rr) "Transit Advertisements"......................................... 15
(ss) "Underage"....................................................... 16
(tt) "Video Game Arcade".............................................. 16
(uu) "Youth".......................................................... 16
III. PERMANENT RELIEF........................................................ 16
(a) Prohibition on Youth Targeting................................... 16
(b) Ban on Use of Cartoons........................................... 16
(c) Limitation of Tobacco Brand Name Sponsorships.................... 17
(d) Elimination of Outdoor Advertising and Transit Advertisements.... 20
(e) Prohibition on Payments Related to Tobacco Products and Media.... 22
(f) Ban on Tobacco Brand Name Merchandise............................ 23
(g) Ban on Youth Access to Free Samples.............................. 23
(h) Ban on Gifts to Underage Persons Based on Proofs of Purchase..... 24
(i) Limitation on Third-Party Use of Brand Names..................... 24
(j) Ban on Non-Tobacco Brand Names................................... 25
(k) Prohibition on Providing Tobacco Products to Teams............... 26
(l) Corporate Culture Commitments Related to Youth Access and
Consumption...................................................... 26
(m) Limitations on Lobbying.......................................... 27
(n) Regulation and Oversight of New Tobacco-Related Trade
Associations..................................................... 29
(o) Prohibition on Agreements to Suppress Research................... 31
(p) Prohibition on Material Misrepresentations....................... 32
IV. PUBLIC ACCESS TO DOCUMENTS ............................................. 32
V. TOBACCO CONTROL AND UNDERAGE USE LAWS................................... 34
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VI. ESTABLISHMENT OF A NATIONAL FOUNDATION.................................. 34
(a) Foundation Purposes.............................................. 34
(b) Foundation Payments.............................................. 34
(c) Foundation Activities............................................ 38
(d) Severance of this Section........................................ 39
VII. ENFORCEMENT............................................................. 40
(a) Jurisdiction..................................................... 40
(b) Enforcement of Consent Decree.................................... 40
(c) Enforcement of this Agreement.................................... 41
(d) Right of Review.................................................. 42
(e) Applicability.................................................... 42
(f) Coordination of Enforcement ..................................... 43
(g) Inspection and Discovery Rights.................................. 43
VIII. CERTAIN ONGOING RESPONSIBILITIES OF THE SETTLING STATES................. 44
IX. CALCULATIONS AND DISBURSEMENTS OF PAYMENTS.............................. 46
(a) All Payments into Escrow......................................... 46
(b) Independent Auditor.............................................. 46
(c) Disbursement of Subsection VI(b) Payments........................ 46
X. SETTLING STATES' RELEASE, DISCHARGE AND COVENANT........................ 47
XI. CONSENT DECREES AND DISMISSAL OF CLAIMS................................. 49
XII. PARTICIPATING MANUFACTURERS' RELEASE AND DISCHARGE...................... 51
XIII. VOLUNTARY ACT OF THE PARTIES............................................ 52
XIV. CONSTRUCTION............................................................ 53
XV. MISCELLANEOUS........................................................... 53
(a) Effect of Current or Future Law.................................. 53
(b) Limited Most-Favored Nation Provision............................ 53
(c) Transfer of Tobacco Brands....................................... 55
(d) Payments in Settlement........................................... 57
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(e) No Determination or Admission.................................... 57
(f) Non-Admissibility................................................ 57
(g) Representations of Parties....................................... 58
(h) Sales of Cigarettes.............................................. 58
(i) Obligations Several, Not Joint................................... 59
(j) Headings......................................................... 59
(k) Amendment and Waiver............................................. 59
(l) Notices.......................................................... 60
(m) Cooperation...................................................... 60
(n) Designees to Discuss Disputes.................................... 60
(o) Governing Law.................................................... 61
(p) Severability..................................................... 61
(q) Intended Beneficiaries........................................... 63
(r) Counterparts..................................................... 63
(s) Applicability.................................................... 63
(t) Preservation of Privilege........................................ 63
(u) Non-Release...................................................... 64
(v) Termination...................................................... 64
(w) Freedom of Information Requests.................................. 65
(x) Bankruptcy....................................................... 65
(y) Notice of Material Transfers..................................... 68
(z) Entire Agreement................................................. 68
(aa) Business Days.................................................... 69
(bb) Subsequent Signatories........................................... 69
(cc) Decimal Places................................................... 69
(dd) Regulatory Authority............................................. 69
(ee) Successors....................................................... 69
(ff) Export Packaging................................................. 70
(gg) Actions within Geographic Boundaries of Settling States.......... 70
(hh) Notice to Affiliates............................................. 70
XVI. ATTORNEYS FEES.......................................................... 70
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EXHIBIT A LIST OF LAWSUITS
EXHIBIT B POTENTIAL LEGISLATION NOT TO BE OPPOSED
EXHIBIT C DOCUMENT PRODUCTION
EXHIBIT D MODEL CONSENT DECREE
EXHIBIT E NOTICES
EXHIBIT F FORMULA FOR CALCULATING INFLATION ADJUSTMENTS
EXHIBIT G ATTORNEYS FEES
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SMOKELESS TOBACCO MASTER SETTLEMENT AGREEMENT
This Smokeless Tobacco Master Settlement Agreement is made by the
undersigned Settling State officials (on behalf of their respective Settling
States) and the undersigned Participating Manufacturers to settle and resolve
with finality all Released Claims against the Participating Manufacturers and
related entities as set forth herein. This Agreement constitutes the
documentation effecting this settlement with respect to each Settling State, and
is intended to and shall be binding upon each Settling State and each
Participating Manufacturer in accordance with the terms hereof.
I. RECITALS
WHEREAS, more than 40 States have commenced litigation asserting various
claims for monetary, equitable, and injunctive relief against certain tobacco
product manufacturers and others as defendants, and the States that have not
filed suit can potentially assert similar claims;
WHEREAS, the Settling States that have commenced litigation have sought
to obtain equitable relief and damages under state laws, including consumer
protection and/or antitrust laws, in order to further the Settling States'
policies regarding public health, including policies adopted to achieve a
significant reduction in tobacco use by Youth;
WHEREAS, defendants have denied each and every one of the Settling
States' allegations of unlawful conduct or wrongdoing and have asserted a number
of defenses to the Settling States' claims, which defenses have been contested
by the Settling States;
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WHEREAS, the Settling States and the Participating Manufacturers are
committed to reducing underage tobacco use by discouraging such use and by
preventing Youth access to Tobacco Products;
WHEREAS, the undersigned Settling State officials believe that entry
into this Agreement and uniform consent decrees with the tobacco industry is
necessary in order to further the Settling States' policies designed to reduce
the use of Tobacco Products by Youth, furthering the public health; and
WHEREAS, the Settling States and the Participating Manufacturers wish to
avoid the further expense, delay, inconvenience, burden, and uncertainty of
continued litigation (including appeals from any verdicts) and, therefore, have
agreed to settle their respective lawsuits and potential claims pursuant to
terms which will achieve for the Settling States and their citizens, the
implementation of important tobacco-related public health measures, including
the enforcement of the mandates and restrictions related to such measures, as
well as funding for a national Foundation dedicated to significantly reducing
the use of Tobacco Products by Youth;
NOW, THEREFORE, BE IT KNOWN THAT, in consideration of the implementation
of tobacco-related health measures and the payments to be made by the
Participating Manufacturers, the release and discharge of claims by the Settling
States, and such other consideration as described herein, the sufficiency of
which is hereby acknowledged, the Settling States and the Participating
Manufacturers, acting by and through their authorized agents, memorialize and
agree as follows:
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II. DEFINITIONS
(a) "Account" has the meaning given in the Escrow Agreement.
(b) "Adult" means any person or persons who are not Underage.
(c) "Adult-Only Facility" means a facility or restricted area (whether
open-air or enclosed) where the operator ensures or has a reasonable basis to
believe (such as by checking identification as required under state law, or by
checking the identification of any person appearing to be under the age of 27)
that no Underage person is present. A facility or restricted area need not be
permanently restricted to Adults in order to constitute an Adult-Only Facility,
provided that the operator ensures or has a reasonable basis to believe that no
Underage person is present during the event or time period in question.
(d) "Affiliate" means a person who directly or indirectly owns or
controls, is owned or controlled by, or is under common ownership or control
with, another person. Solely for purposes of this definition, the terms "owns,"
"is owned," and "ownership" mean ownership of an equity interest, or the
equivalent thereof, of 10 percent or more, and the term "person" means an
individual, partnership, committee, association, corporation, or any other
organization or group of persons.
(e) "Agreement" means this Smokeless Tobacco Master Settlement
Agreement, together with the exhibits hereto, as it may be amended pursuant to
subsection XV(k).
(f) "Bankruptcy" means, with respect to any entity, the commencement of
a case or other proceeding (whether voluntary or involuntary) seeking any of (1)
liquidation, reorganization, rehabilitation, receivership, conservatorship, or
other relief with respect to such entity or its debts under any bankruptcy,
insolvency or similar law now or hereafter
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in effect; (2) the appointment of a trustee, receiver, liquidator, custodian or
similar official of such entity or any substantial part of its business or
property; (3) the consent of such entity to any of the relief described in (1)
above or to the appointment of any official described in (2) above in any such
case or other proceeding involuntarily commenced against such entity; or (4) the
entry of an order for relief as to such entity under the federal bankruptcy laws
as now or hereafter in effect. Provided, however, that an involuntary case or
proceeding otherwise within the foregoing definition shall not be a "Bankruptcy"
if it is or was dismissed within 60 days of its commencement.
(g) "Brand Name" means a brand name (alone or in conjunction with any
other word), trademark, logo, symbol, motto, selling message, recognizable
pattern of colors, or any other indicia of product identification identical or
similar to, or identifiable with, those used for any domestic brand of Tobacco
Products. Provided, however, that the term "Brand Name" shall not include the
corporate name of any Tobacco Product Manufacturer that does not after the MSA
Execution Date sell a brand of Tobacco Products in the States that includes such
corporate name.
(h) "Brand Name Sponsorship" means an athletic, musical, artistic, or
other social or cultural event as to which payment is made (or other
consideration is provided) in exchange for use of a Brand Name or Names (1) as
part of the name of the event or (2) to identify, advertise, or promote such
event or an entrant, participant, or team in such event in any other way.
Sponsorship of a single national or multi-state series or tour (for example,
NASCAR (including any number of NASCAR races)), or of one or more events within
a single national or multi-state series or tour, or of an entrant, participant,
or team taking part in events sanctioned by a single approving organization
(e.g., NASCAR or
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CART), constitutes one Brand Name Sponsorship. Sponsorship of an entrant,
participant, or team by a Participating Manufacturer using a Brand Name or Names
in an event that is part of a series or tour that is sponsored by such
Participating Manufacturer or that is part of a series or tour in which any one
or more events are sponsored by such Participating Manufacturer does not
constitute a separate Brand Name Sponsorship. Sponsorship of an entrant,
participant, or team by a Participating Manufacturer using a Brand Name or Names
in any event (or series of events) not sponsored by such Participating
Manufacturer constitutes a Brand Name Sponsorship. The term "Brand Name
Sponsorship" shall not include an event in an Adult-Only Facility.
(i) "Business Day" means a day which is not a Saturday or Sunday or
legal holiday on which banks are authorized or required to close in New York,
New York.
(j) "Cartoon" means any drawing or other depiction of an object, person,
animal, creature, or any similar caricature that satisfies any of the following
criteria:
(1) the use of comically exaggerated features;
(2) the attribution of human characteristics to animals, plants,
or other objects, or the similar use of anthropomorphic technique; or
(3) the attribution of unnatural or extra human abilities, such
as imperviousness to pain or injury, X-ray vision, tunneling at very
high speeds, or transformation.
The term "Cartoon" includes "Joe Camel," but does not include any drawing or
other depiction that on July 1, 1998, was in use in any State in any
Participating Manufacturer's corporate logo or in any Participating
Manufacturer's Tobacco Product packaging.
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(k) "Cigarette" means any product that contains nicotine, is intended to
be burned or heated under ordinary conditions of use, and consists of or
contains (1) any roll of tobacco wrapped in paper or in any substance not
containing tobacco; or (2) tobacco, in any form, that is functional in the
product, which, because of its appearance, the type of tobacco used in the
filler, or its packaging and labeling, is likely to be offered to, or purchased
by, consumers as a cigarette; or (3) any roll of tobacco wrapped in any
substance containing tobacco which, because of its appearance, the type of
tobacco used in the filler, or its packaging and labeling, is likely to be
offered to, or purchased by, consumers as a cigarette described in clause (1) of
this definition. The term "Cigarette" includes "roll-your-own" (i.e., any
tobacco which, because of its appearance, type, packaging, or labeling is
suitable for use and likely to be offered to, or purchased by, consumers as
tobacco for making cigarettes).
(l)"Cigarette Master Settlement Agreement" means the Master Settlement
Agreement, together with the exhibits thereto, entered into between the
signatory States and the signatory Cigarette manufacturers, on November 23,
1998.
(m) "Claims" means any and all manner of civil (i.e., non-criminal):
claims, demands, actions, suits, causes of action, damages (whenever incurred),
liabilities of any nature including civil penalties and punitive damages, as
well as costs, expenses, and attorneys' fees, known or unknown, suspected or
unsuspected, accrued or unaccrued, whether legal, equitable, or statutory.
(n) "Consent Decree" means a state-specific consent decree as described
in section XI of this Agreement.
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(o) "Court" means the respective Court in each Settling State to which
this Agreement and the Consent Decree are presented for approval and/or entry as
to that Settling State.
(p) "Escrow" has the meaning given in the Escrow Agreement.
(q) "Escrow Agent" means the escrow agent under the Escrow Agreement.
(r) "Escrow Agreement" means the Escrow Agreement entered into pursuant
to the Cigarette Master Settlement Agreement.
(s) "Final Approval" means the date by which State-Specific Finality in
a sufficient number of Settling States has occurred. For the purposes of this
subsection (s), "State-Specific Finality in a sufficient number of Settling
States" means that State-Specific Finality has occurred in both:
(A) a number of Settling States equal to at least 75% of the
total number of Settling States; and
(B) at least 75% of the States that have lawsuits currently
pending as of the MSA Execution Date against the Original
Participating Manufacturer, which are the States specifically
identified on Exhibit A (but not including any State in the
Additional States section). Notwithstanding the foregoing, until
March 31, 2001, the Original Participating Manufacturer may
waive the foregoing requirement for Final Approval.
(t) "Foundation" means the charitable foundation, trust or similar
organization that was created as a result of and pursuant to section VI of the
Cigarette Master Settlement Agreement.
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(u)"Independent Auditor" means the auditor described in and retained
pursuant to section XI of the Cigarette Master Settlement Agreement.
(v)"Inflation Adjustment" means an adjustment in accordance with the
formulas for inflation adjustments set forth in Exhibit F.
(w) "Market Share" means a Tobacco Product Manufacturer's respective
share (expressed as a percentage) of the total number of "units" of Smokeless
Tobacco Products sold in the fifty United States, the District of Columbia, and
Puerto Rico during the applicable calendar year. "Units" shall be determined
using the amount of net excise taxes collected by the federal government
pursuant to section 5701 of the Internal Revenue Code of 1996, as amended or to
be amended hereafter ("IRC"), and in the case of sales in Puerto Rico, collected
by the Puerto Rico taxing authority. A "unit" shall consist of: (1) 1.2 ounces
of "snuff," or (2) 3.0 ounces of "chewing tobacco," each as defined in IRC
Section 5702.
(x) "MSA Execution Date" means November 23, 1998.
(y) "NAAG" means the National Association of Attorneys General, or its
successor organization that is directed by the Attorneys General to perform
certain functions under this Agreement.
(z) "National Public Education Fund" means the National Public Education
Fund that was created as a result of and pursuant to section VI of the Cigarette
Master Settlement Agreement.
(aa) "Non-Participating Manufacturer" means any Tobacco Product
Manufacturer that is not a Participating Manufacturer.
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(bb) "Notice Parties" means each Participating Manufacturer, each
Settling State, the Escrow Agent, the Independent Auditor and NAAG.
(cc) "Original Participating Manufacturer" means the following: United
States Tobacco Company and its manufacturing subsidiary (United States Tobacco
Manufacturing Company Inc.) and its sales and marketing subsidiary (United
States Tobacco Sales and Marketing Company Inc.), and any successors of the
foregoing. For purposes of this Agreement, the foregoing entities shall be
considered as a single Participating Manufacturer. Except as expressly provided
in this Agreement, once an entity becomes an Original Participating
Manufacturer, such entity shall permanently retain the status of Original
Participating Manufacturer.
(dd) "Outdoor Advertising" means (1) billboards, (2) signs and placards
in arenas, stadiums, shopping malls and Video Game Arcades (whether any of the
foregoing are open air or enclosed) (but not including any such sign or placard
located in an Adult-Only Facility), and (3) any other advertisements placed (A)
outdoors, or (B) on the inside surface of a window facing outward. Provided,
however, that the term "Outdoor Advertising" does not mean (1) an advertisement
on the outside of a Tobacco Product manufacturing facility; (2) an individual
advertisement that does not occupy an area larger than 14 square feet (and that
neither is placed in such proximity to any other such advertisement so as to
create a single "mosaic"-type advertisement larger than 14 square feet, nor
functions solely as a segment of a larger advertising unit or series), and that
is placed (A) on the outside of any retail establishment that sells Tobacco
Products (other than solely through a vending machine), (B) outside (but on the
property of) any such establishment, or (C) on the inside surface of a window
facing outward in any such
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establishment; (3) an advertisement inside a retail establishment that sells
Tobacco Products (other than solely through a vending machine) that is not
placed on the inside surface of a window facing outward; or (4) an outdoor
advertisement at the site of an event to be held at an Adult-Only Facility that
is placed at such site during the period the facility or enclosed area
constitutes an Adult-Only Facility, but in no event more than 14 days before the
event, and that does not advertise any Tobacco Product (other than by using a
Brand Name to identify the event).
(ee) "Participating Manufacturer" means a Tobacco Product Manufacturer
that is or becomes a signatory to this Agreement, provided that in the case of a
Tobacco Product Manufacturer that is not the Original Participating
Manufacturer, such Tobacco Product Manufacturer is bound by this Agreement and
the Consent Decree (or, in any Settling State that does not permit amendment of
the Consent Decree, a consent decree containing terms identical to those set
forth in the Consent Decree) in all Settling States in which this Agreement and
the Consent Decree binds the Original Participating Manufacturer (provided,
however, that such Tobacco Product Manufacturer need only become bound by the
Consent Decree in those Settling States in which the Settling State has filed a
Released Claim against it). "Participating Manufacturer" shall also include the
successor of a Participating Manufacturer. Except as expressly provided in this
Agreement, once an entity becomes a Participating Manufacturer such entity shall
permanently retain the status of Participating Manufacturer.
(ff) "Prime Rate" shall mean the prime rate as published from time to
time by the Wall Street Journal or, in the event the Wall Street Journal is no
longer published or no
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longer publishes such rate, an equivalent successor reference rate determined by
the Independent Auditor.
(gg) "Released Claims" means for past conduct, acts or omissions
(including any damages incurred in the future arising from such past conduct,
acts or omissions), those Claims directly or indirectly based on, arising out of
or in any way related, in whole or in part, to (A) the use, sale, distribution,
manufacture, development, advertising, marketing, or health effects of, (B) the
exposure to, or (C) research, statements, or warnings regarding, Tobacco
Products (including, but not limited to, the Claims asserted in the actions
identified in Exhibit A, or any comparable Claims that were, could be or could
have been asserted now or in the future in those actions or in any comparable
action in federal, state, or local court brought by a Settling State or a
Releasing Party (whether or not such Settling State or Releasing Party has
brought such action)), except for claims not asserted in the actions identified
in Exhibit A for outstanding liability under existing licensing (or similar) fee
laws or existing tax laws (but not excepting claims for any tax liability of the
Tobacco-Related Organizations or of any Released Party with respect to such
Tobacco-Related Organizations, which claims are covered by the release and
covenants set forth in this Agreement).
(hh) "Released Parties" means all Participating Manufacturers, their
past, present, and future Affiliates, and the respective divisions, officers,
directors, employees, representatives, insurers, lenders, underwriters,
Tobacco-Related Organizations, trade associations, suppliers, agents, auditors,
advertising agencies, public relations entities, attorneys, retailers, and
distributors of any Participating Manufacturer or of any such Affiliate (and the
predecessors, heirs, executors, administrators, successors, and assigns
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of each of the foregoing). Provided, however, that "Released Parties" does not
include any person or entity (including, but not limited to, an Affiliate) that
is itself a Non-Participating Manufacturer at any time after the MSA Execution
Date, unless such person or entity becomes a Participating Manufacturer.
(ii) "Releasing Parties" means each Settling State and any of its past,
present, and future agents, officials acting in their official capacities, legal
representatives, agencies, departments, commissions, and divisions; and also
means, to the full extent of the power of the signatories hereto to release
claims, the following: (1) any Settling State's subdivisions (political or
otherwise, including, but not limited to, municipalities, counties, parishes,
villages, unincorporated districts, and hospital districts), public entities,
public instrumentalities, and public educational institutions; and (2) persons
or entities acting in a parens patriae, sovereign, quasi-sovereign, private
attorney general, qui tam, taxpayer, or any other capacity, whether or not any
of them participate in this settlement, (A) to the extent that any such person
or entity is seeking relief on behalf of or generally applicable to the general
public in such Settling State or the people of the State, as opposed solely to
private or individual relief for separate and distinct injuries, or (B) to the
extent that any such entity (as opposed to an individual) is seeking recovery of
healthcare expenses (other than premium or capitation payments for the benefit
of present or retired state employees) paid or reimbursed, directly or
indirectly, by a Settling State.
(jj) "Settling State" means any State that signs this Agreement on or
before the MSA Execution Date. Provided, however, that the term "Settling State"
shall not include (1) the States of Florida and Texas, and (2) except for the
purposes of determining
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whether Final Approval has occurred, any State as to which this Agreement has
been terminated.
(kk) "Smokeless Tobacco Products" means smokeless tobacco, as that term
is defined in the Comprehensive Smokeless Tobacco Health Education Act, 15
U.S.C. Section 4401, et seq.
(ll) "State" means any state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American
Samoa, and the Northern Marianas.
(mm) "State-Specific Finality" means, with respect to the Settling State
in question:
(1) this Agreement and the Consent Decree have been approved and
entered by the Court as to the Original Participating Manufacturer, or,
in the event of an appeal from or review of a decision of the Court to
withhold its approval and entry of this Agreement and the Consent
Decree, by the court hearing such appeal or conducting such review;
(2) entry by the Court has been made of an order dismissing with
prejudice all claims against Released Parties in the action as provided
herein; and
(3) the time for appeal or to seek review of or permission to
appeal ("Appeal") from the approval and entry as described in subsection
(1) hereof and entry of such order described in subsection (2) hereof
has expired; or, in the event of an Appeal from such approval and entry,
the Appeal has been dismissed, or the approval and entry described in
subsection (1) hereof and the order described in subsection (2) hereof
have been affirmed in all material respects by the court of
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last resort to which such Appeal has been taken and such dismissal or
affirmance has become no longer subject to further Appeal (including,
without limitation, review by the United States Supreme Court).
(nn) "Subsequent Participating Manufacturer" means a Tobacco Product
Manufacturer (other than the Original Participating Manufacturer) that: (1) is a
Participating Manufacturer, and (2) is a signatory to this Agreement, regardless
of when such Tobacco Product Manufacturer became a signatory to this Agreement.
"Subsequent Participating Manufacturer" shall also include the successors of a
Subsequent Participating Manufacturer. Except as expressly provided in this
Agreement, once an entity becomes a Subsequent Participating Manufacturer such
entity shall permanently retain the status of Subsequent Participating
Manufacturer, unless it agrees to assume the obligations of the Original
Participating Manufacturer as provided in subsection XV(c).
(oo) "Tobacco Product Manufacturer" means an entity that after the MSA
Execution Date directly (and not exclusively through any Affiliate):
(1) manufactures Smokeless Tobacco Products anywhere that such
manufacturer intends to be sold in the States, including Smokeless
Tobacco Products intended to be sold in the States through an importer
(except where such importer is the Original Participating Manufacturer
and will be responsible for the payments under this Agreement with
respect to such Smokeless Tobacco Products as a result of the provisions
of subsection II(w) and that pays the taxes specified in subsection
II(w) on such Smokeless Tobacco Products, and provided that the
manufacturer of such Smokeless Tobacco Products does not market or
advertise such Smokeless Tobacco Products in the States);
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(2)is the first purchaser anywhere for resale in the States of
Smokeless Tobacco Products manufactured anywhere that the manufacturer
does not intend to be sold in the States; or
(3)becomes a successor of an entity described in subsection (1)
or (2) above.
The term "Tobacco Product Manufacturer" shall not include an Affiliate of a
Tobacco Product Manufacturer unless such Affiliate itself falls within any of
subsections (1) - (3) above. The term "Tobacco Product Manufacturer" shall
include an entity that signs this Agreement that itself does not fall within any
of the subsections (1) - (3) above, but which is an Affiliate of an entity that
does not sign this Agreement, but itself falls within any of subsections (1) -
(3) above.
(pp) "Tobacco Products" means Cigarettes and Smokeless Tobacco Products.
(qq) "Tobacco-Related Organizations" means the Council for Tobacco
Research-U.S.A., Inc., The Tobacco Institute, Inc. ("TI"), and the Center for
Indoor Air Research, Inc. ("CIAR") and the successors, if any, of TI or CIAR.
(rr) "Transit Advertisements" means advertising on or within private or
public vehicles and all advertisements placed at, on, or within any bus stop,
taxi stand, transportation waiting area, train station, airport, or any similar
location. Notwithstanding the foregoing, the term "Transit Advertisements" does
not include (1) any advertisement placed in, on, or outside the premises of any
retail establishment that sells Tobacco Products (other than solely through a
vending machine) (except if such individual advertisement (A) occupies an area
larger than 14 square feet; (B) is placed in such proximity to any other such
advertisement so as to create a single "mosaic"-type
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advertisement larger than 14 square feet; or (C) functions solely as a segment
of a larger advertising unit or series); or (2) advertising at the site of an
event to be held at an Adult-Only Facility that is placed at such site during
the period the facility or enclosed area constitutes an Adult-Only Facility, but
in no event more than 14 days before the event, and that does not advertise any
Tobacco Product (other than by using a Brand Name to identify the event).
(ss) "Underage" means younger than the minimum age at which it is legal
to purchase or possess (whichever minimum age is older) Smokeless Tobacco
Products in the applicable Settling State.
(tt) "Video Game Arcade" means an entertainment establishment primarily
consisting of video games (other than video games intended primarily for use by
persons 18 years of age or older) and/or pinball machines.
(uu) "Youth" means any person or persons under 18 years of age.
III. PERMANENT RELIEF
(a) Prohibition on Youth Targeting. No Participating Manufacturer may
take any action, directly or indirectly, to target Youth within any Settling
State in the advertising, promotion, or marketing of Tobacco Products, or take
any action the primary purpose of which is to initiate, maintain, or increase
the incidence of use of Tobacco Products by Youth within any Settling State.
(b) Ban on Use of Cartoons. Beginning 180 days after the MSA Execution
Date, no Participating Manufacturer may use or cause to be used any Cartoon in
the advertising, promoting, packaging, or labeling of Tobacco Products.
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(c) Limitation of Tobacco Brand Name Sponsorships.
(1) Prohibited Sponsorships. After the MSA Execution Date, no
Participating Manufacturer may engage in any Brand Name Sponsorship in
any State consisting of:
(A) concerts; or
(B) events in which the intended audience is comprised of a
significant percentage of Youth; or
(C) events in which any paid participants or contestants are
Youth; or
(D) any athletic event between opposing teams in any
football, basketball, baseball, soccer or hockey league.
(2) Limited Sponsorships.
(A) No Participating Manufacturer may engage in more than
one Brand Name Sponsorship in the States in any twelve-month
period (such period measured from the date of the initial
sponsored event).
(B) Provided, however, that
(i) nothing contained in subsection (2)(A) above shall
require a Participating Manufacturer to breach or terminate
any sponsorship contract in existence as of August 1, 1998
(until the earlier of (x) the current term of any existing
contract, without regard to any renewal or option that may
be exercised by such Participating Manufacturer or (y) three
years after the MSA Execution Date); and
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(ii) notwithstanding subsection (1)(A) above, nothing
contained in subsection (2)(A) shall require the Original
Participating Manufacturer to breach its March 1, 1998,
contract with Daryle Singletary, which contract shall
terminate by December 31, 1998.
(3) Related Sponsorship Restrictions. With respect to any Brand
Name Sponsorship permitted under this subsection (c):
(A) advertising of the Brand Name Sponsorship event shall
not advertise any Tobacco Product (other than by using the Brand
Name to identify such Brand Name Sponsorship event);
(B) no Participating Manufacturer may refer to a Brand Name
Sponsorship event or to a celebrity or other person in such an
event in its advertising of a Tobacco Product;
(C) nothing contained in the provisions of subsection III(e)
of this Agreement shall apply to actions taken by any
Participating Manufacturer in connection with a Brand Name
Sponsorship permitted pursuant to the provisions of subsections
(2)(A) and (2)(B)(i); the Brand Name Sponsorship permitted by
subsection (2)(B)(ii) shall be subject to the restrictions of
subsection III(e) except that such restrictions shall not
prohibit use of the Brand Name to identify the Brand Name
Sponsorship;
(D) nothing contained in the provisions of subsections
III(f) and III(i) shall apply to apparel or other merchandise:
(i) marketed, distributed, offered, sold, or licensed at the
site of a Brand Name
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Sponsorship permitted pursuant to subsections (2)(A) or
(2)(B)(i) by the person to which the relevant Participating
Manufacturer has provided payment in exchange for the use of the
relevant Brand Name in the Brand Name Sponsorship or a
third-party that does not receive payment from the relevant
Participating Manufacturer (or any Affiliate of such
Participating Manufacturer), in connection with the marketing,
distribution, offer, sale or license of such apparel or other
merchandise; or (ii) used at the site of a Brand Name
Sponsorship permitted pursuant to subsection (2)(A) or (2)(B)(i)
(during such event) that are not distributed (by sale or
otherwise) to any member of the general public; and
(E) nothing contained in the provisions of subsection III(d)
shall: (i) apply to the use of a Brand Name on a vehicle used in
a Brand Name Sponsorship; or (ii) apply to Outdoor Advertising
advertising the Brand Name Sponsorship, to the extent that such
Outdoor Advertising is placed at the site of a Brand Name
Sponsorship no more than 90 days before the start of the initial
sponsored event, is removed within 10 days after the end of the
last sponsored event, and is not prohibited by subsection (3)(A)
above.
(4) Corporate Name Sponsorships. Nothing in this subsection (c)
shall prevent a Participating Manufacturer from sponsoring or causing to
be sponsored any athletic, musical, artistic, or other social or
cultural event, or any entrant, participant or team in such event (or
series of events) in the name of the
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corporation which manufactures Tobacco Products, provided that the
corporate name does not include any Brand Name of domestic Tobacco
Products.
(5) Naming Rights Prohibition. No Participating Manufacturer may
enter into any agreement for the naming rights of any stadium or arena
located within a Settling State using a Brand Name, and shall not
otherwise cause a stadium or arena located within a Settling State to be
named with a Brand Name.
(6) Prohibition on Sponsoring Teams and Leagues. No
Participating Manufacturer may enter into any agreement pursuant to
which payment is made (or other consideration is provided) by such
Participating Manufacturer to any football, basketball, baseball, soccer
or hockey league (or any team involved in any such league) in exchange
for use of a Brand Name.
(d) Elimination of Outdoor Advertising and Transit Advertisements. Each
Participating Manufacturer shall discontinue Outdoor Advertising and Transit
Advertisements advertising Tobacco Products within the Settling States as set
forth herein.
(1) Removal. Except as otherwise provided in this section, each
Participating Manufacturer shall remove from within the Settling States
within 150 days after the MSA Execution Date all of its (A) billboards
(to the extent that such billboards constitute Outdoor Advertising)
advertising Tobacco Products; (B) signs and placards (to the extent that
such signs and placards constitute Outdoor Advertising) advertising
Tobacco Products in arenas, stadiums, shopping malls and Video Game
Arcades; and (C) Transit Advertisements advertising Tobacco Products.
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(2) Prohibition on New Outdoor Advertising and Transit
Advertisements. No Participating Manufacturer may, after the MSA
Execution Date, place or cause to be placed any new Outdoor Advertising
advertising Tobacco Products or new Transit Advertisements advertising
Tobacco Products within any Settling State.
(3) Alternative Advertising. With respect to those billboards
required to be removed under subsection (1) that are leased (as opposed
to owned) by any Participating Manufacturer, the Participating
Manufacturer will allow the Attorney General of the Settling State
within which such billboards are located to substitute, at the Settling
State's option, alternative advertising intended to discourage the use
of Tobacco Products by Youth and their exposure to second-hand smoke for
the remaining term of the applicable contract (without regard to any
renewal or option term that may be exercised by such Participating
Manufacturer). The Participating Manufacturer will bear the cost of the
lease through the end of such remaining term. Any other costs associated
with such alternative advertising will be borne by the Settling State.
(4) Ban on Agreements Inhibiting Anti-Tobacco Advertising. Each
Participating Manufacturer agrees that it will not enter into any
agreement that prohibits a third party from selling, purchasing, or
displaying advertising discouraging the use of Tobacco Products or
exposure to second-hand smoke. In the event and to the extent that any
Participating Manufacturer has entered into an agreement containing any
such prohibition, such Participating Manufacturer agrees to waive such
prohibition in such agreement.
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(5) Designation of Contact Person. Each Participating
Manufacturer that has Outdoor Advertising or Transit Advertisements
advertising Tobacco Products within a Settling State shall, within 10
days after the MSA Execution Date, provide the Attorney General of such
Settling State with the name of a contact person to whom the Settling
State may direct inquiries during the time such Outdoor Advertising and
Transit Advertisements are being eliminated, and from whom the Settling
State may obtain periodic reports as to the progress of their
elimination.
(6) Adult-Only Facilities. To the extent that any advertisement
advertising Tobacco Products located within an Adult-Only Facility
constitutes Outdoor Advertising or a Transit Advertisement, this
subsection (d) shall not apply to such advertisement, provided such
advertisement is not visible to persons outside such Adult-Only
Facility.
(e) Prohibition on Payments Related to Tobacco Products and Media. No
Participating Manufacturer may, beginning 30 days after the MSA Execution Date,
make, or cause to be made, any payment or other consideration to any other
person or entity to use, display, make reference to, or use as a prop any
Tobacco Product, Tobacco Product package, advertisement for a Tobacco Product,
or any other item bearing a Brand Name in any motion picture, television show,
theatrical production, or other live performance, live or recorded performance
of music, commercial film or video, or video game ("Media"); provided, however,
that the foregoing prohibition shall not apply to (1) Media where the audience
or viewers are within an Adult-Only Facility (provided such
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Media are not visible to persons outside such Adult-Only facility); or (2) Media
not intended for distribution or display to the public.
(f) Ban on Tobacco Brand Name Merchandise. Beginning July 1, 1999, no
Participating Manufacturer may, within any Settling State, market, distribute,
offer, sell, license, or cause to be marketed, distributed, offered, sold, or
licensed (including, without limitation, by catalogue or direct mail), any
apparel or other merchandise (other than Tobacco Products, items the sole
function of which is to advertise Tobacco Products, or written or electronic
publications) which bears a Brand Name. Provided, however, that nothing in this
subsection shall (1) require any Participating Manufacturer to breach or
terminate any licensing agreement or other contract in existence as of June 20,
1997 (this exception shall not apply beyond the current term of any existing
contract, without regard to any renewal or option term that may be exercised by
such Participating Manufacturer); (2) prohibit the distribution to any
Participating Manufacturer's employee who is not Underage of any item described
above that is intended for the personal use of such an employee; (3) require any
Participating Manufacturer to retrieve, collect or otherwise recover any item
that prior to the MSA Execution Date was marketed, distributed, offered, sold,
licensed, or caused to be marketed, distributed, offered, sold, or licensed by
such Participating Manufacturer; (4) apply to coupons or other items used by
Adults solely in connection with the purchase of Tobacco Products; or (5) apply
to apparel or other merchandise used within an Adult-Only Facility that is not
distributed (by sale or otherwise) to any member of the general public.
(g) Ban on Youth Access to Free Samples. Beginning seven days after the
MSA Execution Date, no Participating Manufacturer may, within any Settling
State, distribute
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or cause to be distributed any free samples of Tobacco Products except in an
Adult-Only Facility. For purposes of this Agreement, a "free sample" does not
include a Tobacco Product that is provided to an Adult in connection with (1)
the purchase, exchange, or redemption for proof of purchase of any Tobacco
Products (including, but not limited to, a free offer in connection with the
purchase of Tobacco Products, such as a "two-for-one" offer), or (2) the
conducting of consumer testing or evaluation of Tobacco Products with persons
who certify that they are Adults.
(h) Ban on Gifts to Underage Persons Based on Proofs of Purchase.
Beginning one year after the MSA Execution Date, no Participating Manufacturer
may provide or cause to be provided to any person without sufficient proof that
such person is an Adult any item in exchange for the purchase of Tobacco
Products, or the furnishing of credits, proofs-of-purchase, or coupons with
respect to such a purchase. For purposes of the preceding sentence only, (1) a
driver's license or other government-issued identification (or legible photocopy
thereof), the validity of which is certified by the person to whom the item is
provided, shall by itself be deemed to be a sufficient form of proof of age; and
(2) in the case of items provided (or to be redeemed) at retail establishments,
a Participating Manufacturer shall be entitled to rely on verification of proof
of age by the retailer, where such retailer is required to obtain verification
under applicable federal, state or local law.
(i) Limitation on Third-Party Use of Brand Names. After the MSA
Execution Date, no Participating Manufacturer may license or otherwise expressly
authorize any third party to use or advertise within any Settling State any
Brand Name in a manner prohibited by this Agreement if done by such
Participating Manufacturer itself. Each
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Participating Manufacturer shall, within 10 days after the MSA Execution Date,
designate a person (and provide written notice to NAAG of such designation) to
whom the Attorney General of any Settling State may provide written notice of
any such third-party activity that would be prohibited by this Agreement if done
by such Participating Manufacturer itself. Following such written notice, the
Participating Manufacturer will promptly take commercially reasonable steps
against any such non-de minimis third-party activity. Provided, however, that
nothing in this subsection shall require any Participating Manufacturer to (1)
breach or terminate any licensing agreement or other contract in existence as of
July 1, 1998 (this exception shall not apply beyond the current term of any
existing contract, without regard to any renewal or option term that may be
exercised by such Participating Manufacturer); or (2) retrieve, collect, or
otherwise recover any item that prior to the MSA Execution Date was marketed,
distributed, offered, sold, licensed, or caused to be marketed, distributed,
offered, sold, or licensed by such Participating Manufacturer.
(j) Ban on Non-Tobacco Brand Names. No Participating Manufacturer may,
pursuant to any agreement requiring the payment of money or other valuable
consideration, use or cause to be used as a brand name of any Tobacco Product
any nationally recognized or nationally established brand name or trade name of
any non-tobacco item or service or any nationally recognized or nationally
established sports team, entertainment group, or individual celebrity. Provided,
however, that the preceding sentence shall not apply to any Tobacco Product
brand name in existence as of July 1, 1998. For the purposes of this subsection,
the term "other valuable consideration" shall
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not include an agreement between two entities who enter into such agreement for
the sole purpose of avoiding infringement claims.
(k) Prohibition on Providing Tobacco Products to Teams. After the MSA
Execution Date, no Participating Manufacturer may provide or cause to be
provided any Tobacco Product to any sports team (including, but not limited to,
any baseball team) or any entertainment group at less than fair market value or
in consideration for any services to be provided to or for the benefit of such
Participating Manufacturer by such sports team or entertainment group.
(l) Corporate Culture Commitments Related to Youth Access and
Consumption. Beginning 180 days after the MSA Execution Date, each Participating
Manufacturer shall:
(1) promulgate or reaffirm corporate principles that express and
explain its commitment to comply with the provisions of this Agreement
and the reduction of use of Tobacco Products by Youth, and clearly and
regularly communicate to its employees and customers its commitment to
assist in the reduction of Youth use of Tobacco Products;
(2) designate an executive level manager (and provide written
notice to NAAG of such designation) to identify methods to reduce Youth
access to, and the incidence of Youth consumption of, Tobacco Products;
and
(3) encourage its employees to identify additional methods to
reduce Youth access to, and the incidence of Youth consumption of,
Tobacco Products.
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(m) Limitations on Lobbying. Following State-Specific Finality in a
Settling State:
(1) No Participating Manufacturer may oppose, or cause to be
opposed (including through any third party or Affiliate), the passage by
such Settling State (or any political subdivision thereof) of those
state or local legislative proposals or administrative rules described
in Exhibit B hereto intended by their terms to reduce Youth access to,
and the incidence of Youth consumption of, Tobacco Products. Provided,
however, that the foregoing does not prohibit any Participating
Manufacturer from (A) challenging enforcement of, or suing for
declaratory or injunctive relief with respect to, any such legislation
or rule on any grounds; (B) continuing, after State-Specific Finality in
such Settling State, to oppose, or cause to be opposed, the passage
during the legislative session in which State-Specific Finality in such
Settling State occurs of any specific state or local legislative
proposals or administrative rules introduced prior to the time of
State-Specific Finality in such Settling State; (C) opposing, or causing
to be opposed, any excise tax or income tax provision or user fee or
other payments relating to Tobacco Products or Tobacco Product
Manufacturers; or (D) opposing, or causing to be opposed, any state or
local legislative proposal or administrative rule that also includes
measures other than those described in Exhibit B.
(2) Each Participating Manufacturer shall require all of its
officers and employees engaged in lobbying activities in such Settling
State after State-Specific Finality, contract lobbyists engaged in
lobbying activities in such Settling State after State-Specific
Finality, and any other third parties who engage in
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lobbying activities in such Settling State after State-Specific Finality
on behalf of such Participating Manufacturer ("lobbyist" and "lobbying
activities" having the meaning such terms have under the law of the
Settling State in question) to certify in writing to the Participating
Manufacturer that they:
(A) will not support or oppose any state, local, or federal
legislation, or seek or oppose any governmental action, on
behalf of the Participating Manufacturer without the
Participating Manufacturer's express authorization (except where
such advance express authorization is not reasonably
practicable);
(B) are aware of and will fully comply with this Agreement
and all laws and regulations applicable to their lobbying
activities, including, without limitation, those related to
disclosure of financial contributions. Provided, however, that
if the Settling State in question has in existence no laws or
regulations relating to disclosure of financial contributions
regarding lobbying activities, then each Participating
Manufacturer shall, upon request of the Attorney General of such
Settling State, disclose to such Attorney General any payment to
a lobbyist that the Participating Manufacturer knows or has
reason to know will be used to influence legislative or
administrative actions of the state or local government relating
to Tobacco Products or their use. Disclosures made pursuant to
the preceding sentence shall be filed in writing with the Office
of the Attorney General on the first day of February and the
first day of August of each year for any and all payments made
during the six month period
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ending on the last day of the preceding December and June,
respectively, with the following information: (1) the name,
address, telephone number, and e-mail address (if any) of the
recipient; (2) the amount of each payment; and (3) the aggregate
amount of all payments described in this subsection (2)(B) to
the recipient in the calendar year; and
(C) have reviewed and will fully abide by the Participating
Manufacturer's corporate principles promulgated pursuant to this
Agreement when acting on behalf of the Participating
Manufacturer.
(3) No Participating Manufacturer may support or cause to be
supported (including through any third party or Affiliate) in Congress
or any other forum legislation or rules that would preempt, override,
abrogate, or diminish such Settling State's rights or recoveries under
this Agreement. Except as specifically provided in this Agreement,
nothing herein shall be deemed to restrain any Settling State or
Participating Manufacturer from advocating terms of any national
settlement or taking any other positions on issues relating to tobacco.
(n) Regulation and Oversight of New Tobacco-Related Trade Associations.
(1) A Participating Manufacturer may form or participate in new
tobacco-related trade associations (subject to all applicable laws),
provided such associations agree in writing not to act in any manner
contrary to any provision of this Agreement. Each Participating
Manufacturer agrees that if any new tobacco-related trade association
fails to so agree, such Participating Manufacturer will not participate
in or support such association.
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(2) Any tobacco-related trade association that is formed or
controlled by one or more of the Participating Manufacturers after the
MSA Execution Date shall adopt by-laws governing the association's
procedures and the activities of its members, board, employees, agents,
and other representatives with respect to the tobacco-related trade
association. Such by-laws shall include, among other things, provisions
that:
(A) each officer of the association shall be appointed by
the board of the association, shall be an employee of such
association, and during such officer's term shall not be a
director of or employed by any member of the association or by
an Affiliate of any member of the association;
(B) legal counsel for the association shall be independent,
and neither counsel nor any member or employee of counsel's law
firm shall serve as legal counsel to any member of the
association or to a manufacturer of Tobacco Products that is an
Affiliate of any member of the association during the time that
it is serving as legal counsel to the association; and
(C) minutes describing the substance of the meetings of the
board of directors of the association shall be prepared and
shall be maintained by the association for a period of at least
five years following their preparation.
(3) Without limitation on whatever other rights to access they
may be permitted by law, for a period of seven years from the date any
new tobacco-related trade association is formed by any of the
Participating Manufacturers after
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the MSA Execution Date the antitrust authorities of any Settling State
may, for the purpose of enforcing this Agreement, upon reasonable cause
to believe that a violation of this Agreement has occurred, and upon
reasonable prior written notice (but in no event less than 10 Business
Days):
(A) have access during regular office hours to inspect and
copy all relevant non-privileged, non-work-product books,
records, meeting agenda and minutes, and other documents
(whether in hard copy form or stored electronically) of such
association insofar as they pertain to such believed violation;
and
(B) interview the association's directors, officers, and
employees (who shall be entitled to have counsel present) with
respect to relevant, non-privileged, non-work-product matters
pertaining to such believed violation.
Documents and information provided to Settling State antitrust authorities shall
be kept confidential by and among such authorities, and shall be utilized only
by the Settling States and only for the purpose of enforcing this Agreement or
the criminal law. The inspection and discovery rights provided to the Settling
States pursuant to this subsection shall be coordinated so as to avoid
repetitive and excessive inspection and discovery.
(o) Prohibition on Agreements to Suppress Research. No Participating
Manufacturer may enter into any contract, combination or conspiracy with any
other Tobacco Product Manufacturer that has the purpose or effect of: (1)
limiting competition in the production or distribution of information about
health hazards or other consequences of the use of their products; (2) limiting
or suppressing research into
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tobacco and health; or (3) limiting or suppressing research into the marketing
or development of new products. Provided, however, that nothing in this
subsection shall be deemed to (1) require any Participating Manufacturer to
produce, distribute or otherwise disclose any information that is subject to any
privilege or protection; (2) preclude any Participating Manufacturer from
entering into any joint defense or joint legal interest agreement or arrangement
(whether or not in writing), or from asserting any privilege pursuant thereto;
or (3) impose any affirmative obligation on any Participating Manufacturer to
conduct any research.
(p) Prohibition on Material Misrepresentations. No Participating
Manufacturer may make any material misrepresentation of fact regarding the
health consequences of using any Tobacco Product, including any tobacco
additives or other ingredients. Nothing in this subsection shall limit the
exercise of any First Amendment right or the assertion of any defense or
position in any judicial, legislative, or regulatory forum.
IV. PUBLIC ACCESS TO DOCUMENTS
(a) After the MSA Execution Date, the Original Participating
Manufacturer will support an application for the dissolution of any protective
orders entered in each Settling State's lawsuit identified in Exhibit A with
respect only to those documents, indices and privilege logs that have been
produced as of the MSA Execution Date to such Settling State and (1) as to which
defendants have made no claim, or have withdrawn any claim, of attorney-client
privilege, attorney work-product protection, common interest/joint defense
privilege (collectively, "privilege"), trade-secret protection, or confidential
or proprietary business information, and (2) that are not inappropriate for
public disclosure
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because of personal privacy interests or contractual rights of third parties
that may not be abrogated by the Original Participating Manufacturer.
(b) Notwithstanding State-Specific Finality, if any order, ruling or
recommendation was issued prior to September 17, 1998, rejecting a claim of
privilege or trade-secret protection with respect to any document or documents
claimed to be privileged or trade secret in a lawsuit identified in Exhibit A,
the Settling State in which such order, ruling or recommendation was made may,
no later than 45 days after the occurrence of State-Specific Finality in such
Settling State, seek public disclosure of such document or documents by
application to the court that issued such order, ruling, or recommendation, and
the court shall retain jurisdiction for such purposes. The Original
Participating Manufacturer does not consent to and may object to, appeal from,
or otherwise oppose any such application for disclosure. The Original
Participating Manufacturer will not assert that the settlement of such lawsuit
has divested the court of jurisdiction or that such Settling State lacks
standing to seek public disclosure on any applicable ground.
(c) Within 180 days after the MSA Execution Date, the Original
Participating Manufacturer agrees to make available, to designated
representatives of the NAAG executive committee, a copy of all the documents
produced by the Original Participating Manufacturer as of the MSA Execution Date
in any action identified in Exhibit A, for review at a convenient time or times
and at a convenient location. Provided, however, nothing in this section IV
shall require the Original Participating Manufacturer to disclose documents that
(1) it continues to claim to be privileged, trade secret, confidential, or
proprietary business information, or that contain other information not
appropriate for
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public disclosure because of personal privacy interests or contractual rights of
third parties; or (2) except as provided in subsection (a) above, are subject to
any protective order, sealing order, or other order or ruling that prevents or
limits a litigant from disclosing such documents. Within 180 days after the MSA
Execution Date, the Original Participating Manufacturer and designated
representatives of the NAAG executive committee shall meet and discuss, in good
faith, procedures to establish centralized public access to such documents. Each
Subsequent Participating Manufacturer shall comply with the requirements of this
section within 180 days after it signs this Agreement.
V. TOBACCO CONTROL AND UNDERAGE USE LAWS
Each Participating Manufacturer agrees that following State-Specific
Finality in a Settling State it will not initiate, or cause to be initiated, a
facial challenge against the enforceability or constitutionality of such
Settling State's (or such Settling State's political subdivisions') statutes,
ordinances, and administrative rules relating to tobacco control enacted prior
to June 1, 1998.
VI. ESTABLISHMENT OF A NATIONAL FOUNDATION
(a) Foundation Purposes. The Settling States believe that a
comprehensive, coordinated program of public education and study is important to
further the remedial goals of this Agreement. Accordingly, as part of the
settlement of claims described herein, the payments specified in section VI(b)
shall be made to the National Public Education Fund as part of the Foundation.
(b) Foundation Payments. The Participating Manufacturers shall severally
pay, calculated in accordance with the procedures set forth below, their share
of $400,000,000,
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which shall be payable over a period of 10 years, at the direction and on behalf
of the Settling States, in order to fund the National Public Education Fund as
part of the Foundation, a charitable foundation, trust, or similar organization,
and for certain other purposes.
(1) The Original Participating Manufacturer shall pay its share
of the $400,000,000 in two parts.
(A) The first part shall be 50% of the first $200,000,000.
$95,750,000 of the first part shall be payable into the National
Public Education Fund over a period of 10 years in installments
as follows:
<TABLE>
<S> <C>
March 31, 1999 $ 5,975,000
March 31, 2000 $ 5,975,000
March 31, 2001 $ 6,975,000
March 31, 2002 $ 7,975,000
March 31, 2003 $ 8,975,000
March 31, 2004 $ 9,975,000
March 31, 2005 $10,975,000
March 31, 2006 $11,975,000
March 31, 2007 $12,975,000
March 31, 2008 $13,975,000
</TABLE>
(B) If as of December 31 of the year preceding the due
date for payment of any of the 10 installments set forth in
subsection (b)(1) above, the Original Participating
Manufacturer's Market Share falls below 50% percent, then such
installment for such year will be reduced by the percentage by
which the Market Share of the Original Participating Manufacturer
falls below 50% as of December 31 of the year preceding the
installment due date, multiplied by: (i) 10 if the Market Share
decline is below 50%, but not below 45%; (ii) 5 if the Market
Share decline is
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below 45%, but not below 40%; (iii) 3 if the Market Share
decline is below 40%, but not below 30%; (iv) 2 if the Market
Share decline is below 30%, but not below 10%; and (v) 1 if the
Market Share decline is below 10%, but not below 0%. Any
reduction in an installment will be deferred to the year
following the last of the 10 installments set forth above
("Deferred Payment"), unless in that year there already exists a
Deferred Payment from a previous year, in which case the new
Deferred Payment will be deferred to the next subsequent year.
All Deferred Payments will also be subject to the 50% Market
Share condition.
(C) The balance of the first part ($4,250,000) shall be
payable pursuant to section VIII.
(2) The second part of the Original Participating Manufacturer's
share of the $400,000,000 shall be its actual Market Share of the
remaining $200,000,000, calculated and payable as set forth below. This
additional amount shall be payable over a period of 10 years. This
additional amount shall be subject to the following condition: that the
aggregate Market Share of the Subsequent Participating Manufacturers
comprises at least 14% measured by Market Share as of year end December
31, 1998, December 31, 1999, December 31, 2000, or December 31, 2001. In
the event this condition is not satisfied, the Original Participating
Manufacturer shall have no obligation to make any payments as set forth
in this subsection (b)(2) or subsection (b)(3), and the Original
Participating Manufacturer's only obligation under this provision will
be to make the payments set forth in subsection (b)(1).
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(3) The Original Participating Manufacturer's additional annual
payment, if any, under subsection (b)(2) shall be payable in 10
installments on March 31 of each year following each of the first 10
years in which the Subsequent Participating Manufacturers' aggregate
Market Share comprises at least 14%. Each of such 10 installments shall
be based on Market Share as of December 31 of the year preceding the
payment due date and shall be calculated as follows: (A) $20,000,000
multiplied by (B) the Original Participating Manufacturer's Market Share
(C) multiplied by a percentage calculated by (i) dividing the Market
Share of the Subsequent Participating Manufacturers by (ii) the sum of
(x) the Market Share of the Subsequent Participating Manufacturers and
(y) the Market Share of all Non-Participating Manufacturers.
(4) The Subsequent Participating Manufacturers shall pay to the
National Public Education Fund their Market Share of the $400,000,000,
which shall be payable over a period of 10 years commencing on March 31
of the year after each such Subsequent Participating Manufacturer signs
this Agreement. Each such Subsequent Participating Manufacturer's annual
payment shall be calculated based on Market Share as of December 31 of
the year preceding the payment due date as follows: (A) $40,000,000
multiplied by (B) each such Subsequent Participating Manufacturer's
Market Share (C) multiplied by a percentage calculated by (i) dividing
the Market Share of the Subsequent Participating Manufacturers by (ii)
the sum of (x) the Market Share of the Subsequent Participating
Manufacturers and (y) the Market Share of all Non-Participating
Manufacturers.
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(5) The payments to be made by each of the Participating
Manufacturers pursuant to this subsection (b) shall, other than the
payments due on March 31, 1999, be subject to the Inflation Adjustment.
(6) The payments to be made by each of the Participating
Manufacturers pursuant to this subsection (b) shall be paid to the
Escrow Agent who shall disburse such payments to the Foundation only
when Final Approval has occurred, except for those payments that are
payable pursuant to section VIII. Notwithstanding the foregoing, the
Escrow Agent shall disburse the March 31, 1999 payment under subsection
(b)(1)(A) when State-Specific Finality has occurred in both:
(A) a number of Settling States equal to at least 50% of the
total number of the Settling States that were Settling States as
of the MSA Execution Date; and
(B) at least 50% of the States that have lawsuits currently
pending as of the MSA Execution Date against the Original
Participating Manufacturer, which are the States specifically
identified on Exhibit A (but not including any State in the
Additional States section).
(c) Foundation Activities. The Foundation shall not engage in, nor shall
any of the Foundation's money be used to engage, in any political activities or
lobbying, including, but not limited to, support of or opposition to candidates,
ballot initiatives, referenda, or other similar activities. The National Public
Education Fund shall be used only for public education and advertising regarding
the addictiveness, health effects, and
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<PAGE> 45
social costs related to the use of tobacco products and shall not be used for
any personal attack on, or vilification of, any person (whether by name or
business affiliation), company, or governmental agency, whether individually or
collectively. The Foundation shall work to ensure that its activities are
carried out in a culturally and linguistically appropriate manner. The payments
described in subsection (b) above are made at the direction and on behalf of
Settling States. By making such payments in such manner, the Participating
Manufacturers do not undertake and expressly disclaim any responsibility with
respect to the creation, operation, liabilities, or tax status of the Foundation
or the National Public Education Fund.
(d) Severance of this Section. If the Attorney General of a Settling
State determines that such Settling State may not lawfully enter into this
section VI as a matter of applicable state law, such Attorney General may sever
this section VI from its settlement with the Participating Manufacturers by
giving written notice of such severance to each Participating Manufacturer
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and NAAG pursuant to subsection XV(1). If any Settling State exercises its right
to sever this section VI, this section VI shall not be considered a part of the
specific settlement between such Settling State and the Participating
Manufacturers, and this section VI shall not be enforceable by or in such
Settling State. The payment obligation of section VI(b) hereof shall apply
regardless of a determination by one or more Settling States to sever section VI
hereof. If the Attorney General of a Settling State that severed this section VI
subsequently determines that such Settling State may lawfully enter into this
section VI as a matter of applicable state law, such Attorney General may
rescind such Settling State's previous severance of this section VI by giving
written notice of such rescission to each Participating Manufacturer and NAAG
pursuant to subsection XV(l). If any Settling State rescinds such severance,
this section VI shall be considered a part of the specific settlement between
such Settling State and the Participating Manufacturers (including for purposes
of receiving grants from the National Public Education Fund pursuant to
subsection VI(g) of the Cigarette Master Settlement Agreement), and this section
VI shall be enforceable by and in such Settling State.
VII. ENFORCEMENT
(a) Jurisdiction. Each Participating Manufacturer and each Settling
State acknowledge that the Court: (1) has jurisdiction over the subject matter
of the action identified in Exhibit A in such Settling State and over each
Participating Manufacturer; (2) shall retain exclusive jurisdiction for the
purposes of implementing and enforcing this Agreement and the Consent Decree as
to such Settling State; and (3) except as provided in subsection XI(c) of the
Cigarette Master Settlement Agreement, shall be the only court to which disputes
under this Agreement or the Consent Decree are presented as to such Settling
State. Provided, however, that notwithstanding the foregoing, the Escrow Court
(as defined in the Escrow Agreement) shall have exclusive jurisdiction, as
provided in section 15 of the Escrow Agreement, over any suit, action or
proceeding seeking to interpret or enforce any provision of, or based on any
right arising out of, the Escrow Agreement.
(b) Enforcement of Consent Decree. Except as expressly provided in the
Consent Decree, any Settling State or Released Party may apply to the Court to
enforce the terms of the Consent Decree (or for a declaration construing any
such term) with respect to alleged violations within such Settling State. A
Settling State may not seek to
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enforce the Consent Decree of another Settling State; provided, however, that
nothing contained herein shall affect the ability of any Settling State to (1)
coordinate state enforcement actions or proceedings, or (2) file or join any
amicus brief. In the event that the Court determines that any Participating
Manufacturer or Settling State has violated the Consent Decree within such
Settling State, the party that initiated the proceedings may request any and all
relief available within such Settling State pursuant to the Consent Decree.
(c) Enforcement of this Agreement.
(1) Any Settling State or Participating Manufacturer may bring
an action in the Court to enforce the terms of this Agreement (or for a
declaration construing any such term ("Declaratory Order")) with respect
to disputes, alleged violations or alleged breaches within such Settling
State.
(2) Before initiating such proceedings, a party shall provide 30
days' written notice to the Attorney General of each Settling State, to
NAAG, and to each Participating Manufacturer of its intent to initiate
proceedings pursuant to this subsection. The 30-day notice period may be
shortened in the event that the relevant Attorney General reasonably
determines that a compelling time-sensitive public health and safety
concern requires more immediate action.
(3) In the event that the Court determines that any
Participating Manufacturer or Settling State has violated or breached
this Agreement, the party that initiated the proceedings may request an
order restraining such violation or breach, and/or ordering compliance
within such Settling State (an "Enforcement Order").
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<PAGE> 48
(4) If an issue arises as to whether a Participating
Manufacturer has failed to comply with an Enforcement Order, the
Attorney General for the Settling State in question may seek an order
for interpretation or for monetary, civil contempt, or criminal
sanctions to enforce compliance with such Enforcement Order.
(5) If the Court finds that a good-faith dispute exists as to the
meaning of the terms of this Agreement or a Declaratory Order, the Court
may in its discretion determine to enter a Declaratory Order rather than
an Enforcement Order.
(6) Whenever possible, the parties shall seek to resolve an
alleged violation of this Agreement by discussion pursuant to section
XV(n) of this Agreement. In addition, in determining whether to seek an
Enforcement Order, or in determining whether to seek an order for
monetary, civil contempt, or criminal sanctions for any claimed
violation of an Enforcement Order, the Attorney General shall give
good-faith consideration to whether the Participating Manufacturer that
is claimed to have violated this Agreement has taken appropriate and
reasonable steps to cause the claimed violation to be cured, unless such
party has been guilty of a pattern of violations of like nature.
(d) Right of Review. All orders and other judicial determinations made
by any court in connection with this Agreement or any Consent Decree shall be
subject to all available appellate review, and nothing in this Agreement or any
Consent Decree shall be deemed to constitute a waiver of any right to any such
review.
(e) Applicability. This Agreement and the Consent Decree apply only to
the Participating Manufacturers in their corporate capacity acting through their
respective
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successors and assigns, directors, officers, employees, agents, subsidiaries,
divisions, or other internal organizational units of any kind or any other
entities acting in concert or participation with them. The remedies, penalties,
and sanctions that may be imposed or assessed in connection with a breach or
violation of this Agreement or the Consent Decree (or any Declaratory Order or
Enforcement Order issued in connection with this Agreement or the Consent
Decree) shall only apply to the Participating Manufacturers, and shall not be
imposed or assessed against any employee, officer, or director of any
Participating Manufacturer, or against any other person or entity as a
consequence of such breach or violation, and the Court shall have no
jurisdiction to do so.
(f) Coordination of Enforcement. The Attorneys General of the Settling
States (through NAAG) shall monitor potential conflicting interpretations by
courts of different States of this Agreement and the Consent Decrees. The
Settling States shall use their best efforts, in cooperation with the
Participating Manufacturers, to coordinate and resolve the effects of such
conflicting interpretations as to matters that are not exclusively local in
nature.
(g) Inspection and Discovery Rights. Without limitation on whatever
other rights to access they may be permitted by law, following State-Specific
Finality in a Settling State and for seven years thereafter, representatives of
the Attorney General of such Settling State may, for the purpose of enforcing
this Agreement and the Consent Decree, upon reasonable cause to believe that a
violation of this Agreement or the Consent Decree has occurred, and upon
reasonable prior written notice (but in no event less than 10 Business Days) (1)
have access during regular office hours to inspect and copy all relevant
non-privileged, non-work-product books, records, meeting agenda and minutes,
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and other documents (whether in hard copy form or stored electronically) of each
Participating Manufacturer insofar as they pertain to such believed violation;
and (2) interview each Participating Manufacturer's directors, officers, and
employees (who shall be entitled to have counsel present) with respect to
relevant non-privileged, non-work-product matters pertaining to such believed
violation. Documents and information provided to representatives of the Attorney
General of such Settling State pursuant to this section VII shall be kept
confidential by the Settling States, and shall be utilized only by the Settling
States and only for purposes of enforcing this Agreement, the Consent Decree,
and the criminal law. The inspection and discovery rights provided to such
Settling State pursuant to this subsection shall be coordinated through NAAG so
as to avoid repetitive and excessive inspection and discovery.
VIII. CERTAIN ONGOING RESPONSIBILITIES OF THE SETTLING STATES
(a) Upon approval of the NAAG executive committee, NAAG will provide
coordination and facilitation for the implementation and enforcement of this
Agreement on behalf of the Attorneys General of the Settling States, including
the following:
(1) NAAG will assist in coordinating the inspection and
discovery activities referred to in subsections III(n)(3) and VII(g)
regarding compliance with this Agreement by the Participating
Manufacturers and any new tobacco-related trade associations.
(2) NAAG will convene at least two meetings per year and one
major national conference every three years for the Attorneys General of
the Settling States, the directors of the Foundation, and three persons
designated by each Participating Manufacturer. The purpose of the
meetings and conference is to
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evaluate the success of this Agreement and coordinate efforts by the
Attorneys General and the Participating Manufacturers to continue to
reduce the use of Smokeless Tobacco Products by Youth.
(3) NAAG will periodically inform the National Governors'
Association, the National Conference of State Legislatures, the
National Association of Counties, and the National League of Cities of
the results of the meetings and conferences referred to in subsection
VIII(a)(2) above.
(4) NAAG will support and coordinate the efforts of the
Attorneys General of the Settling States in carrying out their
responsibilities under this Agreement.
(b) Upon approval by the NAAG executive committee to assume the
responsibilities outlined in subsection VIII(a) hereof, the Original
Participating Manufacturer shall cause to be paid, beginning on March 31, 1999,
and on March 31 of each year thereafter through and including March 31, 2008,
$25,000 per year to the Escrow Agent (to be credited to the Subsection VIII(b)
Account, as such Account is defined in the Escrow Agreement), who shall disburse
such monies to NAAG within 10 Business Days, to fund the activities described in
section VIII(a).
(c) The Original Participating Manufacturer shall on March 31, 1999,
pay $4 million to fund the States' Antitrust/Consumer Protection Tobacco
Enforcement Fund established pursuant to section VIII(c) of the Cigarette Master
Settlement Agreement. The Original Participating Manufacturer's payment pursuant
to this subsection (c) shall be made to the Escrow Agent (to be credited to the
Subsection VIII(c) Account, as such Account is defined in the Escrow Agreement),
who shall disburse such moneys to NAAG
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upon the occurrence of State-Specific Finality in at least one Settling State.
Such funds will be used in accordance with the provisions of Exhibit J of the
Cigarette Master Settlement Agreement.
IX. CALCULATIONS AND DISBURSEMENTS OF PAYMENTS
(a) All Payments Into Escrow. All payments made pursuant to this
Agreement shall be made into escrow pursuant to the Escrow Agreement, and shall
be credited to the appropriate Account established pursuant to the Escrow
Agreement. Such payments shall be disbursed to the beneficiaries or returned to
Participating Manufacturers only as provided in subsections (b) and (c) and the
Escrow Agreement.
(b) Independent Auditor. Beginning with payments due in the year 2000,
the Independent Auditor described in section XI of the Cigarette Master
Settlement Agreement shall calculate and determine the amount of all payments
owed pursuant to this Agreement, and all other calculations in connection with
such payments (including, but not limited to, Market Share). Subsections
XI(a)(1), (b), (c), (d), (e), (f)(1), (f)(2), (f)(4)(A), (f)(4)(B), (f)(5)(B),
(i), and (j) of the Cigarette Master Settlement Agreement are incorporated
herein by reference and govern the payment process, including the calculation
and disbursement of payments under this Agreement.
(c) Disbursement of Subsection VI(b) Payments. Promptly following the
occurrence of a condition for disbursement of payments specified in subsection
VI(b)(6), the Settling States and the Original Participating Manufacturer shall
notify the Independent Auditor of such occurrence. The Independent Auditor shall
promptly thereafter notify each Notice Party of such occurrence and of the
amounts paid pursuant to this Agreement held in the Subsection VI(b) Account (as
such Account is defined in
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the Escrow Agreement), if any, at such time. If neither any of the Settling
States nor any of the Participating Manufacturers disputes such amounts or
disputes such occurrence, by notice delivered to each Notice Party not later
than 10 Business Days after delivery by the Independent Auditor of the notice
described in the preceding sentence, the Independent Auditor shall promptly
instruct the Escrow Agent to disburse the funds paid pursuant to this Agreement
and held in such Account to the Foundation. If any Settling State or
Participating Manufacturer disputes such amounts or such occurrence by notice
delivered to each other Notice Party not later than 10 Business Days after
delivery by the Independent Auditor of the notice described in the second
sentence of this subsection (c), the Independent Auditor shall promptly instruct
the Escrow Agent to credit the amounts disputed to the Disputed Payments Account
and to disburse the undisputed portion to the Foundation.
X. SETTLING STATES' RELEASE, DISCHARGE, AND COVENANT
(a) Upon the occurrence of State-Specific Finality in a Settling State,
such Settling State shall absolutely and unconditionally release and forever
discharge all Released Parties from all Released Claims that the Releasing
Parties directly, indirectly, derivatively, or in any other capacity ever had,
now have, or hereafter can, shall or may have.
(b) Notwithstanding the foregoing, this release and discharge shall not
apply to any defendant in a lawsuit settled pursuant to this Agreement (other
than a Participating Manufacturer) unless and until such defendant releases the
Releasing Parties (and delivers to the Attorney General of the applicable
Settling State a copy of such release) from any and all Claims of such defendant
relating to the prosecution of such lawsuit.
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(c) Each Settling State (for itself and for the Releasing Parties)
further covenants and agrees that it (and the Releasing Parties) shall not after
the occurrence of State-Specific Finality sue or seek to establish civil
liability against any Released Party based, in whole or in part, upon any of the
Released Claims, and further agrees that such covenant and agreement shall be a
complete defense to any such civil action or proceeding.
(d) Each Settling State (for itself and for the Releasing Parties)
further agrees that, if a Released Claim by a Releasing Party against any person
or entity that is not a Released Party (a "non-Released Party") results in or in
any way gives rise to a claim-over (on any theory whatever other than a claim
based on an express written indemnity agreement) by such non-Released Party
against any Released Party (and such Released Party gives notice to the
applicable Settling State within 30 days of the service of such claim-over (or
within 30 days after the MSA Execution Date, whichever is later) and, prior to
entry into any settlement of such claim-over), the Releasing Party: (1) shall
reduce or credit against any judgment or settlement such Releasing Party may
obtain against such non-Released Party the full amount of any judgment or
settlement such non-Released Party may obtain against the Released Party on such
claim-over; and (2) shall, as part of any settlement with such non-Released
Party, obtain from such non-Released Party for the benefit of such Released
Party a satisfaction in full of such non-Released Party's judgment or settlement
against the Released Party.
(e) This release and covenant shall not operate to interfere with a
Settling State's ability to enforce as against any Participating Manufacturer
the provisions of this Agreement, or with the Court's ability to enter the
Consent Decree or to maintain
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continuing jurisdiction to enforce such Consent Decree pursuant to the terms
thereof. Provided, however, that neither section III(a) or III(p) of this
Agreement nor section V(A) or V(H) of the Consent Decree shall create a right to
challenge the continuation, after the MSA Execution Date, of any advertising
content, claim or slogan (other than use of a Cartoon) that was not unlawful
prior to the MSA Execution Date.
(f) The Settling States do not purport to waive or release any claims
on behalf of Indian tribes.
(g) The Settling States do not waive or release any criminal liability
based on federal, state, or local law.
(h) Notwithstanding any provision of law, statutory or otherwise, which
provides that a general release does not extend to claims which the creditor
does not know or suspect to exist in its favor at the time of executing the
release, which if known by it must have materially affected its settlement with
the debtor, the releases set forth in this section X release all Released Claims
against the Released Parties, whether known or unknown, foreseen or unforeseen,
suspected or unsuspected, that the Releasing Parties may have against the
Released Parties, and the Releasing Parties understand and acknowledge the
significance and consequences of waiver of any such provision and hereby assume
full responsibility for any injuries, damages, or losses that the Releasing
Parties may incur.
XI. CONSENT DECREES AND DISMISSAL OF CLAIMS
(a) Within 10 days after the MSA Execution Date (or, as to any Settling
State identified in the Additional States provision of Exhibit A, concurrently
with the filing of its lawsuit), each Settling State and each Participating
Manufacturer that is a party in any of the lawsuits identified in Exhibit A
shall jointly move for a stay of all proceedings in
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such Settling State's lawsuit with respect to the Participating Manufacturers
and all other Released Parties (except any proceeding seeking public disclosure
of documents pursuant to subsection IV(b)). Such stay of a Settling State's
lawsuit shall be dissolved upon the earlier of the occurrence of State-Specific
Finality or termination of this Agreement with respect to such Settling State
pursuant to subsection XV(v)(1).
(b) Not later than December 11, 1998 (or, as to any Settling State
identified in the Additional States provision of Exhibit A, concurrently with
the filing of its lawsuit):
(1) each Settling State that is a party to a lawsuit
identified in Exhibit A and each Participating Manufacturer will:
(A) tender this Agreement to the Court in such
Settling State for its approval; and
(B) tender to the Court in such Settling State for
entry a consent decree conforming to the model consent decree
attached hereto as Exhibit D (revisions or changes to such
model consent decree shall be limited to the extent required
by state procedural requirements to reflect accurately the
factual setting of the case in question, but shall not include
any substantive revision to the duties or obligations of any
Settling State or Participating Manufacturer, except by
agreement of the Original Participating Manufacturer); and
(2) each Settling State shall seek entry of an order of
dismissal of claims dismissing with prejudice all claims against the
Participating Manufacturers and any other Released Party in such
Settling State's action identified in Exhibit A. Provided, however,
that the Settling State is not required to seek entry of such an
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order in such Settling State's action against such a Released Party
(other than a Participating Manufacturer) unless and until such
Released Party has released the Releasing Parties (and delivered to the
Attorney General of such Settling State a copy of such release) (which
release shall be effective upon the occurrence of State-Specific
Finality in such Settling State, and shall recite that in the event
this Agreement is terminated with respect to such Settling State
pursuant to subsection XV(v)(1), the Released Party agrees that the
order of dismissal shall be null and void and of no effect) from any
and all Claims of such Released Party relating to the prosecution of
such action as provided in subsection X(b).
XII. PARTICIPATING MANUFACTURERS' RELEASE AND DISCHARGE
(a) Upon State-Specific Finality in a Settling State, each
Participating Manufacturer will release and discharge any and all monetary
Claims against such Settling State and any of such Settling State's officers,
employees, agents, administrators, representatives, officials acting in their
official capacity, agencies, departments, commissions, divisions, and counsel
relating to or in connection with the lawsuit(s) commenced by the Attorney
General of such Settling State identified in Exhibit A.
(b) Upon State-Specific Finality in a Settling State, each
Participating Manufacturer will release and discharge any and all monetary
Claims against all subdivisions (political or otherwise, including, but not
limited to, municipalities, counties, parishes, villages, unincorporated
districts, and hospital districts) of such Settling State, and any of their
officers, employees, agents, administrators, representatives, officials acting
in their official capacity, agencies, departments, commissions, divisions, and
counsel arising out of Claims that have been waived and
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released with continuing full force and effect pursuant to section X of this
Agreement. Notwithstanding the foregoing, this release and discharge shall not
be effective with respect to a party released pursuant to this subsection (c) if
the signatories to this Agreement do not have the power to release and discharge
the claims pursuant to section X on behalf of such party.
XIII. VOLUNTARY ACT OF THE PARTIES
The Settling States and the Participating Manufacturers acknowledge and
agree that this Agreement is voluntarily entered into by each Settling State and
each Participating Manufacturer as the result of arm's-length negotiations, and
each Settling State and each Participating Manufacturer was represented by
counsel in deciding to enter into this Agreement. Each Participating
Manufacturer further acknowledges that it understands that certain provisions of
this Agreement may require it to act or refrain from acting in a manner that
could otherwise give rise to state or federal constitutional challenges and
that, by voluntarily consenting to this Agreement, it (and the Tobacco-Related
Organizations (or any trade associations formed or controlled by any
Participating Manufacturer)) waives for purposes of performance of this
Agreement any and all claims that the provisions of this Agreement violate the
state or federal constitutions. Provided, however, that nothing in the foregoing
shall constitute a waiver as to the entry of any court order (or any
interpretation thereof) that would operate to limit the exercise of any
constitutional right except to the extent of the restrictions, limitations, or
obligations expressly agreed to in this Agreement or the Consent Decree.
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XIV. CONSTRUCTION
(a) No Settling State or Participating Manufacturer shall be considered
the drafter of this Agreement or any Consent Decree, or any provision of either,
for the purpose of any statute, case law, or rule of interpretation or
construction that would or might cause any provision to be construed against the
drafter.
(b) Nothing in this Agreement shall be construed as approval by the
Settling States of any Participating Manufacturer's business organizations,
operations, acts, or practices, and no Participating Manufacturer may make any
representation to the contrary.
XV. MISCELLANEOUS
(a) Effect of Current or Future Law. If any current or future law
includes obligations or prohibitions applying to Tobacco Product Manufacturers
related to any of the provisions of this Agreement, each Participating
Manufacturer shall comply with this Agreement unless compliance with this
Agreement would violate such law.
(b) Limited Most-Favored Nation Provision.
(1) If any Participating Manufacturer enters into any future
settlement agreement of other litigation comparable to any of the
actions identified in Exhibit A brought by a non-foreign governmental
plaintiff other than the federal government ("Future Settlement
Agreement"):
(A) before October 1, 2000, on overall terms more
favorable to such governmental plaintiff than the overall
terms of this Agreement (after due consideration of relevant
differences in population or other appropriate factors), then,
unless a majority of the Settling States
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determines that the overall terms of the Future Settlement
Agreement are not more favorable than the overall terms of
this Agreement, the overall terms of this Agreement will be
revised so that the Settling States will obtain treatment with
respect to such Participating Manufacturer at least as
relatively favorable as the overall terms provided to any such
governmental plaintiff; provided, however, that as to economic
terms, this Agreement shall not be revised based on any such
Future Settlement Agreement if such Future Settlement
Agreement is entered into after: (i) the impaneling of the
jury (or, in the event of a non-jury trial, the commencement
of trial) in such litigation or any severed or bifurcated
portion thereof; or (ii) any court order or judicial
determination relating to such litigation that (x) grants
judgment (in whole or in part) against such Participating
Manufacturer; or (y) grants injunctive or other relief that
affects the assets or on-going business activities of such
Participating Manufacturer in a manner other than as expressly
provided for in this Agreement; or
(B) on or after October 1, 2000, on non-economic
terms more favorable to such governmental plaintiff than the
non-economic terms of this Agreement, and such Future
Settlement Agreement includes terms that provide for the
implementation of non-economic tobacco-related public health
measures different from those contained in this Agreement,
then this Agreement shall be revised with respect to such
Participating
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Manufacturer to include terms comparable to such non-economic
terms, unless a majority of the Settling States elects against
such revision.
(2) If any Settling State resolves by settlement Claims
against any Non-Participating Manufacturer after the MSA Execution Date
comparable to any Released Claim, and such resolution includes overall
non-economic terms that are more favorable to such Non-Participating
Manufacturer than the terms of this Agreement (including, without
limitation, any terms that relate to the marketing or distribution of
Tobacco Products), then the overall non-economic terms of this
Agreement will be revised so that the Original Participating
Manufacturer will obtain, with respect to that Settling State, overall
non-economic terms at least as relatively favorable as those obtained
by such Non-Participating Manufacturer pursuant to such resolution of
Claims. Notwithstanding the provisions of section XV(k), the provisions
of this subsection XV(b)(2) may be waived by (and only by) the Original
Participating Manufacturer.
(3) The parties agree that if any term of this Agreement is
revised pursuant to subsection (b)(l) or (b)(2) above and the substance
of such term before it was revised was also a term of the Consent
Decree, each affected Settling State and each affected Participating
Manufacturer shall jointly move the Court to amend the Consent Decree
to conform the terms of the Consent Decree to the revised terms of the
Agreement.
(c) Transfer of Tobacco Brands. The Original Participating Manufacturer
may not sell or otherwise transfer or permit the sale or transfer of any of its
Tobacco Product brands, Brand Names, Tobacco Product product formulas or Tobacco
Product businesses
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(other than a sale or transfer of Tobacco Product brands or Brand Names to be
sold, product formulas to be used, or Tobacco Product businesses to be
conducted, by the acquirer or transferee exclusively outside of the States) to
any person or entity unless such person or entity prior to the sale or
acquisition agrees to assume the obligations of the Original Participating
Manufacturer with respect to such Tobacco Product brands, Brand Names, Tobacco
Product product formulas or businesses. No Participating Manufacturer may sell
or otherwise transfer any of its Tobacco Product brands, Brand Names, Tobacco
Product product formulas or Tobacco Product businesses (other than a sale or
transfer of Tobacco Product brands or Brand Names to be sold, Tobacco Product
product formulas to be used, or businesses to be conducted, by the acquirer or
transferee exclusively outside of the States) to any person or entity unless
such person or entity is or becomes prior to the sale or acquisition a
Participating Manufacturer. In the event of any such sale or transfer of a
Tobacco Product brand, Brand Name, Tobacco Product product formula or Tobacco
Product business by a Participating Manufacturer to a person or entity that
within 180 days prior to such sale or transfer was a Non-Participating
Manufacturer, the Participating Manufacturer shall certify to the Settling
States that it has determined that such person or entity has the capability to
perform the obligations under this Agreement. Such certification shall not
survive beyond one year following the date of any such transfer. The Original
Participating Manufacturer certifies and represents that it (or a wholly-owned
Affiliate) exclusively owns and controls in the States the Brand Names of those
Tobacco Products that it currently manufactures for sale (or sells) in the
States and that it has the capacity to enter into an effective agreement
concerning the sale or transfer of such Brand Names pursuant to this subsection
(c). Nothing in this
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Agreement is intended to create any right for a State to obtain any Tobacco
Product product formula that it would not otherwise have under applicable law.
(d) Payments in Settlement. All payments to be made by the
Participating Manufacturers pursuant to this Agreement are in settlement of all
of the Settling States' antitrust, consumer protection, common law negligence,
statutory, common law, and equitable claims for monetary, restitutionary,
equitable, and injunctive relief alleged by the Settling States with respect to
the year of payment or earlier years, except that no part of any payment under
this Agreement is made in settlement of an actual or potential liability for a
fine, penalty (civil or criminal), or enhanced damages, or is the cost of a
tangible or intangible asset or other future benefit.
(e) No Determination or Admission. This Agreement is not intended to be
and shall not in any event be construed or deemed to be, or represented or
caused to be represented as, an admission or concession or evidence of (1) any
liability or any wrongdoing whatsoever on the part of any Released Party or that
any Released Party has engaged in any of the activities barred by this
Agreement; or (2) personal jurisdiction over any person or entity other than the
Participating Manufacturers. Each Participating Manufacturer specifically
disclaims and denies any liability or wrongdoing whatsoever with respect to the
claims and allegations asserted against it by the Attorneys General of the
Settling States and the Litigating Political Subdivisions. Each Participating
Manufacturer has entered into this Agreement solely to avoid the further
expense, inconvenience, burden, and risk of litigation.
(f) Non-Admissibility. The settlement negotiations resulting in this
Agreement have been undertaken by the Settling States and the Participating
Manufacturers in good
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faith and for settlement purposes only, and no evidence of negotiations or
discussions underlying this Agreement shall be offered or received in evidence
in any action or proceeding for any purpose. Neither this Agreement nor any
public discussions, public statements, or public comments with respect to this
Agreement by any Settling State or Participating Manufacturer or its agents
shall be offered or received in evidence in any action or proceeding for any
purpose other than in an action or proceeding arising under or relating to this
Agreement.
(g) Representations of Parties. Each Settling State and each
Participating Manufacturer hereby represents that this Agreement has been duly
authorized and, upon execution, will constitute a valid and binding contractual
obligation, enforceable in accordance with its terms, of each of them. The
signatories hereto on behalf of their respective Settling States expressly
represent and warrant that they have the authority to settle and release all
Released Claims of their respective Settling States and any of their respective
Settling States' past, present, and future agents, officials acting in their
official capacities, legal representatives, agencies, departments, commissions,
and divisions, and that such signatories are aware of no authority to the
contrary. It is recognized that the Original Participating Manufacturer is
relying on the foregoing representation and warranty in making the payments
required by and in otherwise performing under this Agreement. The Original
Participating Manufacturer shall have the right to terminate this Agreement
pursuant to section XV(v) as to any Settling State as to which the foregoing
representation and warranty is breached or not effectively given.
(h) Sales of Cigarettes. The Original Participating Manufacturer
certifies and represents that it does not currently manufacture, market, sell,
or import for sale
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Cigarettes. Each Participating Manufacturer agrees that in the event that such
Participating Manufacturer manufactures, markets, sells, or imports for sale
Cigarettes after the MSA Execution Date, it will become a participating
manufacturer in the Cigarette Master Settlement Agreement (as that term is
defined in the Cigarette Master Settlement Agreement) before engaging in such
Cigarette manufacturing, marketing, sales, or imports. This subsection shall be
deemed an essential and material part of every term of this Agreement and shall
be incorporated in each term of this Agreement as if repeated verbatim in such
term.
(i) Obligations Several, Not Joint. All obligations of the
Participating Manufacturers pursuant to this Agreement (including, but not
limited to, all payment obligations) are intended to be, and shall remain,
several and not joint.
(j) Headings. The headings of the sections and subsections of this
Agreement are not binding and are for reference only and do not limit, expand,
or otherwise affect the contents or meaning of this Agreement.
(k) Amendment and Waiver. This Agreement may be amended by a written
instrument executed by all Participating Manufacturers affected by the amendment
and by all Settling States affected by the amendment. The terms of any such
amendment shall not be enforceable in any Settling State that is not a signatory
to such amendment. The waiver of any rights conferred hereunder shall be
effective only if made by written instrument executed by the waiving party or
parties. The waiver by any party of any breach of this Agreement shall not be
deemed to be or construed as a waiver of any other breach, whether prior,
subsequent, or contemporaneous, nor shall such waiver be deemed to be or
construed as a waiver by any other party.
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(l) Notices. All notices or other communications to any party to this
Agreement shall be in writing (including, but not limited to, facsimile, telex,
telecopy, or similar writing) and shall be given at the addresses specified in
Exhibit E (as it may be amended to reflect any additional Participating
Manufacturer that becomes a party to this Agreement after the MSA Execution
Date). Any Settling State or Participating Manufacturer may change or add the
name and address of the persons designated to receive notice on its behalf by
notice given (effective upon the giving of such notice) as provided in this
subsection.
(m) Cooperation. Each Settling State and each Participating
Manufacturer agrees to use its best efforts and to cooperate with each other to
cause this Agreement and the Consent Decrees to become effective, to obtain all
necessary approvals, consents, and authorizations, if any, and to execute all
documents and to take such other action as may be appropriate in connection
herewith. Consistent with the foregoing, each Settling State and each
Participating Manufacturer agrees that it will not directly or indirectly assist
or encourage any challenge to this Agreement or any Consent Decree by any other
person, and will support the integrity and enforcement of the terms of this
Agreement and the Consent Decrees. Each Settling State shall use its best
efforts to cause State-Specific Finality to occur as to such Settling State.
(n) Designees to Discuss Disputes. Within 14 days after the MSA
Execution Date, each Settling State's Attorney General and each Participating
Manufacturer shall provide written notice of its designation of a senior
representative to discuss with the other signatories to this Agreement any
disputes and/or other issues that may arise with respect to this Agreement. Each
Settling State's Attorney General shall provide such
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notice of the name, address, and telephone number of the person it has so
designated to each Participating Manufacturer and to NAAG. Each Participating
Manufacturer shall provide such notice of the name, address, and telephone
number of the person it has so designated to each Settling State's Attorney
General, to NAAG, and to each other Participating Manufacturer.
(o) Governing Law. This Agreement (other than the Escrow Agreement)
shall be governed by the laws of the relevant Settling State, without regard to
the conflict of law rules of such Settling State. The Escrow Agreement shall be
governed by the laws of the State in which the Escrow Court is located, without
regard to the conflict of law rules of such State.
(p) Severability.
(1) Sections VI, VII, VIII, IX, X, XI, XII, and XV(b), (c),
(d), (e), (f), (g), (h), (i), (p), (q), (s), (t) and (ee) hereof
("Nonseverable Provisions") are not severable, except to the extent
that severance of section VI is permitted by Settling States pursuant
to section VI(d) hereof. The remaining terms of this Agreement are
severable, as set forth herein.
(2) If a court materially modifies, renders unenforceable, or
finds to be unlawful any of the Nonseverable Provisions, the NAAG
executive committee shall select a team of Attorneys General (the
"Negotiating Team") to attempt to negotiate an equivalent or comparable
substitute term or other appropriate credit or adjustment (a
"Substitute Term") with the Original Participating Manufacturer. In the
event that the court referred to in the preceding sentence is located
in a Settling State, the Negotiating Team shall include the Attorney
General of such
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Settling State. The Original Participating Manufacturer shall have no
obligation to agree to any Substitute Term. If the Original
Participating Manufacturer does not agree to a Substitute Term, this
Agreement shall be terminated in all Settling States affected by the
court's ruling. The Negotiating Team shall submit any proposed
Substitute Term negotiated by the Negotiating Team and agreed to by the
Original Participating Manufacturer to the Attorneys General of all of
the affected Settling States for their approval. If any affected
Settling State does not approve the proposed Substitute Term, this
Agreement in such Settling State shall be terminated.
(3) If a court materially modifies, renders unenforceable, or
finds to be unlawful any term of this Agreement other than a
Nonseverable Provision:
(A) The remaining terms of this Agreement shall
remain in full force and effect.
(B) Each Settling State whose rights or obligations
under this Agreement are affected by the court's decision in
question (the "Affected Settling State") and the Participating
Manufacturers agree to negotiate in good faith a Substitute
Term. Any agreement on a Substitute Term reached between the
Participating Manufacturers and the Affected Settling State
shall not modify or amend the terms of this Agreement with
regard to any other Settling State.
(C) If the Affected Settling State and the
Participating Manufacturers are unable to agree on a
Substitute Term, then they will submit the issue to
non-binding mediation. If mediation fails to produce
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agreement to a Substitute Term, then that term shall be
severed and the remainder of this Agreement shall remain in
full force and effect.
(4) If a court materially modifies, renders unenforceable, or
finds to be unlawful any portion of any provision of this Agreement,
the remaining portions of such provision shall be unenforceable with
respect to the affected Settling State unless a Substitute Term is
arrived at pursuant to subsections XV(p)(2) or (3) hereof, whichever is
applicable.
(q) Intended Beneficiaries. No portion of this Agreement shall provide
any rights to, or be enforceable by, any person or entity that is not a Settling
State or a Released Party. No Settling State may assign or otherwise convey any
right to enforce any provision of this Agreement.
(r) Counterparts. This Agreement may be executed in counterparts.
Facsimile or photocopied signatures shall be considered as valid signatures as
of the date affixed, although the original signature pages shall thereafter be
appended.
(s) Applicability. The obligations and duties of each Participating
Manufacturer set forth herein are applicable only to actions taken (or omitted
to be taken) within the States. This subsection (s) shall not be construed as
extending the territorial scope of any obligation or duty set forth herein whose
scope is otherwise limited by the terms hereof.
(t) Preservation of Privilege. Nothing contained in this Agreement or
any Consent Decree, and no act required to be performed pursuant to this
Agreement or any Consent Decree, is intended to constitute, cause, or effect any
waiver (in whole or in part) of any attorney-client privilege, work product
protection, or common interest/joint
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defense privilege, and each Settling State and each Participating Manufacturer
agrees that it shall not make or cause to be made in any forum any assertion to
the contrary.
(u) Non-Release. Except as otherwise specifically provided in this
Agreement, nothing in this Agreement shall limit, prejudice, or otherwise
interfere with the rights of any Settling State or any Participating
Manufacturer to pursue any and all rights and remedies it may have against any
Non-Participating Manufacturer or other non-Released Party.
(v) Termination.
(1) Unless otherwise agreed to by the Original Participating
Manufacturer and the Settling State in question, in the event that (A)
State-Specific Finality in a Settling State does not occur in such
Settling State on or before December 31, 2001; or (B) this Agreement or
the Consent Decree has been disapproved by the Court (or, in the event
of an appeal from or review of a decision of the Court to approve this
Agreement and the Consent Decree, by the court hearing such appeal or
conducting such review), and the time to Appeal from such disapproval
has expired, or, in the event of an Appeal from such disapproval, the
Appeal has been dismissed or the disapproval has been affirmed by the
court of last resort to which such Appeal has been taken and such
dismissal or disapproval has become no longer subject to further Appeal
(including, without limitation, review by the United States Supreme
Court); or (C) this Agreement is terminated in a Settling State for
whatever reason (including, but not limited to, pursuant to section
XV(p) of this Agreement), then this Agreement and all of its terms
(except for the non-admissibility provisions hereof, which shall
continue in full force and effect) shall
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be canceled and terminated with respect to such Settling State, and it
and all orders issued by the courts in such Settling State pursuant
hereto shall become null and void and of no effect.
(2) If this Agreement is terminated with respect to a Settling
State for whatever reason, then (A) the applicable statute of
limitation or any similar time requirement shall be tolled from the
date such Settling State signed this Agreement until the later of the
time permitted by applicable law or for one year from the date of such
termination, with the effect that the parties shall be in the same
position with respect to the statute of limitation as they were at the
time such Settling State filed its action, and (B) the parties shall
jointly move the Court for an order reinstating the actions and claims
dismissed pursuant to sections XI and XII hereof, with the effect that
the parties shall be in the same position with respect to those actions
and claims as they were at the time the action or claim was stayed or
dismissed.
(w) Freedom of Information Requests. Upon the occurrence of
State-Specific Finality in a Settling State, each Participating Manufacturer
will withdraw in writing any and all requests for information, administrative
applications, and proceedings brought or caused to be brought by such
Participating Manufacturer pursuant to such Settling State's freedom of
information law relating to the subject matter of the lawsuits identified in
Exhibit A.
(x) Bankruptcy. The following provisions shall apply if a Participating
Manufacturer both enters Bankruptcy and at any time thereafter is not timely
performing its financial obligations as required under this Agreement:
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(1) In the event that a number of Settling States equal to at
least 75% of the total number of Settling States deem (by written
notice to the Participating Manufacturers other than the bankrupt
Participating Manufacturer) that the financial obligations of this
Agreement have been terminated and rendered null and void as to such
bankrupt Participating Manufacturer (except as provided in subsection
(A) below) due to a material breach by such Participating Manufacturer,
whereupon, with respect to all Settling States:
(A) all agreements, all concessions, all reductions
of Releasing Parties' Claims, and all releases and covenants
not to sue, contained in this Agreement shall be null and void
as to such Participating Manufacturer. Provided, however, that
(i) all reductions of Releasing Parties' Claims and all
releases and covenants not to sue, contained in this Agreement
shall remain in full force and effect as to all persons or
entities (other than the bankrupt Participating Manufacturer
itself or any person or entity that, as a result of the
Bankruptcy, obtains domestic tobacco assets of such
Participating Manufacturer (unless such person or entity is
itself a Participating Manufacturer)) who (but for the first
sentence of this subsection (A)) would otherwise be Released
Parties by virtue of their relationship with the bankrupt
Participating Manufacturer; and (ii) in the event a Settling
State asserts any Released Claim against a bankrupt
Participating Manufacturer after the termination of this
Agreement with respect to such Participating Manufacturer as
described in this subsection (1) and receives a judgment,
settlement or distribution arising from such
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Released Claim, then the amount of any payments such Settling
State has previously received from such Participating
Manufacturer under this Agreement shall be applied against the
amount of any such judgment, settlement or distribution
(provided that in no event shall such Settling State be
required to refund any payments previously received from such
Participating Manufacturer pursuant to this Agreement);
(B) the Settling States shall have the right to
assert any and all claims against such Participating
Manufacturer in the Bankruptcy or otherwise without regard to
any limits otherwise provided in this Agreement (subject to
any and all defenses against such claims);
(C) the Settling States may exercise all rights
provided under the federal Bankruptcy Code (or applicable
bankruptcy law) with respect to their Claims against such
Participating Manufacturer, including the right to initiate
and complete police and regulatory actions against such
Participating Manufacturer pursuant to the exceptions to the
automatic stay set forth in section 362(b) of the Bankruptcy
Code (provided, however, that such Participating Manufacturer
may contest whether the Settling State's action constitutes a
police and regulatory action); and
(D) to the extent that any Settling State is pursuing
a police and regulatory action against such Participating
Manufacturer as described in subsection (1)(C), such
Participating Manufacturer shall not request or support a
request that the Bankruptcy court utilize the authority
provided under section 105 of the Bankruptcy Code to impose a
discretionary stay
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on the Settling State's action. The Participating
Manufacturers further agree that they will not request, seek
or support relief from the terms of this Agreement in any
proceeding before any court of law (including the federal
bankruptcy courts) or an administrative agency or through
legislative action, including (without limitation) by way of
joinder in or consent to or acquiescence in any such pleading
or instrument filed by another.
(2) Revision of this Agreement pursuant to subsection XV(b)(2)
shall not be required by virtue of any resolution on an involuntary
basis in the Bankruptcy of Claims against the bankrupt Participating
Manufacturer.
(y) Notice of Material Transfers. Each Participating Manufacturer shall
provide notice to each Settling State at least 20 days before consummating a
sale, transfer of title, or other disposition, in one transaction or series of
related transactions, of assets having a fair market value equal to five percent
or more (determined in accordance with United States generally accepted
accounting principles) of the consolidated assets of such Participating
Manufacturer.
(z) Entire Agreement. This Agreement (together with any agreements
expressly contemplated hereby and any other contemporaneous written agreements)
embodies the entire agreement and understanding between and among the Settling
States and the Participating Manufacturers relating to the subject matter hereof
and supersedes (1) all prior agreements and understandings relating to such
subject matter, whether written or oral, and (2) all purportedly contemporaneous
oral agreements and understandings relating to such subject matter, except for
the Agreement of Resolution between the State
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of Washington and the Original Participating Manufacturer, dated October 1, 1998
(the "Washington Resolution"), and the Consent Decree and Final Judgment entered
pursuant to the Resolution on October 2, 1998 (the "Washington Decree"),
provided that the terms of this Agreement relating to permanent relief,
enforcement, and consent decrees will supersede the corresponding terms of the
Washington Resolution and the Washington Decree and that the Washington Decree
will be modified accordingly.
(aa) Business Days. Any obligation hereunder that, under the terms of
this Agreement, is to be performed on a day that is not a Business Day shall be
performed on the first Business Day thereafter.
(bb) Subsequent Signatories. With respect to a Tobacco Product
Manufacturer that signs this Agreement after the MSA Execution Date, the timing
of obligations under this Agreement (other than payment obligations, which shall
be governed by section VI) shall be negotiated to provide for the institution of
such obligations on a schedule not more favorable to such subsequent signatory
than that applicable to the Original Participating Manufacturer.
(cc) Decimal Places. Any figure or percentage referred to in this
Agreement shall be carried to seven decimal places.
(dd) Regulatory Authority. Nothing in section III of this Agreement is
intended to affect the legislative or regulatory authority of any local or State
government.
(ee) Successors. In the event that a Participating Manufacturer ceases
selling a brand of Tobacco Products in the States that such Participating
Manufacturer owned in the States prior to July 1, 1998, and an Affiliate of such
Participating Manufacturer thereafter and after the MSA Execution Date
intentionally sells such brand in the States,
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such Affiliate shall be considered to be the successor of such Participating
Manufacturer with respect to such brand. Performance by any such successor of
the obligations under this Agreement with respect to the sales of such brand
shall be subject to court-ordered specific performance.
(ff) Export Packaging. Each Participating Manufacturer shall place a
visible indication on each package of Tobacco Products it manufactures for sale
outside of the fifty United States and the District of Columbia that
distinguishes such package from packages of Tobacco Products it manufactures for
sale in the fifty United States and the District of Columbia.
(gg) Actions Within Geographic Boundaries of Settling States. To the
extent that any provision of this Agreement expressly prohibits, restricts, or
requires any action to be taken "within" any Settling State or the Settling
States, the relevant prohibition, restriction, or requirement applies within the
geographic boundaries of the applicable Settling State or Settling States,
including, but not limited to, Indian country or Indian trust land within such
geographic boundaries.
(hh) Notice to Affiliates. Each Participating Manufacturer shall give
notice of this Agreement to each of its Affiliates.
XVI. ATTORNEYS FEES
The payment of attorneys fees under the Agreement by the Original
Participating Manufacturer is set forth in Exhibit G.
IN WITNESS WHEREOF, each Settling State and each Participating
Manufacturer, through their fully-authorized representatives, have agreed to
this Agreement.
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STATE OF ALABAMA
By: ____________________________
Fob James, Jr.
Governor
Date: __________________
By: ____________________________
Bill Pryor
Attorney General
Date: __________________
<PAGE> 78
STATE OF ALASKA
By: ____________________________
Bruce M. Botelho
Attorney General
Date: __________________
<PAGE> 79
AMERICAN SAMOA
By: ____________________________
Tauese P. Sunia
Governor
Date: __________________
By: ____________________________
Toetagata Albert Mailo
Attorney General
Date: __________________
<PAGE> 80
STATE OF ARIZONA
By: ____________________________
Grant Woods
Attorney General
Date: __________________
By: ____________________________
John H. Kelley
Director
Arizona Health Care Cost
Containment System
Date: __________________
<PAGE> 81
STATE OF ARKANSAS
By: ____________________________
Winston Bryant
Attorney General
Date: __________________
<PAGE> 82
STATE OF CALIFORNIA
By: ____________________________
Daniel E. Lungren
Attorney General
Date: __________________
By: ____________________________
Kimberly Belshe
Director
California Department of Health Services
Date: __________________
<PAGE> 83
STATE OF COLORADO
By: ____________________________
Gale A. Norton
Attorney General
Date: __________________
<PAGE> 84
STATE OF CONNECTICUT
By: ____________________________
Richard Blumenthal
Attorney General
Date: __________________
<PAGE> 85
STATE OF DELAWARE
By: ____________________________
M. Jane Brady
Attorney General
Date: __________________
<PAGE> 86
DISTRICT OF COLUMBIA
By: ____________________________
John M. Ferren
Corporation Counsel
Date: __________________
By: ____________________________
Marion Barry, Jr.
Mayor
Date: ___________________
<PAGE> 87
STATE OF GEORGIA
By: ____________________________
Zell Miller
Governor
Date: __________________
By: ____________________________
Thurbert E. Baker
Attorney General
Date: __________________
<PAGE> 88
GUAM
By: ____________________________
Carl T.C. Gutierrez
Governor
Date: __________________
By: ____________________________
Robert H. Kono
Acting Attorney General
Date: __________________
<PAGE> 89
STATE OF HAWAII
By: ____________________________
Margery S. Bronster
Attorney General
Date: __________________
<PAGE> 90
STATE OF IDAHO
By: ____________________________
Alan G. Lance
Attorney General
Date: __________________
<PAGE> 91
STATE OF ILLINOIS
By: ____________________________
Jim Ryan
Attorney General
Date: __________________
<PAGE> 92
STATE OF INDIANA
By: ____________________________
Frank L. O'Bannon
Governor
Date: __________________
By: ____________________________
Jeffrey A. Modisett
Attorney General
Date: __________________
<PAGE> 93
STATE OF IOWA
By: ____________________________
Tom Miller
Attorney General
Date: __________________
<PAGE> 94
STATE OF KANSAS
By: ____________________________
Carla J. Stovall
Attorney General
Date: __________________
<PAGE> 95
COMMONWEALTH OF KENTUCKY
By: ____________________________
Albert Benjamin "Ben" Chandler III
Attorney General
Date: __________________
<PAGE> 96
STATE OF LOUISIANA
By: ____________________________
Richard P. Ieyoub
Attorney General
Date: __________________
<PAGE> 97
STATE OF MAINE
By: ____________________________
Andrew Ketterer
Attorney General
Date: __________________
<PAGE> 98
STATE OF MARYLAND
By: ____________________________
J. Joseph Curran, Jr.
Attorney General
Date: __________________
<PAGE> 99
COMMONWEALTH OF MASSACHUSETTS
By: ____________________________
Scott Harshbarger
Attorney General
Date: __________________
<PAGE> 100
STATE OF MICHIGAN
By: ____________________________
Frank J. Kelley
Attorney General
Date: __________________
<PAGE> 101
STATE OF MINNESOTA
By: ____________________________
Hubert H. Humphrey III
Attorney General
Date: __________________
<PAGE> 102
STATE OF MISSISSIPPI
By: ____________________________
Michael C. Moore
Attorney General
Date: __________________
<PAGE> 103
STATE OF MISSOURI
By: ____________________________
Jeremiah W. (Jay) Nixon
Attorney General
Date: __________________
<PAGE> 104
STATE OF MONTANA
By: ____________________________
Joseph P. Mazurek
Attorney General
Date: __________________
<PAGE> 105
STATE OF NEBRASKA
By: ____________________________
Don Stenberg
Attorney General
Date: __________________
<PAGE> 106
STATE OF NEVADA
By: ____________________________
Frankie Sue Del Papa
Attorney General
Date: __________________
<PAGE> 107
STATE OF NEW HAMPSHIRE
By: ____________________________
Philip T. McLaughlin
Attorney General
Date: __________________
<PAGE> 108
STATE OF NEW JERSEY
By: ____________________________
Peter Verniero
Attorney General
Date: __________________
<PAGE> 109
STATE OF NEW MEXICO
By: ____________________________
Tom Udall
Attorney General
Date: __________________
<PAGE> 110
STATE OF NEW YORK
By: ____________________________
Dennis C. Vacco
Attorney General
Date: __________________
<PAGE> 111
STATE OF NORTH CAROLINA
By: ____________________________
James B. Hunt
Governor
Date: ____________________________
By: ____________________________
Michael F. Easley
Attorney General
Date: __________________
<PAGE> 112
STATE OF NORTH DAKOTA
By: ____________________________
Heidi Heitkamp
Attorney General
Date: __________________
<PAGE> 113
NORTHERN MARIANA ISLANDS
By: ____________________________
Sally Pfund
(Acting) Attorney General
Date: __________________
<PAGE> 114
STATE OF OHIO
By: ____________________________
Betty D. Montgomery
Attorney General
Date: __________________
<PAGE> 115
STATE OF OKLAHOMA
By: ____________________________
W.A. Drew Edmondson
Attorney General
Date: __________________
<PAGE> 116
STATE OF OREGON
By: ____________________________
Hardy Myers
Attorney General
Date: __________________
<PAGE> 117
COMMONWEALTH OF PENNSYLVANIA
By: ____________________________
Mike Fisher
Attorney General
Date: __________________
<PAGE> 118
COMMONWEALTH OF PUERTO RICO
By: ____________________________
Jose A. Fuentes-Agostini
Attorney General
Date: __________________
<PAGE> 119
STATE OF RHODE ISLAND
By: ____________________________
Jeffrey B. Pine
Attorney General
Date: __________________
<PAGE> 120
STATE OF SOUTH CAROLINA
By: ____________________________
Charlie Condon
Attorney General
Date: __________________
<PAGE> 121
STATE OF SOUTH DAKOTA
By: ____________________________
William J. Janklow
Governor
Date: __________________
By: ____________________________
Mark Barnett
Attorney General
Date: __________________
<PAGE> 122
STATE OF TENNESSEE
By: ____________________________
John Knox Walkup
Attorney General
Date: __________________
<PAGE> 123
STATE OF UTAH
By: ____________________________
Jan Graham
Attorney General
Date: __________________
<PAGE> 124
STATE OF VERMONT
By: ____________________________
William H. Sorrell
Attorney General
Date: __________________
<PAGE> 125
COMMONWEALTH OF VIRGINIA
By: ____________________________
Mark L. Earley
Attorney General
Date: __________________
<PAGE> 126
THE VIRGIN ISLANDS OF THE UNITED
STATES
By: ____________________________
Julio A. Brady
Attorney General
Date: __________________
<PAGE> 127
STATE OF WASHINGTON
By: ____________________________
Christine O. Gregoire
Attorney General
Date: __________________
<PAGE> 128
STATE OF WEST VIRGINIA
By: ____________________________
Darrell V. McGraw Jr.
Attorney General
Date: __________________
<PAGE> 129
STATE OF WISCONSIN
By: ____________________________
Tommy G. Thompson
Governor
Date: __________________
By: ____________________________
James E. Doyle
Attorney General
Date: __________________
<PAGE> 130
STATE OF WYOMING
By: ____________________________
Jim Geringer
Governor
Date: __________________
By: ____________________________
Gay Woodhouse
(Acting) Attorney General
Date: __________________
<PAGE> 131
UNITED STATES TOBACCO COMPANY
and its subsidiaries,
UNITED STATES TOBACCO MANUFACTURING COMPANY INC. and
UNITED STATES TOBACCO SALES AND MARKETING COMPANY INC.
By: ____________________________
Richard H. Verheij
Executive Vice President and
General Counsel
Date: __________________
By: ____________________________
Peter J. McKenna
Counsel
Date: __________________
<PAGE> 132
EXHIBIT A
LIST OF LAWSUITS
1. Alaska
State of Alaska v. Philip Morris, Inc., et al., Superior Court, First
Judicial District at Juneau, No. IJU-97915 CI (Alaska)
2. Arizona
State of Arizona v. American Tobacco Co., Inc., et al., Superior Court,
Maricopa County, No. CV-96-14769 (Ariz.)
3. Arkansas
State of Arkansas v. The American Tobacco Co., Inc., et al., Chancery
Court, 6th Division, Pulaski County, No. IJ 97-2982 (Ark.)
4. California
People of the State of California et al. v. Philip Morris, Inc., et al.,
Superior Court, Sacramento County, No. 97-AS-30301 (Cal.)
5. Colorado
State of Colorado et al., v. R.J. Reynolds Tobacco Co., et al., District
Court, City and County of Denver, No. 97CV3432 (Colo.)
6. Connecticut
State of Connecticut v. Philip Morris, et al., Superior Court, Judicial
District of Waterbury, No. X02CV96-0148414S (Conn.)
7. Hawaii
State of Hawaii v. Brown & Williamson Tobacco Corp., et al., Circuit
Court, First Circuit, No. 97-0441-01 (Haw.)
8. Idaho
State of Idaho v. Philip Morris, Inc., et al., Fourth Judicial District,
Ada County, No. CVOC 9703239D (Idaho)
9. Illinois
People of the State of Illinois v. Philip Morris et al., Circuit Court
of Cook County, No. 96-L13146 (Ill.)
10. Indiana
State of Indiana v. Philip Morris, Inc., et al., Marion County Superior
Court, No. 49D 07-9702-CT-0236 (Ind.)
11. Iowa
State of Iowa v. R.J. Reynolds Tobacco Company et al., Iowa District
Court, Polk County, No. CL71048 (Iowa)
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<PAGE> 133
12. Louisiana
Ieyoub v. The American Tobacco Company, et al., 14th Judicial District
Court, Calcasieu Parish, No. 96-1209 (La.),
13. Maine
State of Maine v. Philip Morris, Inc., et al., Superior Court, Kennebec
County, No. CV 97-134 (Me.)
14. Missouri
State of Missouri v. American Tobacco Co., Inc. et al., Circuit Court,
City of St. Louis, No. 972-1465 (Mo.)
15. Montana
State of Montana v. Philip Morris, Inc., et al., First Judicial Court,
Lewis and Clark County, No. CDV 9700306 (Mont.)
16. Nebraska
State of Nebraska v. R.J. Reynolds Tobacco Co., et al., District Court,
Lancaster County, No. 573277 (Neb.)
17. Nevada
State of Nevada v. Philip Morris, Incorporated, et al., Second Judicial
Court, Washoe County, No. CV97-03279 (Nev.)
18. New Mexico
State of New Mexico, v. The American Tobacco Co., et al., First Judicial
District Court, County of Santa Fe, No. SF-1235 c (N.M.)
19. New York State
State of New York et al. v. Philip Morris, Inc., et al., Supreme Court
of the State of New York, County of New York, No. 400361/97 (N.Y.)
20. Ohio
State of Ohio v. Philip Morris, Inc., et al., Court of Common Pleas,
Franklin County, No. 97CVH055114 (Ohio)
21. Oregon
State of Oregon v. The American Tobacco Co., et al., Circuit Court,
Multnomah County, No. 9706-04457 (Or.)
22. Pennsylvania
Commonwealth of Pennsylvania v. Philip Morris, Inc., et al., Court of
Common Pleas, Philadelphia County, April Term 1997, No. 2443
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<PAGE> 134
23. Puerto Rico
Rossello, et al. v. Brown & Williamson Tobacco Corporation, et al., U.S.
District Court, Puerto Rico, No. 97-1910JAF
24. Rhode Island
State of Rhode Island v. American Tobacco Co., et al., Rhode Island
Superior Court, Providence, No. 97-3058 (R.I.)
25. South Carolina
State of South Carolina v. Brown & Williamson Tobacco Corporation, et
al., Court of Common Pleas, Fifth Judicial Circuit, Richland County, No.
97-CP-40-1686 (S.C.)
26. South Dakota
State of South Dakota, et al. v. Philip Morris, Inc., et al., Circuit
Court, Hughes County, Sixth Judicial Circuit, No. 98-65 (S.D.)
27. Vermont
State of Vermont v. Philip Morris, Inc., et al., Chittenden Superior
Court, Chittenden County, No. 744-97 (Vt.)
28. West Virginia
McGraw, et al. v. The American Tobacco Company, et al., Kanawha County
Circuit Court, No. 94-1707 (W. Va.)
29. Wisconsin
State of Wisconsin v. Philip Morris Inc., et al., Circuit Court, Branch
11, Dane County, No. 97-CV-328 (Wis.)
Additional States Section
1. For each Settling State not listed above, the lawsuit or other legal action
filed by the Attorney General or Governor of such Settling State against
Participating Manufacturers in the Court in such Settling State prior to 30
days after the MSA Execution Date asserting Released Claims.
2. Washington
State of Washington v. American Tobacco Co. Inc., et al., Superior Court of
Washington, King County, No. 96-2-1505608SEA (Wash.)
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<PAGE> 135
EXHIBIT B
POTENTIAL LEGISLATION NOT TO BE OPPOSED
1. Limitations on Youth access to vending machines.
2. Inclusion of cigars within the definition of tobacco products.
3. Enhancement of enforcement efforts to identify and prosecute violations of
laws prohibiting retail sales to Youth.
4. Encouraging or supporting use of technology to increase effectiveness of
age-of-purchase laws, such as, without limitation, the use of programmable
scanners, scanners to read drivers' licenses, or use of other age/ID data
banks.
5. Limitations on promotional programs for non-tobacco goods using Tobacco
Products as prizes or give-aways.
6. Enforcement of access restrictions through penalties on Youth for
possession or use.
7. Limitations on tobacco product advertising in or on school facilities, or
wearing of tobacco logo merchandise in or on school property.
8. Limitations on non-tobacco products which are designed to look like tobacco
products, such as bubble gum cigars, candy cigarettes, etc.
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<PAGE> 136
EXHIBIT C
DOCUMENT PRODUCTION
Section 1.
(a) Philip Morris Companies, Inc., et al., v. American Broadcasting
Companies, Inc., et al., At Law No. 760CL94X00816-00 (Cir. Ct., City
of Richmond)
(b) Harley-Davidson v. Lorillard Tobacco Co., No. 93-947 (S.D.N.Y.)
(c) Lorillard Tobacco Co. v. Harley-Davidson, No. 93-6098 (E.D. Wis.)
(d) Brown & Williamson v. Jacobson and CBS, Inc., No. 82-648 (N.D. Ill.)
(e) The FTC investigations of tobacco industry advertising and promotion
as embodied in the following cites:
1. 46 FTC 706
2. 48 FTC 82
3. 46 FTC 735
4. 47 FTC 1393
5. 108 F. Supp. 573
6. 55 FTC 354
7. 56 FTC 96
8. 79 FTC 255
9. 80 FTC 455
10. #8023069
11. #8323222
Each Original Participating Manufacturer and Tobacco-Related
Organization will conduct its own reasonable inquiry to determine what documents
or deposition testimony, if any, it produced or provided in the above-listed
matters.
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<PAGE> 137
Section 2.
(a) State of Washington v. American Tobacco Co., et al., No. 96-2-15056-8
SEA (Wash. Super. Ct., County of King)
(b) In re Mike Moore, Attorney General, ex rel, State of Mississippi
Tobacco Litigation, No. 94-1429 (Chancery Ct., Jackson, Miss.)
(c) State of Florida v. American Tobacco Co., et al., No. CL 95-1466 AH
(Fla. Cir. Ct., 15th Judicial Cir., Palm Beach Co.)
(d) State of Texas v. American Tobacco Co., et al., No. 5-96CV-91 (E.D.
Tex.)
(e) Minnesota v. Philip Morris et al., No. C-94-8565 (Minn. Dist. Ct.,
County of Ramsey)
(f) Broin v. R.J. Reynolds, No. 91-49738 CA (22) (11th Judicial Ct., Dade
County, Florida)
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<PAGE> 138
EXHIBIT D
MODEL CONSENT DECREE
IN THE [XXXXXX] COURT OF THE STATE OF [XXXXXX]
IN AND FOR THE COUNTY OF [XXXXX]
- - - - - - - - - - - - - - - - - - - - - - - - - - x CAUSE NO. XXXXXX
:
:
STATE OF [XXXXXXXXXXX], : CONSENT DECREE AND FINAL
Plaintiff, : JUDGMENT
v. :
:
[XXXXXX XXXXX XXXX], et al., :
:
Defendants. :
:
- - - - - - - - - - - - - - - - - - - - - - - - - - x
WHEREAS, Plaintiff, [the State of [name of Settling State]], commenced
this action on [date], [by and through its Attorney General [name]], pursuant to
[her/his/its] common law powers and the provisions of [state and/or federal
law];
WHEREAS, the State of [name of Settling State] asserted various claims
for monetary, equitable and injunctive relief on behalf of the State of [name of
Settling State] against certain tobacco product manufacturers and other
defendants;
WHEREAS, Defendants have contested the claims in the State's complaint
[and amended complaints, if any] and denied the State's allegations [and
asserted affirmative defenses];
WHEREAS, the parties desire to resolve this action in a manner which
appropriately addresses the State's public health concerns, while conserving the
parties' resources, as well as those of the Court, which would otherwise be
expended in litigating a matter of this magnitude; and
WHEREAS, the Court has made no determination of any violation of law,
this Consent Decree and Final Judgment being entered prior to the taking of any
testimony and without trial or final adjudication of any issue of fact or law;
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED, AS FOLLOWS:
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<PAGE> 139
I. JURISDICTION AND VENUE
This Court has jurisdiction over the subject matter of this action and
over each of the Participating Manufacturers. Venue is proper in this
[county/district].
II. DEFINITIONS
The definitions set forth in the Agreement (a copy of which is attached
hereto) are incorporated herein by reference.
III. APPLICABILITY
A. This Consent Decree and Final Judgment applies only to the
Participating Manufacturers in their corporate capacity acting through their
respective successors and assigns, directors, officers, employees, agents,
subsidiaries, divisions, or other internal organizational units of any kind or
any other entities acting in concert or participation with them. The remedies,
penalties and sanctions that may be imposed or assessed in connection with a
violation of this Consent Decree and Final Judgment (or any order issued in
connection herewith) shall only apply to the Participating Manufacturers, and
shall not be imposed or assessed against any employee, officer or director of
any Participating Manufacturer, or against any other person or entity as a
consequence of such violation, and there shall be no jurisdiction under this
Consent Decree and Final Judgment to do so.
B. This Consent Decree and Final Judgment is not intended to and does
not vest standing in any third party with respect to the terms hereof. No
portion of this Consent Decree and Final Judgment shall provide any rights to,
or be enforceable by, any person or entity other than the State of [name of
Settling State] or a Released Party. The State of [name of Settling State] may
not assign or otherwise convey any right to enforce any provision of this
Consent Decree and Final Judgment.
IV. VOLUNTARY ACT OF THE PARTIES
The parties hereto expressly acknowledge and agree that this Consent
Decree and Final Judgment is voluntarily entered into as the result of
arm's-length negotiation, and all parties hereto were represented by counsel in
deciding to enter into this Consent Decree and Final Judgment.
V. INJUNCTIVE AND OTHER EQUITABLE RELIEF
Each Participating Manufacturer is permanently enjoined from:
A. Taking any action, directly or indirectly, to target Youth within
the State of [name of Settling State] in the advertising, promotion or marketing
of Tobacco Products, or taking any action the primary purpose of which is to
initiate, maintain or increase the incidence of use of Tobacco Products by Youth
within the State of [name of Settling State].
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<PAGE> 140
B. After 180 days after the MSA Execution Date, using or causing to be
used within the State of [name of Settling State] any Cartoon in the
advertising, promoting, packaging or labeling of Tobacco Products.
C. After 30 days after the MSA Execution Date, making or causing to be
made any payment or other consideration to any other person or entity to use,
display, make reference to or use as a prop within the State of [name of
Settling State] any Tobacco Product, Tobacco Product package, advertisement for
a Tobacco Product, or any other item bearing a Brand Name in any Media;
provided, however, that the foregoing prohibition shall not apply to (1) Media
where the audience or viewers are within an Adult-Only Facility (provided such
Media are not visible to persons outside such Adult-Only facility); (2) Media
not intended for distribution or display to the public; or (3) actions taken by
any Participating Manufacturer in connection with a Brand Name Sponsorship
permitted pursuant to subsections III(c)(2)(A) and III(c)(2)(B)(i) of the
Agreement and use of a Brand Name to identify a Brand Name Sponsorship permitted
by subsection III(c)(2)(B)(ii).
D. Beginning July 1, 1999, marketing, distributing, offering, selling,
licensing or causing to be marketed, distributed, offered, sold, or licensed
(including, without limitation, by catalogue or direct mail), within the State
of [name of Settling State], any apparel or other merchandise (other than
Tobacco Products, items the sole function of which is to advertise Tobacco
Products, or written or electronic publications) which bears a Brand Name.
Provided, however, that nothing in this section shall (1) require any
Participating Manufacturer to breach or terminate any licensing agreement or
other contract in existence as of June 20, 1997 (this exception shall not apply
beyond the current term of any existing contract, without regard to any renewal
or option term that may be exercised by such Participating Manufacturer); (2)
prohibit the distribution to any Participating Manufacturer's employee who is
not Underage of any item described above that is intended for the personal use
of such an employee; (3) require any Participating Manufacturer to retrieve,
collect or otherwise recover any item that prior to the MSA Execution Date was
marketed, distributed, offered, sold, licensed or caused to be marketed,
distributed, offered, sold or licensed by such Participating Manufacturer; (4)
apply to coupons or other items used by Adults solely in connection with the
purchase of Tobacco Products; (5) apply to apparel or other merchandise used
within an Adult-Only Facility that is not distributed (by sale or otherwise) to
any member of the general public; or (6) apply to apparel or other merchandise
(a) marketed, distributed, offered, sold, or licensed at the site of a Brand
Name Sponsorship permitted pursuant to subsection III(c)(2)(A) or
III(c)(2)(B)(i) of the Agreement by the person to which the relevant
Participating Manufacturer has provided payment in exchange for the use of the
relevant Brand Name in the Brand Name Sponsorship or a third-party that does not
receive payment from the relevant Participating Manufacturer (or any Affiliate
of such Participating Manufacturer) in connection with the marketing,
distribution, offer, sale or license of such apparel or other merchandise, or
(b) used at the site of a Brand Name Sponsorship permitted pursuant to
subsections III(c)(2)(A) or III(c)(2)(B)(i) of the Agreement (during such event)
that are not distributed (by sale or otherwise) to any member of the general
public.
E. After seven days after the MSA Execution Date, distributing or
causing to be distributed within the State of [name of Settling State] any free
samples of Tobacco Products
D-3
<PAGE> 141
except in an Adult-Only Facility. For purposes of this Consent Decree and Final
Judgment, a "free sample" does not include a Tobacco Product that is provided to
an Adult in connection with (1) the purchase, exchange or redemption for proof
of purchase of any Tobacco Products (including, but not limited to, a free offer
in connection with the purchase of Tobacco Products, such as a "two-for-one"
offer), or (2) the conducting of consumer testing or evaluation of Tobacco
Products with persons who certify that they are Adults.
F. Using or causing to be used as a brand name of any Tobacco Product
pursuant to any agreement requiring the payment of money or other valuable
consideration, any nationally recognized or nationally established brand name or
trade name of any non-tobacco item or service or any nationally recognized or
nationally established sports team, entertainment group or individual celebrity.
Provided, however, that the preceding sentence shall not apply to any Tobacco
Product brand name in existence as of July 1, 1998. For the purposes of this
provision, the term "other valuable consideration" shall not include an
agreement between two entities who enter into such agreement for the sole
purpose of avoiding infringement claims.
G. Entering into any contract, combination or conspiracy with any other
Tobacco Product Manufacturer that has the purpose or effect of: (1) limiting
competition in the production or distribution of information about health
hazards or other consequences of the use of their products; (2) limiting or
suppressing research into tobacco and health; or (3) limiting or suppressing
research into the marketing or development of new products. Provided, however,
that nothing in the preceding sentence shall be deemed to (1) require any
Participating Manufacturer to produce, distribute or otherwise disclose any
information that is subject to any privilege or protection; (2) preclude any
Participating Manufacturer from entering into any joint defense or joint legal
interest agreement or arrangement (whether or not in writing), or from asserting
any privilege pursuant thereto; or (3) impose any affirmative obligation on any
Participating Manufacturer to conduct any research.
H. Making any material misrepresentation of fact regarding the health
consequences of using any Tobacco Product, including any tobacco additives or
other ingredients. Provided, however, that nothing in the preceding sentence
shall limit the exercise of any First Amendment right or the assertion of any
defense or position in any judicial, legislative or regulatory forum.
VI. MISCELLANEOUS PROVISIONS
A. Jurisdiction of this case is retained by the Court for the purposes
of implementing, and enforcing the Agreement and this Consent Decree and Final
Judgment and enabling the continuing proceedings contemplated herein. Whenever
possible, the State of [name of Settling State] and the Participating
Manufacturers shall seek to resolve any issue that may exist as to compliance
with this Consent Decree and Final Judgment by discussion among the appropriate
designees named pursuant to subsection XV(n) of the Agreement. The State of
[name of Settling State] and/or any Participating Manufacturer may apply to the
Court at any time for further orders and directions as may be necessary or
appropriate for the implementation and enforcement of this Consent Decree and
Final Judgment. Provided, however, that with regard to subsections V(A) and V(H)
of this Consent Decree and Final Judgment, the Attorney General shall issue a
D-4
<PAGE> 142
cease and desist demand to the Participating Manufacturer that the Attorney
General believes is in violation of either of such sections at least ten
Business Days before the Attorney General applies to the Court for an order to
enforce such subsections, unless the Attorney General reasonably determines that
either a compelling time-sensitive public health and safety concern requires
more immediate action or the Court has previously issued an Enforcement Order to
the Participating Manufacturer in question for the same or a substantially
similar action or activity. For any claimed violation of this Consent Decree and
Final Judgment, in determining whether to seek an order for monetary, civil
contempt or criminal sanctions for any claimed violation, the Attorney General
shall give good-faith consideration to whether: (1) the Participating
Manufacturer that is claimed to have committed the violation has taken
appropriate and reasonable steps to cause the claimed violation to be cured,
unless that party has been guilty of a pattern of violations of like nature; and
(2) a legitimate, good-faith dispute exists as to the meaning of the terms in
question of this Consent Decree and Final Judgment. The Court in any case in its
discretion may determine not to enter an order for monetary, civil contempt or
criminal sanctions.
B. This Consent Decree and Final Judgment is not intended to be, and
shall not in any event be construed as, or deemed to be, an admission or
concession or evidence of (1) any liability or any wrongdoing whatsoever on the
part of any Released Party or that any Released Party has engaged in any of the
activities barred by this Consent Decree and Final Judgment; or (2) personal
jurisdiction over any person or entity other than the Participating
Manufacturers. Each Participating Manufacturer specifically disclaims and denies
any liability or wrongdoing whatsoever with respect to the claims and
allegations asserted against it in this action, and has stipulated to the entry
of this Consent Decree and Final Judgment solely to avoid the further expense,
inconvenience, burden and risk of litigation.
C. Except as expressly provided otherwise in the Agreement, this
Consent Decree and Final Judgment shall not be modified (by this Court, by any
other court or by any other means) unless the party seeking modification
demonstrates, by clear and convincing evidence, that it will suffer irreparable
harm from new and unforeseen conditions. Provided, however, that the provisions
of sections III, V, VI and VII of this Consent Decree and Final Judgment shall
in no event be subject to modification without the consent of the State of [name
of Settling State] and all affected Participating Manufacturers. In the event
that any of the sections of this Consent Decree and Final Judgment enumerated in
the preceding sentence are modified by this Court, by any other court or by any
other means without the consent of the State of [name of Settling State] and all
affected Participating Manufacturers, then this Consent Decree and Final
Judgment shall be void and of no further effect. Changes in the economic
conditions of the parties shall not be grounds for modification. It is intended
that the Participating Manufacturers will comply with this Consent Decree and
Final Judgment as originally entered, even if the Participating Manufacturers'
obligations hereunder are greater than those imposed under current or future law
(unless compliance with this Consent Decree and Final Judgment would violate
such law). A change in law that results, directly or indirectly, in more
favorable or beneficial treatment of any one or more of the Participating
Manufacturers shall not support modification of this Consent Decree and Final
Judgment.
D-5
<PAGE> 143
D. In any proceeding which results in a finding that a Participating
Manufacturer violated this Consent Decree and Final Judgment, the Participating
Manufacturer or Participating Manufacturers found to be in violation shall pay
the State's costs and attorneys' fees incurred by the State of [name of Settling
State] in such proceeding.
E. The remedies in this Consent Decree and Final Judgment are
cumulative and in addition to any other remedies the State of [name of Settling
State] may have at law or equity, including but not limited to its rights under
the Agreement. Nothing herein shall be construed to prevent the State from
bringing an action with respect to conduct not released pursuant to the
Agreement, even though that conduct may also violate this Consent Decree and
Final Judgment. Nothing in this Consent Decree and Final Judgment is intended to
create any right for [name of Settling State] to obtain any Tobacco Product
formula that it would not otherwise have under applicable law.
F. No party shall be considered the drafter of this Consent Decree and
Final Judgment for the purpose of any statute, case law or rule of
interpretation or construction that would or might cause any provision to be
construed against the drafter. Nothing in this Consent Decree and Final Judgment
shall be construed as approval by the State of [name of Settling State] of the
Participating Manufacturers' business organizations, operations, acts or
practices, and the Participating Manufacturers shall make no representation to
the contrary.
G. The settlement negotiations resulting in this Consent Decree and
Final Judgment have been undertaken in good faith and for settlement purposes
only, and no evidence of negotiations or discussions underlying this Consent
Decree and Final Judgment shall be offered or received in evidence in any action
or proceeding for any purpose. Neither this Consent Decree and Final Judgment
nor any public discussions, public statements or public comments with respect to
this Consent Decree and Final Judgment by the State of [name of Settling State]
or any Participating Manufacturer or its agents shall be offered or received in
evidence in any action or proceeding for any purpose other than in an action or
proceeding arising under or relating to this Consent Decree and Final Judgment.
H. All obligations of the Participating Manufacturers pursuant to this
Consent Decree and Final Judgment (including, but not limited to, all payment
obligations) are, and shall remain, several and not joint.
I. The provisions of this Consent Decree and Final Judgment are
applicable only to actions taken (or omitted to be taken) within the States.
Provided, however, that the preceding sentence shall not be construed as
extending the territorial scope of any provision of this Consent Decree and
Final Judgment whose scope is otherwise limited by the terms thereof.
J. Nothing in subsection V(A) or V(H) of this Consent Decree shall
create a right to challenge the continuation, after the MSA Execution Date, of
any advertising content, claim or slogan (other than use of a Cartoon) that was
not unlawful prior to the MSA Execution Date.
K. If the Agreement terminates in this State for any reason, then this
Consent Decree and Final Judgment shall be void and of no further effect.
D-6
<PAGE> 144
VII. FINAL DISPOSITION
A. The Agreement, the settlement set forth therein, and the
establishment of the escrow provided for therein are hereby approved in all
respects, and all claims are hereby dismissed with prejudice as provided
therein.
B. The Court finds that the person[s] signing the Agreement have full
and complete authority to enter into the binding and fully effective settlement
of this action as set forth in the Agreement. The Court further finds that
entering into this settlement is in the best interests of the State of [name of
Settling State].
LET JUDGMENT BE ENTERED ACCORDINGLY
DATED this _____ day of ______________, 1998
D-7
<PAGE> 145
EXHIBIT E
NOTICES
<TABLE>
<S> <C> <C>
NAAG Executive Director PHO: (202) 326-6053
- ---- 750 First Street, N.E. FAX: (202) 408-6999
Suite 1100
Washington, DC 20002
ESCROW AGENT
- ------------
[to come]
ALABAMA Honorable Bill Pryor PHO: (334) 242-7300
Attorney General of Alabama FAX: (334) 242-4891
Office of the Attorney General
State House
11 South Union Street
Montgomery, AL 36130
ALASKA Honorable Bruce M. Botelho PHO: (907) 465-3600
Attorney General of Alaska FAX: (907) 465-2075
Office of the Attorney General
Post Office Box 110300
Diamond Courthouse
Juneau, AK 99811-0300
AMERICAN SAMOA Honorable Toetagata Albert Mailo PHO: (684) 633-4163
Attorney General of American Samoa FAX: (684) 633-1838
Office of the Attorney General
Post Office Box 7
Pago Pago, AS 96799
ARIZONA Honorable Grant Woods PHO: (602) 542-4266
Attorney General of Arizona FAX: (602) 542-4085
Office of the Attorney General
1275 West Washington Street
Phoenix, AZ 85007
</TABLE>
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<PAGE> 146
<TABLE>
<S> <C> <C>
ARKANSAS Honorable Winston Bryant PHO: (501) 682-2007
Attorney General of Arkansas FAX: (501) 682-8084
Office of the Attorney General
200 Tower Building, 323 Center Street
Little Rock, AR 72201-2610
CALIFORNIA Honorable Daniel E. Lungren PHO: (916) 324-5437
Attorney General of California FAX: (916) 324-6734
Office of the Attorney General
1300 I Street, Suite 1740
Sacramento, CA 95814
COLORADO Honorable Gale A. Norton PHO: (303) 866-3052
Attorney General of Colorado FAX: (303) 866-3955
Office of the Attorney General
Department of Law
1525 Sherman Street
Denver, CO 80203
CONNECTICUT Honorable Richard Blumenthal PHO: (860) 808-5318
Attorney General of Connecticut FAX: (860) 808-5387
Office of the Attorney General
55 Elm Street
Hartford, CT 06141-0120
DELAWARE Honorable M. Jane Brady PHO: (302) 577-8400
Attorney General of Delaware FAX: (302) 577-2610
Office of the Attorney General
Carvel State Office Building
820 North French Street
Wilmington, DE 19801
DISTRICT OF COLUMBIA Honorable John M. Ferren PHO: (202) 727-6248
District of Columbia Corporation Counsel FAX: (202) 347-9822
Office of the Corporation Counsel
441 4th Street NW
Washington, DC 20001
GEORGIA Honorable Thurbert E. Baker PHO: (404) 656-4585
Attorney General of Georgia FAX: (404) 657-8733
Office of the Attorney General
40 Capitol Square, S.W.
Atlanta, GA 30334-1300
</TABLE>
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<PAGE> 147
<TABLE>
<S> <C> <C>
GUAM Honorable Robert H. Kono PHO: (671) 475-3324
Acting Attorney General of Guam FAX: (671) 472-2493
Office of the Attorney General
Judicial Center Building
120 West O'Brien Drive
Agana, GU 96910
HAWAII Honorable Margery S. Bronster PHO: (808) 586-1282
Attorney General of Hawaii FAX: (808) 586-1239
Office of the Attorney General
425 Queen Street
Honolulu, HI 96813
IDAHO Honorable Alan G. Lance PHO: (208) 334-2400
Attorney General of Idaho FAX: (208) 334-2530
Office of the Attorney General
Statehouse P.O. Box 83720
Boise, ID 83720-0010
ILLINOIS Honorable Jim Ryan PHO: (312) 814-2503
Attorney General of Illinois FAX: (217)785-2551
Office of the Attorney General
James R. Thompson Center
100 West Randolph Street
Chicago, IL 60601
INDIANA Honorable Jeffrey A. Modisett PHO: (317) 233-4386
Attorney General of Indiana FAX: (317) 232-7979
Office of the Attorney General
Indiana Government Center South
Fifth Floor
402 West Washington Street
Indianapolis, IN 46204
IOWA Honorable Tom Miller PHO: (515) 281-3053
Attorney General of Iowa FAX: (515) 281-4209
Office of the Attorney General
Hoover State Office Building
Des Moines, IA 50319
</TABLE>
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<PAGE> 148
<TABLE>
<S> <C> <C>
KANSAS Honorable Carla J. Stovall PHO: (913) 296-2215
Attorney General of Kansas FAX: (913) 296-6296
Office of the Attorney General
Judicial Building
301 West Tenth Street
Topeka, KS 66612-1597
KENTUCKY Honorable Albert Benjamin "Ben" Chandler III PHO: (502) 564-7600
Attorney General of Kentucky FAX: (502) 564-8310
Office of the Attorney General
State Capitol, Room 116
Frankfort, KY 40601
LOUISIANA Honorable Richard P. Ieyoub PHO: (504) 342-7013
Attorney General of Louisiana FAX: (504) 342-8703
Office of the Attorney General
Department of Justice
Post Office Box 94095
Baton Rouge, LA 70804-4095
MAINE Honorable Andrew Ketterer PHO: (207) 626-8800
Attorney General of Maine FAX: (207) 287-3145
Office of the Attorney General
State House Station Six
Augusta, ME 04333
MARYLAND Honorable J. Joseph Curran Jr. PHO: (410) 576-6300
Attorney General of Maryland FAX: (410) 333-8298
Office of the Attorney General
200 Saint Paul Place
Baltimore, MD 21202-2202
MASSACHUSETTS Honorable Scott Harshbarger PHO: (617) 727-2200
Attorney General of Massachusetts FAX: (617) 727-3251
Office of the Attorney General
One Ashburton Place
Boston, MA 02108-1698
MICHIGAN Honorable Frank J. Kelley PHO: (517) 373-1110
Attorney General of Michigan FAX: (517) 373-3042
Office of the Attorney General
Post Office Box 30212
525 West Ottawa Street
Lansing, MI 48909-0212
</TABLE>
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<PAGE> 149
<TABLE>
<S> <C> <C>
MINNESOTA Honorable Hubert H. Humphrey III PHO: (651) 296-6196
Attorney General of Minnesota FAX: (612) 297-4193
102 State Capitol
St. Paul, MN 55155
MISSISSIPPI Honorable Michael C. Moore PHO: (601) 359-3680
Attorney General of Mississippi FAX: (601) 359-4231
P.O. Box 220
Jackson, MS 39201-0220
MISSOURI Honorable Jeremiah W. (Jay) Nixon PHO: (573) 751-3321
Attorney General of Missouri FAX: (573) 751-0774
Office of the Attorney General
Supreme Court Building
207 West High Street
Jefferson City, MO 65101
MONTANA Honorable Joseph P. Mazurek PHO: (406) 444-2026
Attorney General of Montana FAX: (406) 444-3549
Office of the Attorney General
Justice Building, 215 North Sanders
Helena, MT 59620-1401
NEBRASKA Honorable Don Stenberg PHO: (402) 471-2682
Attorney General of Nebraska FAX: (402) 471-3820
Office of the Attorney General
State Capitol
Post Office Box 98920
Lincoln, NE 68509-8920
NEVADA Honorable Frankie Sue Del Papa PHO: (702) 687-4170
Attorney General of Nevada FAX: (702) 687-5798
Office of the Attorney General
Old Supreme Court Building
100 North Carson Street
Carson City, NV 89701
NEW HAMPSHIRE Honorable Philip T. McLaughlin PHO: (603) 271-3658
Attorney General of New Hampshire FAX: (603) 271-2110
Office of the Attorney General
State House Annex, 25 Capitol Street
Concord, NH 03301-6397
</TABLE>
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<PAGE> 150
<TABLE>
<S> <C> <C>
NEW JERSEY Honorable Peter Verniero PHO: (609) 292-4925
Attorney General of New Jersey FAX: (609) 292-3508
Office of the Attorney General
Richard J. Hughes Justice Complex
25 Market Street, CN 080
Trenton, NJ 08625
NEW MEXICO Honorable Tom Udall PHO: (505) 827-6000
Attorney General of New Mexico FAX: (505) 827-5826
Office of the Attorney General
Post Office Drawer 1508
Santa Fe, NM 87504-1508
NEW YORK Honorable Dennis C. Vacco PHO: (518) 474-7330
Attorney General of New York FAX: (518) 473-9909
Office of the Attorney General
Department of Law-- The Capitol
2nd Floor
Albany, NY 12224
NORTH CAROLINA Honorable Michael F. Easley PHO: (919) 716-6400
Attorney General of North Carolina FAX: (919) 716-6750
Office of the Attorney General
Department of Justice
Post Office Box 629
Raleigh, NC 27602-0629
NORTH DAKOTA Honorable Heidi Heitkamp PHO: (701) 328-2210
Attorney General of North Dakota FAX: (701) 328-2226
Office of the Attorney General
State Capitol
600 East Boulevard Avenue
Bismarck, ND 58505-0040
N. MARIANA ISLANDS Honorable Sally Pfund (Acting) PHO: (670) 664-2341
Attorney General of the Northern Mariana Islands FAX: (670) 664-2349
Office of the Attorney General
Administration Building
Saipan, MP 96950
</TABLE>
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<PAGE> 151
<TABLE>
<S> <C> <C>
OHIO Honorable Betty D. Montgomery PHO: (614) 466-3376
Attorney General of Ohio FAX: (614) 466-5087
Office of the Attorney General
State Office Tower
30 East Broad Street
Columbus, OH 43266-0410
OKLAHOMA Honorable W.A. Drew Edmondson PHO: (405) 521-3921
Attorney General of Oklahoma FAX: (405) 521-6246
Office of the Attorney General
State Capitol, Room 112
2300 North Lincoln Boulevard
Oklahoma City, OK 73105
OREGON Honorable Hardy Myers PHO: (503) 378-6002
Attorney General of Oregon FAX: (503) 378-4017
Office of the Attorney General
Justice Building
1162 Court Street NE
Salem, OR 97310
PENNSYLVANIA Honorable Mike Fisher PHO: (717) 787-3391
Attorney General of Pennsylvania FAX: (717) 783-1107
Office of the Attorney General
Strawberry Square
Harrisburg, PA 17120
PUERTO RICO Honorable Jose A. Fuentes-Agostini PHO: (787) 721-7700
Attorney General of Puerto Rico FAX: (787) 724-4770
Office of the Attorney General
Post Office Box 192
San Juan, PR 00902-0192
RHODE ISLAND Honorable Jeffrey B. Pine PHO: (401) 274-4400
Attorney General of Rhode Island FAX: (401) 222-1302
Office of the Attorney General
150 South Main Street
Providence, RI 02903
SOUTH CAROLINA Honorable Charlie Condon PHO: (803) 734-3970
Attorney General of South Carolina FAX: (803) 253-6283
Office of the Attorney General
Rembert C. Dennis Office Building
Post Office Box 11549
Columbia, SC 29211-1549
</TABLE>
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<PAGE> 152
<TABLE>
<S> <C> <C>
SOUTH DAKOTA Honorable Mark Barnett PHO: (605) 773-3215
Attorney General of South Dakota FAX: (605) 773-4106
Office of the Attorney General
500 East Capitol
Pierre, SD 57501-5070
TENNESSEE Honorable John Knox Walkup PHO: (615) 741-6474
Attorney General of Tennessee FAX: (615) 741-2009
Office of the Attorney General
500 Charlotte Avenue
Nashville, TN 37243
UTAH Honorable Jan Graham PHO: (801) 538-1326
Attorney General of Utah FAX: (801) 538-1121
Office of the Attorney General
State Capitol, Room 236
Salt Lake City, UT 84114-0810
VERMONT Honorable William H. Sorrell PHO: (802) 828-3171
Attorney General of Vermont FAX: (802) 828-3187
Office of the Attorney General
109 State Street
Montpelier, VT 05609-1001
VIRGINIA Honorable Mark L. Earley PHO: (804) 786-2071
Attorney General of Virginia FAX: (804) 371-0200
Office of the Attorney General
900 East Main Street
Richmond, VA 23219
VIRGIN ISLANDS Honorable Julio A. Brady PHO: (340) 774-5666
Attorney General of the Virgin Islands FAX: (340) 774-9710
Office of the Attorney General
Department of Justice
G.E.R.S. Complex
48B-50C Kronprinsdens Gade
St. Thomas, VI 00802
</TABLE>
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<PAGE> 153
<TABLE>
<S> <C> <C>
WASHINGTON Honorable Christine O. Gregoire PHO: (360) 753-6200
Attorney General of Washington FAX: (360) 664-0228
Office of the Attorney General
P.O. Box 40100
1125 Washington Street, SE
Olympia, WA 98504-0100
with a copy to:
---------------
Joseph F. Rice
John J. McConnell, Jr.
Ness, Motley, Loadholt, Richardson & Poole
151 Meeting Street, Suite 200
Post Office Box 1137
Charleston SC 29402
Tel: 843-720-9000
Fax: 843-720-9290
WEST VIRGINIA Honorable Darrell V. McGraw Jr. PHO: (304) 558-2021
Attorney General of West Virginia FAX: (304) 558-0140
Office of the Attorney General
State Capitol
1900 Kanawha Boulevard East
Charleston, WV 25305
WISCONSIN Honorable James E. Doyle PHO: (608) 266-1221
Attorney General of Wisconsin FAX: (608) 267-2779
Office of the Attorney General
State Capitol
Post Office Box 7857
Suite 114 East
Madison, WI 53707-7857
WYOMING Honorable Gay Woodhouse PHO: (307) 777-7841
Acting Attorney General of Wyoming FAX: (307) 777-6869
Office of the Attorney General
State Capitol Building
Cheyenne, WY 82002
</TABLE>
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<PAGE> 154
For United States Tobacco Company and its subsidiaries,
United States Tobacco Manufacturing Company Inc.
and United States Tobacco Sales and Marketing Company Inc.:
Richard H. Verheij
Executive Vice President and General Counsel
UST Inc.
100 West Putnam Avenue
Greenwich, CT 06830
Tel: 203-661-1100
Fax: 203-661-5613
With a copy to:
---------------
Peter J. McKenna
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Tel: 212-735-3000
Fax: 212-735-2000
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<PAGE> 155
EXHIBIT F
FORMULA FOR CALCULATING
INFLATION ADJUSTMENTS
(1) Any amount that, in any given year, is to be adjusted for inflation
pursuant to this Exhibit (the "Base Amount") shall be adjusted upward by adding
to such Base Amount the Inflation Adjustment.
(2) The Inflation Adjustment shall be calculated by multiplying the Base
Amount by the Inflation Adjustment Percentage applicable in that year.
(3) The Inflation Adjustment Percentage applicable to payments due in the
year 2000 shall be equal to the greater of 3% or the CPI%. For example, if the
Consumer Price Index for December 1999 (as released in January 2000) is 2%
higher than the Consumer Price Index for December 1998 (as released in January
1999), then the CPI% with respect to a payment due in 2000 would be 2%. The
Inflation Adjustment Percentage applicable in the year 2000 would thus be 3%.
(4) The Inflation Adjustment Percentage applicable to payments due in any
year after 2000 shall be calculated by applying each year the greater of 3% or
the CPI% on the Inflation Adjustment Percentage applicable to payments due in
the prior year. Continuing the example in subsection (3) above, if the CPI% with
respect to a payment due in 2001 is 6%, then the Inflation Adjustment Percentage
applicable in 2001 would be 9.1800000% (an additional 6% applied on the 3%
Inflation Adjustment Percentage applicable in 2000), and if the CPI% with
respect to a payment due in 2002 is 4%, then the Inflation Adjustment Percentage
applicable in 2002 would be 13.5472000% (an additional 4% applied on the
9.1800000% Inflation Adjustment Percentage applicable in 2001).
(5) "Consumer Price Index" means the Consumer Price Index for All Urban
Consumers as published by the Bureau of Labor Statistics of the U.S. Department
of Labor (or other similar measures agreed to by the Settling States and the
Participating Manufacturers).
(6) The "CPI%" means the actual total percent change in the Consumer Price
Index during the calendar year immediately preceding the year in which the
payment in question is due.
F-1
<PAGE> 156
(7) Additional Example.
Calculating the Inflation Adjustment Percentages:
<TABLE>
<CAPTION>
Percentage to be
applied on the Inflation
Adjustment Percentage
for the prior year (i.e., the Inflation
Payment Hypothetical greater of 3% or the Adjustment
Year CPI% CPI%) Percentage
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2000 2.4% 3.0% 3.0000000%
2001 2.1% 3.0% 6.0900000%
2002 3.5% 3.5% 9.8031500%
2003 3.5% 3.5% 13.6462603%
2004 4.0% 4.0% 18.1921107%
2005 2.2% 3.0% 21.7378740%
2006 1.6% 3.0% 25.3900102%
</TABLE>
F-2
<PAGE> 157
EXHIBIT G
ATTORNEYS FEES
The Original Participating Manufacturer will pay, in the manner and at
the times set forth below, the sum of $5 million as attorneys fees for outside
counsel, if any, retained by the Settling States in connection with the actions
identified in Exhibit A. The $5 million will be paid into an attorney escrow
fund the later of (a) 30 days after Final Approval or (b) $2.5 million on
November 23, 1999 and $2.5 million on November 23, 2000.
Payment of the foregoing amounts to the fund shall be full satisfaction
of the Original Participating Manufacturer's obligations for attorneys' fees
under the Agreement. Should any dispute arise after such payments, including any
dispute in connection with the disbursement of the funds, the Settling States
and their attorneys agree, jointly and severally, to hold the Original
Participating Manufacturer harmless in respect thereto.
In the event that any monies paid into the fund are not disbursed by
December 31, 2002, the remaining monies in the fund shall be paid to the
Foundation.
G-1
