STATE OF MINNESOTA DISTRICT COURT
COUNTY OF RAMSEY SECOND JUDICIAL DISTRICT
THE STATE OF MINNESOTA, Court File No. C1-94-8565
BY HUBERT H. HUMPHREY, III,
ITS ATTORNEY GENERAL,
and
BLUE CROSS AND BLUE SHIELD
OF MINNESOTA,
Plaintiffs,
vs.
PHILIP MORRIS INCORPORATED,
R.J. REYNOLDS TOBACCO COMPANY,
BROWN & WILLIAMSON TOBACCO
CORPORATION, B.A.T. INDUSTRIES
P.L.C., BRITISH-AMERICAN TOBACCO
COMPANY LIMITED, BAT (U.K. &
EXPORT) LIMITED, LORILLARD
TOBACCO COMPANY, THE
AMERICAN TOBACCO COMPANY,
LIGGETT GROUP, INC., THE
COUNCIL FOR TOBACCO RESEARCH
U.S.A., INC. and THE TOBACCO
INSTITUTE, INC.,
Defendants.
SETTLEMENT AGREEMENT AND RELEASE
THIS SETTLEMENT AGREEMENT AND RELEASE ("Settlement Agreement") is made
as of the date hereof, by and among the parties hereto, as indicated by their
signatures below, to settle and resolve with finality all claims of BCBSM, Inc.
d/b/a Blue Cross and Blue Shield of
Minnesota ("Blue Cross") relating to the subject matter of this action which
have been or could have been asserted by Blue Cross and Blue Shield of
Minnesota.
WHEREAS, Blue Cross is a nonprofit health service plan corporation
organized pursuant to Minnesota Statutes Chapter 62C, and as such fulfills a
variety of health related functions in the State of Minnesota;
WHEREAS, the general purposes of Blue Cross under its enabling
legislation and its Articles of Incorporation is "to make possible wide,
economic and timely availability of hospital, medical surgical, dental and other
health services for the people of Minnesota and others" and "advance public
health and the art and science of hospital, medical and health care under the
laws of the State of Minnesota;"
WHEREAS, Blue Cross in recognition and furtherance of its statutory
mandate and charter, and the State of Minnesota, through its Attorney General,
Hubert H. Humphrey III, commenced this action on August 17, 1994, asserting
various claims for monetary and injunctive relief on behalf of Blue Cross and
the State of Minnesota against certain tobacco manufacturers and others as
Defendants;
WHEREAS, Blue Cross brought this action with the objectives of seeking
disclosure of cigarette industry knowledge about Tobacco Products to help better
inform the public and banning the marketing of Tobacco Products to children;
WHEREAS, Blue Cross has achieved disclosure of millions of cigarette
industry documents that shall hereafter be available to the public in the
Minnesota depository;
WHEREAS, Blue Cross has, by this action, sought to affect conduct of
Defendants, including:
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- to refrain from opposition to Minnesota legislative activity
intended to control tobacco use by children;
- to refrain from challenging the enforceability of existing
Minnesota laws or rules relating to tobacco control;
- to discontinue all billboard and transit advertisements of
Tobacco Products in the State of Minnesota;
- to refrain from the payment for product placement within
motion pictures made within the United States;
- to permanently cease the marketing of any service or item,
other than Tobacco Products and advertisements for such
products, which bears the brand name or other identifying mark
of any domestic Tobacco Product;
- to disclose certain payments or provision of other benefits to
lobbyists, third parties and public officials; and
- to cause The Council for Tobacco Research-U.S.A. to cease
operations.
WHEREAS, Blue Cross has specifically asserted various claims for
monetary relief against the tobacco manufacturers and other defendants to
recover amounts which Blue Cross has expended for the treatment of the
smoking-caused illnesses of its subscribers;
WHEREAS, Blue Cross is the first such health plan to undertake such
action against any of the Defendants with regard to issues of smoking and
health, and until 1998, was the only such health plan to have commenced such an
action;
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WHEREAS, the Defendants have denied each and every one of Plaintiffs'
allegations of unlawful conduct or wrongdoing and have asserted a number of
defenses to Plaintiffs' claims, which defenses have been contested by
Plaintiffs; and
WHEREAS, the parties hereto wish to avoid the further expense, delay,
inconvenience, burden and uncertainty of continued litigation of this matter
(including appeals from any verdict), Blue Cross and the Settling Defendants
have agreed to settle this litigation:
NOW, THEREFORE, BE IT KNOWN THAT, in consideration of the payments to
be made by the Settling Defendants, the dismissal and release of claims by Blue
Cross and such other consideration as described herein, the sufficiency of which
is hereby acknowledged, the parties hereto, acting by and through their
authorized agents, memorialize and agree as follows:
I. GENERAL PROVISIONS
A. Jurisdiction. Blue Cross and the Settling Defendants acknowledge
that this Court has jurisdiction over the subject matter of this action and over
each of the parties to this Settlement Agreement, and that this Court shall
retain jurisdiction for the purposes of implementing and enforcing this
Settlement Agreement. The parties hereto agree to present any disputes under
this Settlement Agreement, including without limitation any claims for breach or
enforcement of this Settlement Agreement, exclusively to this Court.
B. Voluntary Agreement of the Parties. Blue Cross and the Settling
Defendants acknowledge and agree that this Settlement Agreement is voluntarily
entered into by all parties hereto as the result of arm's-length negotiations
during which all such parties were represented by counsel. Blue Cross and
Settling Defendants understand that Congress may enact legislation dealing with
some of the issues addressed in this Agreement. Settling Defendants and their
assigns,
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affiliates, agents, and successors, hereby waive any right to challenge this
Agreement, directly or through third parties, on the ground that any term hereof
is unconstitutional, outside the power or jurisdiction of the Court, preempted
by or in conflict with any current or future federal legislation (except where
non-economic terms of future federal legislation are irreconcilable).
C. Definitions.
For the purposes of this Settlement Agreement, the following terms
shall have the meanings set forth below:
1. "State" or "State of Minnesota" means the State of
Minnesota acting by and through its Attorney General;
2. "Blue Cross" means BCBSM, Inc., d/b/a Blue Cross and Blue
Shield of Minnesota, and all of its employees, directors, officers,
attorneys, parents, and divisions. BCBSM, Inc. represents that it is an
independent corporation operating under license from Blue Cross and
Blue Shield Association, an association of independent Blue Cross and
Blue Shield Plans (the "Association"), permitting BCBSM, Inc. to use
the Blue Cross and Blue Shield service marks in Minnesota, and that
BCBSM, Inc. is not serving as an agent of the Association or any other
Blue Cross/Blue Shield Plans in entering into this Settlement
Agreement;
3. "Settling Defendants" means those Defendants in this action
that are signatories hereto;
4. "Defendants" means Philip Morris Incorporated, R.J.
Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation,
B.A.T. Industries P.L.C., British- American Tobacco Company Limited,
BAT (U.K. and Export) Limited, Lorillard Tobacco
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Company, The American Tobacco Company, The Council for Tobacco
Research-U.S.A., Inc., and the Tobacco Institute, Inc. and their
successors and assigns;
5. "Consumer Price Index" shall mean the Consumer Price Index
for All Urban Consumers for the most recent twelve-month period, as
published by the Bureau of Labor Statistics of the U.S. Department of
Labor;
6. "State Settlement Agreement" means the settlement agreement
entitled "Settlement Agreement and Stipulation for Entry of Consent
Judgment" entered into among the State and the Settling Defendants with
respect to the settlement of this action;
7. "State Escrow Agreement" means the escrow agreement so
entitled and entered into among State, the Settling Defendants and an
escrow agent;
8. "Court" means the District Court of the State of Minnesota,
County of Ramsey, Second Judicial District;
9. "Market Share" means a Settling Defendant's respective
share of sales of cigarettes by unit for consumption in the United
States during the calendar year immediately preceding the year in which
the payment at issue is due, regardless of when payment is made;
10. "Cigarettes" means any product which contains nicotine, is
intended to be burned or heated under ordinary conditions of use, and
consists of or contains (i) any roll of tobacco wrapped in paper or in
any substance not containing tobacco; or (ii) 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 (iii) 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
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packaging and labeling, is likely to be offered to, or purchased by,
consumers as a cigarette described in subparagraph (i) of this
Paragraph.;
11. "Smokeless Tobacco" means any powder that consists of cut,
ground, powdered, or leaf tobacco that contains nicotine and that is
intended to be placed in the oral cavity;
12. "Tobacco Products" means Cigarettes and Smokeless Tobacco;
13. "Depository," unless otherwise specified, means the
Minnesota document depository established by the Court's Order dated
June 16, 1995. "Depositories" includes both the Minnesota depository
and the Guildford, U.K. document depository established by the Court's
Order dated September 6, 1995.
14. "Private Counsel" means Robins, Kaplan, Miller & Ciresi
L.L.P.
15. "Final Settlement" means the date on which this Settlement
Agreement, is executed and a Stipulation of Dismissal with prejudice is
filed with the Court;
16. "Allocation Fraction" means that fraction of each of the
payments made to Blue Cross which is expressed as a fraction for which,
for each year, 1978-1996, the numerator is Blue Cross's damages for
that year and the denominator is Blue Cross's total damages for years
1978-1996. The Allocation Fractions for years 1978-1996 are as follows:
For year, 1978: 0.028166303;
For year, 1979: 0.032609439;
For year, 1980: 0.039670851;
For year, 1981: 0.040893991;
For year, 1982: 0.042167950;
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For year, 1983: 0.037203831;
For year, 1984: 0.031715039;
For year, 1985: 0.040184252;
For year, 1986: 0.046644637;
For year, 1987: 0.048474365;
For year, 1988: 0.049674533;
For year, 1989: 0.058874757;
For year, 1990: 0.066059121;
For year, 1991: 0.068837235;
For year, 1992: 0.071286135;
For year, 1993: 0.066550282;
For year, 1994: 0.075199152;
For year, 1995: 0.075114815; and
For year, 1996: 0.080673311.
D. Settlement Receipts. The payments to be made by the Settling
Defendants under this Settlement Agreement are in satisfaction of all of Blue
Cross's claims for damages, including, without limitation, those for punitive
damages, incurred by Blue Cross in the year of payment or earlier years, except
that no part of any payment under this Settlement Agreement is made in
settlement of an actual or potential liability for a fine, penalty (civil or
criminal) or enhanced damages. Blue Cross represents that it does not have
authority to bring: (1) claims attributable to or arising out of the payment of
benefits by self-funded employer-employee benefit plans for which Blue Cross
presently provides or has formerly provided administrative services, (2) claims
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attributable to or arising out of the payment of benefits under any program or
plan for the Minnesota Comprehensive Health Association or under the Federal
Employees Health Benefit Act or any other federal health benefit plan, or
(3) claims attributable to or arising out of the payment of benefits by any
employee benefit plan of any political subdivision of the State of Minnesota for
which Blue Cross provides or has provided administrative services. Each payment
set forth in this section shall be in partial satisfaction of each year of
damages incurred and alleged by Blue Cross for the years 1978 through 1996 and
each payment shall accordingly be allocated to the satisfaction of each specific
year of damages incurred by Blue Cross according to the Allocation Fraction set
forth above.
E. Settlement Payments to Blue Cross. Each Settling Defendant severally
shall cause to be paid to an account designated in writing by Blue Cross in
accordance with and subject to Paragraph I.F. of this Settlement Agreement, the
following amounts: the amount listed for it in Schedule A hereto, such amount
representing its share of $160,000,000, to be paid on or before September 5,
1998; pro rata in proportion to its Market Share, its share of $79,200,000, to
be paid on or before January 4, 1999; pro rata in proportion to its Market
Share, its share of $57,450,000, to be paid on or before January 3, 2000; pro
rata in proportion to its Market Share, its share of $57,450,000, to be paid on
or before January 2, 2001; pro rata in proportion to its Market Share, its share
of $57,450,000, to be paid on or before January 2, 2002; and pro rata in
proportion to its Market Share, its share of $57,450,000, to be paid on or
before January 2, 2003. The payments made by the Settling Defendants pursuant to
this Paragraph shall be adjusted upward by the greater of 3% or the percentage
increase in the Consumer Price Index applied each year on the previous year,
beginning with the payment due to be made on or before January 3, 2000. The
payments due to be made by the Settling Defendants pursuant to this Paragraph E
on or before January 3, 2000, on or
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before January 2, 2001, on or before January 2, 2002, and on or before January
2, 2003, will also be decreased or increased, as the case may be, in accordance
with the formula for adjustments of payments set forth in Appendix A. The
payments due to be made by the Settling Defendants pursuant to this Paragraph E
on or before September 5, 1998, and on or before January 4, 1999, shall not be
subject to the inflation escalation and volume adjustment described in the
preceding sentences.
In the event that any of the Settling Defendants (a "Defaulting
Defendant") fails to make any payment required of it pursuant to this Paragraph
E by the applicable date set forth in this Paragraph E (a "Missed Payment"),
Blue Cross shall provide notice to each of the Settling Defendants of such
non-payment. The Defaulting Defendant shall have 15 days after receipt of such
notice to pay the Missed Payment, together with interest accrued from the
original applicable due date at the prime rate as published in the Wall Street
Journal on the latest publication date on or before the date of default plus 3%.
If the Defaulting Defendant does not make such payment within such 15-day
period, Blue Cross shall provide notice to each of the Settling Defendants of
such continued non-payment. Any or all of the Settling Defendants (other than
the Defaulting Defendant) shall thereafter have 15 days after receipt of such
notice to elect (in such Settling Defendant's or such Settling Defendants' sole
and absolute discretion) to pay the Missed Payment, together with interest
accrued from the original applicable due date the rate of prime rate as
published in the Wall Street Journal on the latest publication date on or before
the date of default plus 3%.
In the event that Blue Cross does not receive the Missed Payment,
together with such accrued interest, within such additional 15-day period, all
payments required to be made by each of the respective Settling Defendants
pursuant to this Paragraph E shall at the end of such additional 15-
10
day period be accelerated and shall immediately become due and owing to Blue
Cross from each Settling Defendant pro rata in proportion to its Market Share;
provided, however, that any such accelerated payments (a) shall all be adjusted
upward by the greater of (i) the rate of 3% per annum or (ii) the actual total
percent change in the CPI, in either instance for the period between January 1
of the year in which the acceleration of payments pursuant to this Paragraph
occurs and the date on which such accelerated payments are due pursuant to this
subsection, and (b) shall all immediately be adjusted in accordance with the
formula for adjustments of payments set forth in Appendix A.
Nothing in this Paragraph E shall be deemed under any circumstance to
create any obligation in any of the Settling Defendants to pay any amount owed
or payable to Blue Cross from any other Settling Defendant. All obligations of
the Settling Defendants pursuant to this Paragraph E are intended to be and
shall remain several, and not joint.
F. Payment of Settlement Proceeds. Any payment made pursuant to the
Settlement Agreement shall be made to an account designated in writing by Blue
Cross.
G. Blue Cross's Dismissal of Claims. Upon execution of this Settlement
Agreement Blue Cross shall file a Stipulation of Dismissal dismissing with
prejudice all claims as to all Defendants.
H. Blue Cross's Release and Discharge. Upon Final Approval, Blue Cross
shall release and forever discharge all Defendants and their present and former
parents, subsidiaries (whether or not wholly owned) and affiliates, and their
divisions, organizational units, affiliates, officers, directors, employees,
representatives, insurers, suppliers, agents, attorneys and distributors (and
the predecessors, heirs, executors, administrators, successors and assigns of
each of the foregoing) ("Releasees") from any and all manner of civil claims,
demands, actions, suits and causes of action,
11
damages whenever incurred, liabilities of any nature whatsoever, including civil
penalties, as well as costs, expenses and attorneys' fees, known or unknown,
suspected or unsuspected, accrued or unaccrued, whether legal, equitable or
statutory ("Claims") that Blue Cross (including any of its past, present or
future parents, subsidiaries (whether or not wholly owned) and their respective
representatives, employees, directors, trustees, officers, attorneys, Private
Counsel, agents, representatives, divisions, organizational units (and the
predecessors, heirs, executors, administrators, successors and assigns of each
of the foregoing, and whether or not any such person or entity participates in
the settlement), whether directly, indirectly, representatively, derivatively or
in any other capacity, ever had, now has or hereafter can, shall or may have as
to any claims relating to the subject matter of this action (including damages
not incurred as of the date of this Settlement); provided, however, that the
foregoing shall not operate as a release of any person, party or entity (whether
or not a signatory to this Agreement) as to any of the monetary obligations
undertaken in this Agreement in connection with a breach or default of this
Agreement.
Blue Cross hereby covenants and agrees that it shall not hereafter sue
or seek to establish civil liability against any person or entity covered by the
release provided under this Paragraph H based, in whole or in part, upon any of
the Released Claims, and Blue Cross agrees that this covenant and agreement
shall be a complete defense to any such civil action or proceeding. .
Notwithstanding the foregoing, if the Settling Defendants enter into
any future pre-verdict settlement of any action brought by any insurer, health
maintenance organization, Blue Cross plan, Blue Shield plan, employee welfare
benefit plan, union trust fund providing health care benefits and/or coverage
for health care benefits, or any other third-party payor (hereinafter
collectively referred to as "Third-Party Payors") of health care coverage or
benefits that does not release claims
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for damages not incurred as of the date of such settlement relating to the
subject matter of such action, the scope of the release provided herein shall be
revised so as to permit Blue Cross to assert claims for damages not incurred as
of the date hereof relating to the subject matter of this action.
I. Settling Defendants' Release and Discharge. Upon Final Approval,
Settling Defendants shall release and forever discharge Blue Cross from any and
all manner of civil claims, demands, actions, suits and causes of action,
damages whenever incurred, liabilities of any nature whatsoever, including
costs, expenses, penalties and attorneys' fees, known or unknown, suspected or
unsuspected, accrued or unaccrued, whether legal, equitable or statutory,
arising out of or in any way related to, in whole or in part, the subject matter
of the litigation of this lawsuit, that Settling Defendants (including any of
their present and former parents, subsidiaries, divisions, affiliates, officers,
directors, employees, witnesses (fact or expert), representatives, insurers,
agents, attorneys and distributors and the predecessors, heirs, executors,
administrators, successors and assigns of each of the foregoing, and whether or
not any such person participates in the settlement), whether directly,
indirectly, representatively, derivatively or in any other capacity, ever had,
now has or hereafter can, shall or may have.
J. Pierringer Release. Without limiting the terms or effect of
Paragraph I.H. of this Settlement Agreement, Blue Cross hereby expressly
releases and discharges each Releasee from its respective fraction(s),
portion(s), or percentage(s) of any of the Released Claims that shall hereafter
be determined at trial or other disposition to be the fault of such Releasee.
Blue Cross expressly agrees to indemnify and hold harmless all Releasees from
any claims, demands, damages or causes of action for contribution or
indemnification that may be made by any person or entity with respect to any
Released Claim, and to satisfy such fraction, portion or percentage of any
judgment,
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settlement or other disposition with respect to any Released Claim which is
determined to be the fault of any of such Releasees. The parties to this
Settlement Agreement specifically intend that one of the purposes and legal
effects of this Settlement Agreement is to bar forever any right of contribution
and/or indemnify against the Releasees, and that it thus have the effect of a
"Pierringer-type" release and be construed in accordance with Pierringer v.
Hoger, 124 N.W.2d 106 (Wisc. 1963); Frey v. Snelgrove, 269 N.W.2d 918 (Minn.
1978); and Alumax Mill Products, Inc. v. Congress Financial Corp., 912 F.2d 996
(8th Cir. 1990).
K. Limited Most-Favored Nation Provision. In partial consideration for
the monetary payments to be made by the Settling Defendants pursuant to this
Settlement Agreement, Blue Cross agrees that if the Settling Defendants enter
into any future pre-verdict settlement agreement of other similar litigation
brought by a Third-Party Payor on terms more favorable to such Third-Party Payor
than the terms of this Settlement Agreement, the terms of this Settlement
Agreement shall not be revised except as follows: to the extent, if any, such
other pre-verdict settlement agreement includes terms that provide (a) for joint
and several liability among the Settling Defendants with respect to monetary
payments to be made pursuant to such agreement or (b) a guarantee by the parent
company of any of the Settling Defendants or other assurances of payment or
creditors' remedies with respect to monetary payments to be made pursuant to
such agreement, then this Settlement Agreement shall, at the option of Blue
Cross, be revised to include terms comparable to such terms.
II. PUBLIC ACCESS TO DOCUMENTS AND COURT FILES
In connection with the settlement of this action, Blue Cross has
insisted that the Settling Defendants enter into a Consent Judgment with the
State of Minnesota providing for the
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maintenance of the Minnesota and Guildford Depositories, thereby achieving
continued public access to millions of industry documents for the public
benefit.
III. MISCELLANEOUS PROVISIONS
A. Settling Defendants and the Law Firm of Robins, Kaplan, Miller &
Ciresi L.L.P. ("RKM&C") have reached separate agreement for the payment of
the Blue Cross' costs and attorneys' fees. In consideration for said
agreement, RKM&C has released Blue Cross from its obligation to pay costs and
attorneys' fees under the retainer agreement entered into between the Blue
Cross and RKM&C.
B. Representations of Parties. The respective parties hereto hereby
represent that this Settlement 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 the parties hereto. Blue
Cross represents that all of its outside counsel that have represented it in
connection with this action are, by and through their authorized
representatives, signatories to this Settlement Agreement.
C. Obligation Several, Not Joint. All obligations of the Settling
Defendants pursuant to this Settlement Agreement are intended to be and shall
remain several, and not joint.
D. Headings. The headings of the paragraphs of this Settlement
Agreement are not binding and are for reference only and do not limit, expand or
otherwise affect the contents of this Settlement Agreement.
E. No Determination or Admission. This Settlement Agreement and any
proceedings taken hereunder are not intended to be and shall not in any event be
construed as, or deemed to be, an admission or concession or evidence of any
liability or any wrongdoing whatsoever on the part of any party hereto or any
person covered by the releases provided under Paragraphs I.H. and I.I.
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hereof. The Settling Defendants specifically disclaim and deny any liability or
wrongdoing whatsoever with respect to the allegations and claims asserted
against them in this action and enter into this Settlement Agreement solely to
avoid the further expense, inconvenience, burden and uncertainty of litigation.
F. Non-Admissibility. The settlement negotiations resulting in this
Settlement Agreement have been undertaken by the parties hereto in good faith
and for settlement purposes only, and neither this Settlement Agreement nor any
evidence of negotiations hereunder shall be offered or received in evidence in
this action, or any other action or proceeding, for any purpose other than in an
action or proceeding arising under this Settlement Agreement.
G. Amendment; Waiver. This Settlement Agreement may be amended only by
a written instrument executed by Blue Cross, and the Settling Defendants. The
waiver of any rights conferred hereunder shall be effective only if made by
written instrument executed by the waiving party. The waiver by any party of any
breach of this Settlement Agreement shall not be deemed to be or construed as a
waiver of any other breach, whether prior, subsequent or contemporaneous, of
this Settlement Agreement.
H. Notices. All notices or other communications to any party to this
Settlement Agreement shall be in writing (and shall include telex, telecopy or
similar writing) and shall be given to the respective parties hereto at the
following addresses. Any party hereto may change the name and address of the
person designated to receive notice on behalf of such party by notice given as
provided in this paragraph.
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For Blue Cross:
Thomas F. Gilde
Associate Corporate Counsel
Blue Cross and Blue Shield of Minnesota
3535 Blue Cross Road
Eagan, MN 55122
or
P. O. Box 64560
St. Paul, MN 55164
Fax: 612.456.6017
with a copy to:
Michael V. Ciresi
Robins, Kaplan, Miller & Ciresi L.L.P.
2800 LaSalle Plaza
800 LaSalle Avenue
Minneapolis, MN 55402-2015
Fax: 612.339.4181
For Philip Morris Incorporated:
Martin J. Barrington
Philip Morris Incorporated
120 Park Avenue
New York, NY 10017-5592
Fax: 212.907.5399
With a copy to:
Meyer G. Koplow
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Fax: 212.403.2000
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For R.J. Reynolds Tobacco Company:
Charles A. Blixt
General Counsel
R.J. Reynolds Tobacco Company
401 North Main Street
Winston-Salem, NC 27102
Fax: 910.741.2998
With a copy to:
Arthur F. Golden
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Fax: 212.450.4800
For Brown & Williamson Tobacco Corporation:
F. Anthony Burke
Brown & Williamson Tobacco Corporation
200 Brown & Williamson Tower
401 South Fourth Avenue
Louisville, KY 40202
Fax: 502.568.7297
With a copy to:
Stephen R. Patton
Kirkland & Ellis
200 East Randolph Dr.
Chicago, IL 60601
Fax: 312.861.2200
For Lorillard Tobacco Company:
Arthur J. Stevens
Lorillard Tobacco Company
714 Green Valley Road
Greensboro, NC 27408
Fax: 910.335.7707
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I. Cooperation. The parties hereto agree to use their best efforts and
to cooperate with each other to cause this Settlement Agreement 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 therewith. Consistent with the foregoing, the parties
hereto agree that they will not directly or indirectly assist or encourage any
challenge to this Settlement Agreement by any other person. All parties hereto
agree to support the integrity and enforcement of the terms of this Settlement
Agreement.
J. Governing Law. This Settlement Agreement shall be governed by the
laws of the State of Minnesota, without regard to the conflicts of law rules of
such state.
K. Construction. None of the parties hereto shall be considered to be
the drafter of this Settlement Agreement or any provision hereof 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 hereof.
L. Intended Beneficiaries. This action was brought by the Blue Cross,
through its Attorney General, and by Blue Cross to recover certain monies and to
promote the health and welfare of the people of Minnesota. No portion of this
Settlement Agreement shall provide any rights to, or be enforceable by, any
person or entity that is neither a party hereto nor a person encompassed by the
releases provided in Paragraphs I.H. and I.I. of this Settlement Agreement.
Except as expressly provided in this Settlement Agreement, no portion of this
Settlement Agreement shall bind any non- party or determine, limit or prejudice
the rights of any such person or entity. None of the rights granted or
obligations assumed under this Settlement Agreement by the parties hereto may be
assigned or otherwise conveyed without the express prior written consent of all
of the parties hereto.
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M. Counterparts. This Settlement Agreement may be executed in
counterparts. Facsimile or photocopied signatures shall be considered as valid
signatures as of the date hereof, although the original signature pages shall
thereafter be appended to this Settlement Agreement.
IN WITNESS WHEREOF, the parties hereto, through their fully authorized
representatives, have agreed to this Comprehensive Settlement Agreement and
Release as of this 8th day of May, 1998.
BLUE CROSS AND BLUE SHIELD OF
MINNESOTA
By:
-----------------------------------------
Andrew P. Czajkowski
Chief Executive Officer
Blue Cross and Blue Shield of Minnesota
By:
-----------------------------------------
Thomas F. Gilde
Associate Corporate Counsel
By:
-----------------------------------------
Michael V. Ciresi
Robins, Kaplan, Miller & Ciresi L.L.P.
PHILIP MORRIS INCORPORATED
By:
-----------------------------------------
Meyer G. Koplow
Counsel
By:
-----------------------------------------
Martin J. Barrington
General Counsel
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R.J. REYNOLDS TOBACCO COMPANY
By:
-----------------------------------------
D. Scott Wise
Counsel
By:
-----------------------------------------
Charles A. Blixt
General Counsel
BROWN & WILLIAMSON TOBACCO
CORPORATION
By:
-----------------------------------------
Stephen R. Patton
Counsel
By:
-----------------------------------------
F. Anthony Burke
Vice President and General Counsel
LORILLARD TOBACCO COMPANY
By:
-----------------------------------------
Arthur J. Stevens
Senior Vice President & General Counsel
21
SCHEDULE A
AMOUNTS PAYABLE BY SETTLING DEFENDANTS ON OR
BEFORE SEPTEMBER 5, 1998 PURSUANT TO
PARAGRAPH I.E OF THE SETTLEMENT AGREEMENT
Philip Morris Incorporated .. $108,800,000
R.J. Reynolds Tobacco Company $ 10,880,000
Brown & Williamson Tobacco
Corporation ................. $ 28,640,000
Lorillard Tobacco Company ... $ 11,680,000
Total Amount ................ $160,000,000
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