Exhibit 99.2
FLORIDA FEE PAYMENT AGREEMENT
This Florida Fee Payment Agreement (the "Agreement") is entered into as
of September 11, 1998, by and among Xxxxxx Xxxxxx Incorporated, X.X. Xxxxxxxx
Tobacco Company, Xxxxx & Xxxxxxxxxx Tobacco Corporation, Lorillard Tobacco
Company and United States Tobacco Company (collectively and severally "Settling
Defendants" and each individually a "Settling Defendant"), the State of Florida
and those Florida Counsel (as identified by the Governor pursuant to section 24
hereof) that with the written consent of the State of Florida are, or at any
time prior to December 15, 1998 become, signatories hereto ("Participating
Florida Counsel").
WITNESSETH:
WHEREAS, on August 25, 1997, the State of Florida and Settling
Defendants entered into a comprehensive settlement agreement to settle and
resolve with finality all present and future civil claims relating to the
subject matter of the lawsuit State of Florida v. American Tobacco Co., No.
95-1466 AH (15th Jud. Cir., Palm Beach County) (the "Action"), which settlement
agreement (the "Settlement Agreement") was approved by the Circuit Court for
Palm Beach County (the "Court") and adopted as an enforceable order of the Court
pursuant to Court Order dated August 25, 1997;
WHEREAS, section V of the Settlement Agreement provides that Settling
Defendants shall pay reasonable attorneys' fees to private counsel for the State
of Florida, in an amount set by arbitration, subject to an appropriate annual
cap on all such payments of attorneys' fees by Settling Defendants, as well as
other conditions;
WHEREAS, section V of the Settlement Agreement did not and was not
intended to reflect the entire agreement of Settling Defendants and the State of
Florida as to the procedures and conditions that would govern Settling
Defendants' payment of fees to private counsel retained by the State of Florida
in connection with the Action ("Florida Counsel"), including an agreed specific
annual aggregate national cap on all payments of attorneys' fees and certain
other professional fees by Settling Defendants, as well as other essential
terms;
WHEREAS, section IV of the Settlement Agreement contains a "Most
Favored Nation" clause which provides that, in the event that Settling
Defendants
enter into a future pre-verdict settlement agreement of other litigation brought
by a non-federal governmental plaintiff on terms more favorable to such
governmental plaintiff than the terms of the Settlement Agreement (after due
consideration of relevant differences in population or other appropriate
factors), the terms of the Settlement Agreement shall be revised so that the
State of Florida will obtain treatment at least as relatively favorable as any
such non-federal governmental entity;
WHEREAS, on January 16, 1998, Settling Defendants entered into a
pre-verdict settlement agreement with the State of Texas, which sets forth the
terms of Settling Defendants' agreement to pay attorneys' fees to private
counsel for the State of Texas and includes provisions for advances on such
attorneys' fees by Settling Defendants and the State of Texas;
WHEREAS, on May 8, 1998, certain Settling Defendants entered into a
pre-verdict settlement agreement with the State of Minnesota (the "Minnesota
Settlement"), which includes provisions for payment of attorneys' fees to
private counsel for the State of Minnesota;
WHEREAS, on September 11, 1998, Settling Defendants and the State of
Florida entered into a Stipulation of Amendment to Settlement Agreement and for
Entry of Consent Decree (the "Stipulation of Amendment") to resolve any disputes
with respect to the Most Favored Nation clause of the Settlement Agreement,
including any disputes regarding payment of attorneys' fees, in light of the
Texas and Minnesota Settlements; and
WHEREAS, Settling Defendants, the State of Florida and Participating
Florida Counsel, in order to resolve any disputes with respect to sections IV
and V of the Settlement Agreement, and to describe more fully the procedures
that will govern Settling Defendants' payment of fees to Florida Counsel, have
agreed to the terms of this Agreement:
NOW, THEREFORE, BE IT KNOWN THAT, in consideration of their mutual
agreement to the terms of this Agreement, the State of Florida's and Settling
Defendants' mutual agreement to the terms of the Stipulation of Amendment, and
such other consideration described herein, including the release of certain
claims against Settling Defendants, the sufficiency of which is hereby
acknowledged, the parties hereto, acting by and through their authorized agents,
memorialize and agree as follows:
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SECTION 1. Agreement to Pay Fees.
Settling Defendants will pay reasonable attorneys' fees pursuant to
this Agreement to those Florida Counsel (as identified by the Governor pursuant
to section 24 hereof) that are Participating Florida Counsel for their
representation of the State of Florida in connection with the Action. The amount
of such fees will be set by a panel of three independent arbitrators (the
"Panel") whose decisions as to the amount of fees to be paid in connection with
this Agreement ("Fee Award(s)") shall be final and not appealable. The
procedures governing Settling Defendants' obligation to pay any such Fee Awards,
including the procedures for making, and the timing and amounts of payments in
satisfaction of, such Fee Awards shall be as provided herein.
SECTION 2. Aggregate National Caps on Payment of Certain Fees.
Settling Defendants' payment of any Fee Award pursuant to this
Agreement shall be subject to the payment schedule and the annual and quarterly
aggregate national caps specified in sections 15, 16, 17, 18 and 19 hereof,
which shall apply to:
(a) all payments of attorneys' fees pursuant to an award arbitrated by
the Panel ("Fee Award") in connection with the settlement of any tobacco and
health cases (other than non-class action personal injury cases brought directly
by or on behalf of a single natural person or the survivor of such person or for
wrongful death, or any non-class action consolidation of two or more such cases)
("Tobacco Cases") on terms that provide for payment by Settling Defendants or
other defendants acting in agreement with Settling Defendants (collectively,
"Participating Defendants") of fees with respect to private counsel retained by
the plaintiff in connection with any such case ("Private Counsel"), subject to
an annual cap on payment of all such fees;
(b) all payments of attorneys' fees (other than fees for attorneys of
Participating Defendants) pursuant to a Fee Award for activities in connection
with Tobacco Cases resolved by operation of federal legislation that either (i)
implements the terms of the June 20, 1997 Proposed Resolution (or a
substantially equivalent federal program) (the "Proposed Resolution") or (ii)
imposes an enforceable obligation on Participating Defendants to pay attorneys'
fees with respect to Private Counsel (any such legislation hereinafter referred
to as "Federal Legislation"); and
(c) all payments of attorneys' fees and certain other professional
fees (other than fees for attorneys or agents of Participating Defendants)
pursuant to a
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Fee Award for contributions made toward enacted Federal Legislation. In the
event that Federal Legislation is enacted, the terms "Private Counsel" and
"Eligible Counsel" shall apply not only to persons otherwise falling within the
definitions of such terms herein but also to all persons granted Fee Awards for
such contributions (such persons being Eligible Counsel with respect to each
month beginning with the month the Federal Legislation was enacted).
Nothing in this Agreement shall be construed to require any Settling
Defendant to pay Fee Awards in connection with any litigation other than the
Action.
SECTION 3. Exclusive Obligation of Settling Defendants; Releases; Effective
Date.
(a) The provisions set forth herein constitute the entire obligation
of Settling Defendants with respect to payment of attorneys' fees in connection
with the Action and the exclusive means by which Florida Counsel may seek
payment of fees by Settling Defendants in connection with the Action. The
parties hereto acknowledge that the provisions for payment set forth herein are
the entirety of Settling Defendants' obligations with respect to payment of
attorneys' fees pursuant to section V of the Settlement Agreement. The State of
Florida agrees that Settling Defendants have no obligation to pay attorneys'
fees pursuant to section V of the Settlement Agreement with respect to any
counsel other than Participating Florida Counsel and that Settling Defendants
have no other obligation to pay fees or otherwise compensate Florida Counsel,
any other counsel or representative of the State of Florida or the State of
Florida itself with respect to attorneys' fees in connection with the Action.
(b) Each Participating Florida Counsel hereby irrevocably releases
Settling Defendants and their respective present and former parents,
subsidiaries, divisions, affiliates, officers, directors, employees,
representatives, insurers, agents and attorneys (as well as the predecessors,
heirs, executors, administrators, successors and assigns of each of the
foregoing) from any and all claims that such counsel ever had, now has or
hereafter can, shall or may have in any way related to the Action (including but
not limited to any negotiations related to the settlement of the Action). The
foregoing shall not be construed as a release of any person or entity as to any
of the obligations undertaken in this Agreement in connection with a breach
thereof.
(c) Each Participating Florida Counsel hereby irrevocably releases all
of the State of Florida's present and former salaried employees, officials and
officers, elected representatives, in-house attorneys and agents, special
assistant attorneys general and each other Participating Florida Counsel (as
well as the
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predecessors, heirs, executors, administrators, successors and assigns of
each of the foregoing) from any and all claims for personal liability that such
counsel ever had, now has or hereafter can, shall or may have in any way related
to the Action (including but not limited to any negotiations related to the
settlement of the Action). The foregoing shall not be construed as a release of
any person or entity as to any of the obligations undertaken in this Agreement
in connection with a breach thereof.
(d) This Agreement shall become effective upon (i) its execution by
(A) the authorized representatives of each Settling Defendant, (B) the Attorney
General and the Governor on behalf of the State of Florida and (C) the
authorized representatives of at least eight of those Florida Counsel identified
as Contract Counsel by the Governor pursuant to section 24 hereof, or such
lesser number of such counsel as Settling Defendants (in their sole discretion)
deem sufficient and (ii) the expiration of three business days after its
presentation for signature to each Contract Counsel (the first date upon which
all such conditions shall have been satisfied being the "Effective Date").
SECTION 4. No Effect on Certain Florida Counsel's Contingent-Fee Contract.
The State of Florida has entered into a contingent-fee contract (the
"Contract") with certain Florida Counsel ("Contract Counsel"). The rights and
obligations, if any, of Contract Counsel that are parties hereto ("Participating
Contract Counsel") and the State of Florida under the Contract shall not be
affected by this Agreement, except that any payments received by Participating
Contract Counsel pursuant to this Agreement shall be credited against any
amounts that may be due to such Contract Counsel from the State of Florida under
the Contract. The State of Florida's execution of this Agreement shall not be
deemed a waiver of any defense to any claim under the Contract, including
without limitation any defense that the Contract is void ab initio, that
payments under the Contract are subject to prior legislative appropriation, that
claims under the Contract are subject to sovereign immunity, that any proposed
application of the Contract is invalid, that the Contract is subject to a
subsequent novation or that Contract Counsel must act collectively under the
Contract.
SECTION 5. Composition of the Panel.
(a) The first and the second members of the Panel shall both be
permanent members of the Panel and, as such, will participate in the
determination of all Fee Awards. The third Panel member shall not be a permanent
Panel member, but instead shall be a state-specific member selected to determine
Fee Awards on behalf of Private Counsel retained in connection with
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litigation within a single state. Accordingly, the third, state-specific member
of the Panel for purposes of determining Fee Awards with respect to litigation
in the State of Florida shall not participate in any determination as to any Fee
Award with respect to litigation in any other state (unless selected to
participate in such determinations by such persons as may be authorized to make
such selections under other agreements).
(b) The members of the Panel shall be selected as follows:
(i) The first member shall be a natural person selected by
Participating Defendants, who shall advise Participating Florida
Counsel of the name of the person selected by October 8, 1998.
(ii) The second member shall be a natural person selected by agreement
of Participating Defendants and a majority of the members of a
committee composed of the following members: Xxxxxx X. Xxxx, Xxxxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxx Xxxxxxx, two representatives of the
Xxxxxxx Plaintiffs' Legal Committee and, at the option of Participating
Defendants, one additional representative to serve on behalf of counsel
for any one or more states that, subsequent to the date hereof, enter
into settlement agreements with Participating Defendants that provide
for payment of such states' Private Counsel pursuant to an arbitrated
award of fees; such second member shall be selected by October 1, 1998.
(iii) The third, state-specific member for purposes of determining Fee
Awards with respect to litigation in the State of Florida shall be a
natural person selected by Participating Contract Counsel, who shall
notify Settling Defendants of the name of the person selected by
October 15, 1998.
SECTION 6. Commencement of Panel Proceedings.
No application for a Fee Award shall be presented to the Panel or any
Panel member until November 3, 1998. The Panel shall consider and render
decisions on applications for Fee Awards in the order in which they are
submitted or pursuant to notice by counsel having priority that they have ceded
their place to others. In the event that more than one application for a Fee
Award is submitted on the same date, the Panel shall consider and render
decisions on such applications in the order in which their respective cases were
settled. Counsel may seek permission from the Panel to make combined
presentations of aspects of their respective applications. Settling Defendants
shall not oppose any request to combine presentations of applications for Fee
Awards in connection with the
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Action, the lawsuit In re Xxxx Xxxxx, Attorney General, ex rel. State of
Mississippi Tobacco Litig., No. 94-1429 (Miss. Ch. Ct., Xxxxxxx County), or the
lawsuit State of Texas v. American Tobacco Co., No. 5-96CV-91 (E.D. Tex. filed
Mar. 28, 1996).
SECTION 7. Costs of Arbitration.
All costs and expenses of the arbitration proceedings held by the
Panel, including compensation of Panel members (but not including any costs,
expenses or compensation of counsel making applications to the Panel), shall be
borne by Settling Defendants in proportion to their respective Market Shares.
SECTION 8. Application on Behalf of Contract Counsel.
Participating Contract Counsel shall make a collective written
application to the Panel for a single Fee Award on behalf of all Contract
Counsel (the "Contract Counsel Award") on November 3, 1998. All interested
persons, including persons not parties hereto, may submit to the Panel any
information that they wish; but interested persons not parties hereto may submit
only written materials. The Panel shall consider all such submissions by any
party hereto and may consider any such materials submitted by other interested
persons. All written submissions relating to applications for a Fee Award in
connection with the Action shall be served on all parties hereto by November 13,
1998. Presentations to the Panel shall, to the extent possible, be based on
affidavit or video presentation rather than live testimony. The Panel shall
preserve the confidentiality of any attorney work-product materials or other
similar confidential information that may be submitted. Settling Defendants will
not take any position adverse to the amount of the Fee Award requested by
Participating Contract Counsel, nor will they or their representatives express
any opinion (even upon request) as to the appropriateness or inappropriateness
of the amount of any proposed Contract Counsel Award. The undersigned outside
counsel for Settling Defendants Xxxxxx Xxxxxx Incorporated and X.X. Xxxxxxxx
Tobacco Company will appear, if requested, to provide information as to the
nature and efficacy of the work of Contract Counsel and to advise the Panel that
they support a Contract Counsel Award of full reasonable compensation under the
circumstances.
SECTION 9. Award of Fees to Contract Counsel.
The members of the Panel will consider all relevant information
submitted to them in reaching a decision as to a Fee Award that fairly provides
for full reasonable compensation of Contract Counsel for their representation of
the State of Florida in connection with the Action. The Panel shall determine
and report
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the amount of the Contract Counsel Award for all Contract Counsel collectively
no later than December 10, 1998. Given the significance and uniqueness of the
Action, the Panel shall not be limited to an hourly-rate or lodestar analysis in
determining the amount of the Contract Counsel Award, but shall take into
account the totality of the circumstances. In considering the amount of the
Contract Counsel Award, the Panel shall not consider Fee Awards that already
have been or yet may be awarded in connection with any other Tobacco Cases. The
Panel's decisions as to Fee Awards shall be in writing and shall report the
amount of the fee awarded (with or without explanation or opinion, at the
Panel's discretion).
SECTION 10. Application of Other Participating Florida Counsel, If Any.
Participating Florida Counsel other than Contract Counsel ("Other
Participating Florida Counsel"), if any, may submit applications for Fee Awards
separate from Participating Contract Counsel. The procedures, schedule and
process with respect to any such application on behalf of any such Other
Participating Florida Counsel shall be the same as the procedures, schedule and
process set forth in sections 6, 7, 8 and 9 hereof with respect to the fee
application on behalf of Contract Counsel, except that Settling Defendants shall
be in no way constrained from contesting any Other Participating Florida
Counsel's entitlement to receive a Fee Award or the amount of any Fee Award
requested on behalf of any such counsel. Any Other Participating Florida Counsel
that does not submit an application for a Fee Award on or before November 3,
1998 shall have thereby irrevocably waived any opportunity for payment of
attorneys' fees pursuant to this Agreement.
SECTION 11. Allocations Among Participating Contract Counsel.
(a) All payments (including advances) made by Settling Defendants with
respect to the Contract Counsel Award pursuant to this Agreement ("Contract
Counsel Payments") shall be subject to reduction as provided in section 12
hereof and shall be paid in the first instance to C. Xxxxx Xxxxxxxxx, Esq. (or
such other person designated in writing by Participating Contract Counsel), on
behalf of Participating Contract Counsel. Any Contract Counsel that is a
Participating Contract Counsel as of five business days prior to the date of any
Contract Counsel Payment shall be entitled to receive a percentage share of such
payment ("Payment Share") equal to the proportion of (i) the percentage of any
fee recovery allocated to such Participating Contract Counsel under the terms of
the fee-sharing agreement among Contract Counsel (or any written amendment
thereto) (such percentage being such Contract Counsel's "Fee Percentage") to
(ii) the sum of the Fee Percentages of all Participating Contract Counsel.
Settling
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Defendants and the State of Florida shall have no obligation,
responsibility or liability with respect to the allocation among Participating
Contract Counsel, or with respect to any claim of misallocation, of any amounts
of any Contract Counsel Payment. Any Contract Counsel not a party hereto as of
five days prior to the date of any Contract Counsel Payment ("Non-Participating
Contract Counsel") shall not be entitled to share in such payment.
(b) P. Xxx Xxxxxx and Xxxxxx & Associates (collectively, "Xxxxxx")
have claimed entitlement to attorneys' fees on a contingent-fee basis under the
Contract, which claim has been contested by certain Contract Counsel and the
State of Florida. In order to protect Xxxxxx'x interest (if any) in any Contract
Counsel Payment, the parties hereto agree as follows:
(i) Until such time as either (A) all of the conditions
described in paragraph (ii) of this subsection have been satisfied or
(B) any one or more of the conditions described in paragraph (iii) of
this subsection have been satisfied, Xxxxxx shall be assigned a Payment
Share of any Contract Counsel Payment(s), such share(s) to be held in
escrow by C. Xxxxx Xxxxxxxxx, Esq. (the "Xxxxxx Escrow Share"). The Fee
Percentage used to determine any Payment Share(s) assigned to Xxxxxx
for purposes of this paragraph shall be equal to 8.33%.
(ii) In the event that (A) Xxxxxx is conclusively determined
to be entitled to attorneys' fees on a contingent-fee basis under the
Contract by the court of last resort to which such question may be
presented; and (B) prior to December 15, 1998, Xxxxxx has both
consented to payment of attorneys' fees pursuant to the terms of this
Agreement and granted releases identical to the releases granted by
Participating Florida Counsel pursuant to section 3 hereof; and (C)
prior to December 15, 1998, the State of Florida has consented in
writing to payment of attorneys' fees to Xxxxxx pursuant to the terms
of this Agreement, then: (1) Xxxxxx shall be treated as Participating
Contract Counsel for purposes of this Agreement; and (2) on the date
upon which all of the conditions described above in this paragraph
shall have been satisfied, Xxxxxx shall be entitled to receive from the
Xxxxxx Escrow Share an amount equal to the Payment Share of any
Contract Counsel Payment(s) made prior to such date that Xxxxxx would
be entitled to receive pursuant to subsection (a) of this section in
light of Xxxxxx'x actual Fee Percentage determined by such court
("Xxxxxx'x Actual Payment Share"). If Xxxxxx'x Actual Payment Share is
less than the Xxxxxx Escrow Share, each Participating Contract Counsel
(other than Xxxxxx) shall be entitled to receive a percentage of the
difference between the amount of Xxxxxx'x Escrow Share and
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Xxxxxx'x Actual Payment Share equal to its respective Fee
Percentage, with the remainder, if any, to be returned to Settling
Defendants in proportion to their respective contributions toward such
amount. If Xxxxxx'x Actual Payment Share is greater than the Xxxxxx
Escrow Share, Participating Contract Counsel (other than Xxxxxx) shall
be obligated to pay to Xxxxxx an amount sufficient to ensure that
Xxxxxx receives Xxxxxx'x Actual Payment Share.
(iii) In the event that (A) Xxxxxx is conclusively determined not to be
entitled to attorneys' fees on a contingent-fee basis under the
Contract by the court of last resort to which such question may be
presented; or (B) as of close of business on December 14, 1998, Xxxxxx
has not both consented to payment of attorneys' fees pursuant to the
terms of this Agreement and granted releases identical to the releases
granted by Participating Florida Counsel pursuant to section 3 hereof;
or (C) as of close of business on December 14, 1998, the State of
Florida has not consented in writing to payment of attorneys' fees to
Xxxxxx pursuant to the terms of this Agreement, then: (1) Xxxxxx shall
not be treated as Participating Contract Counsel or Participating
Florida Counsel for purposes of the payment provisions of this
Agreement and shall not be entitled to receive any part of the Xxxxxx
Escrow Share; and (2) on the date upon which any one or more of the
conditions described above in this paragraph shall have been satisfied,
each Participating Contract Counsel shall be entitled to receive a
percentage of the amount of the Xxxxxx Escrow Share equal to its
respective Fee Percentage, with the remainder, if any, to be returned
to Settling Defendants in proportion to their respective contributions
toward such amount.
(c) Each Participating Contract Counsel hereby irrevocably agrees to
indemnify and hold harmless Settling Defendants and the State of Florida, up to
any amounts allocable to such Participating Contract Counsel pursuant to this
Agreement, for any and all losses (including costs and attorneys' fees) they may
at any time incur as a result of any claim (i) by Xxxxxx relating to attorneys'
fees (other than a claim for payment of attorneys' fees by Settling Defendants
pursuant to the terms of this Agreement); (ii) by any private counsel party to
the Contract for alleged damages or other losses as a result of the allocation
of any Contract Counsel Payment in accordance with the certification described
in section 12(a) hereof; or (iii) by any party to any referral agreement or
other compensation arrangement entered with such Participating Contract Counsel
in connection with, or otherwise relating to, the Action.
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SECTION 12. Participation by Fewer than All Contract Counsel.
In the event that fewer than all Contract Counsel are Participating
Contract Counsel as of five business days prior to the date of any Contract
Counsel Payment:
(a) The Fee Percentage of each Non-Participating Contract Counsel
shall be certified to Settling Defendants in writing by Participating Contract
Counsel, at least four business days prior to the date of the Contract Counsel
Payment. Settling Defendants and the State of Florida shall have no obligation,
responsibility or liability with respect to any such certification.
(b) The amount of the Contract Counsel Payment shall be reduced by a
percentage equal to the sum of the Fee Percentages of Non-Participating Contract
Counsel provided to Settling Defendants pursuant to subsection (a) of this
section. Settling Defendants and the State of Florida shall have no obligation,
responsibility or liability with respect to the amount of any such reduction.
The amount of any reduction in the amount of any Contract Counsel Payment made
pursuant to this subsection shall be retained by Settling Defendants.
(c) In the event that (i) the State of Florida pays attorneys' fees in
connection with the Action to any Non-Participating Contract Counsel and (ii)
Settling Defendants have been released by such Non-Participating Contract
Counsel to the extent provided in section 3 hereof or the State's payment of
attorneys' fees is pursuant to a non-consensual final judgment against the State
(as to which all appeals have been exhausted) and such judgment has resolved and
satisfied all asserted and potential claims of such Non-Participating Contract
Counsel for compensation pursuant to the Contract or otherwise in connection
with the Action (including any claims against Settling Defendants, without any
liability on the part of Settling Defendants, or any of them), the State of
Florida shall be entitled to receive from Settling Defendants the amount of any
reduction pursuant to subsection (b) of this section in the amount of any
Contract Counsel Payment as a result of such counsel's being a Non-Participating
Contract Counsel, up to the amount actually paid to such Non-Participating
Contract Counsel by the State of Florida.
SECTION 13. Advance on Payment of Fees.
Within five business days of the Effective Date, each Settling
Defendant shall severally pay to Contract Counsel, pro rata in proportion to its
Market Share indicated on Schedule A hereto and subject to reduction pursuant to
section 12 hereof, its respective share of $100 million, as an advance against
later Contract
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Counsel Payments to be credited as provided in section 19 hereof. The Attorney
General, on behalf of the State of Florida, hereby represents and warrants that
the advance to be paid by Settling Defendants pursuant to this section and all
other payments by Settling Defendants described in this Agreement are not funds
of the State of Florida and are not subject to appropriation by the State of
Florida pursuant to 1998 Fla. Sess. Law Serv. Ch. 98-63 (C.S.S.B. 1270) (West)
and that Settling Defendants are under no obligation to pay such advance or
payments to the State of Florida. Settling Defendants' obligations with respect
to payment of such advance and all other payments described in this Agreement
are expressly conditioned upon the continuing accuracy of the foregoing
representation and warranty of the Attorney General.
SECTION 14. Waiver of Fee Payments.
Any Participating Contract Counsel that at any time waives, abandons or
otherwise relinquishes its right to payment of attorneys' fees pursuant to this
Agreement ("Waiving Counsel") shall not be entitled to payment of attorneys'
fees pursuant to this Agreement under any circumstances. Each Waiving Counsel
shall be treated for purposes of the payment provisions of this Agreement as
NonParticipating Contract Counsel and not as Participating Contract Counsel
(notwithstanding its being a signatory hereto).
SECTION 15. Annual Amount for 1997; Allocation.
(a) For 1997, Settling Defendants shall pay, subject to reduction
pursuant to section 12 hereof and in the manner described in section 17 hereof,
the unsatisfied amount of the Fee Award (without regard to the advance described
in section 13 hereof) (the "Unpaid Fees") of Florida Counsel, and those
Participating Defendants so obligated shall make payments with respect to the
Unpaid Fees of Private Counsel retained in connection with the lawsuits In re
Xxxx Xxxxx, Attorney General, ex rel. State of Mississippi Tobacco Litig.,
No. 94-1429 (Miss. Ch. Ct., Xxxxxxx County), and Xxxxxxx v. X.X. Xxxxxxxx
Tobacco Co., No. 939359 (Cal. Super. Ct., San Francisco County), in an amount
not to exceed $250 million for all payments described in this subsection.
(b) In the event that the sum of the Unpaid Fees of those Private
Counsel identified in subsection (a) of this section exceeds $250 million, such
amount shall be allocated among the payments to be made with respect to such
Private Counsel in proportion to the amount of their respective Unpaid Fees (the
amount so allocated with respect to the Unpaid Fees of each such Private Counsel
being such counsel's "Allocable Share" for 1997).
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SECTION 16. Annual Amount for 1998; Allocation.
(a) For 1998, Settling Defendants shall pay, subject to reduction
pursuant to section 12 hereof and in the manner described in section 17 hereof,
the Unpaid Fees of Florida Counsel, and those Participating Defendants so
obligated shall make payments with respect to the Unpaid Fees of all other
Private Counsel, in an amount not to exceed $500 million for all such payments
described in this subsection.
(b) The amount payable by Settling Defendants with respect to each Fee
Award for 1998 shall be determined as follows: The $500 million annual cap for
1998 shall be allocated equally among each month of the year. Except as provided
in section 17(b) hereof, each monthly amount shall be allocated to those Private
Counsel retained in connection with Tobacco Cases settled by Participating
Defendants or resolved by Federal Legislation before or during such month, up to
the amounts of their respective Unpaid Fees (such counsel being "Eligible
Counsel" with respect to such monthly amount). In the event that the monthly
amount is less than the sum of Eligible Counsel's Unpaid Fees, the monthly
amount shall be allocated to Eligible Counsel in proportion to the amounts of
their respective Unpaid Fees (the amount so allocated to each Eligible Counsel
for a given month being such counsel's Allocable Share for such month, and the
sum of each Private Counsel's Allocable Shares for each month being such
counsel's Allocable Share for 1998).
(c) Settling Defendants represent that, as of the date of this
Agreement, the only Tobacco Cases (other than the Action) that have been settled
by Participating Defendants on terms that allow for Private Counsel retained in
connection with such cases to seek a Fee Award from the Panel are In re Xxxx
Xxxxx, Attorney General, ex rel. State of Mississippi Tobacco Litig., No.
94-1429 (Miss. Ch. Ct., Xxxxxxx County), State of Texas v. American Tobacco Co.,
No. 5- 96CV-91 (E.D. Tex.), and Xxxxxxx v. X.X. Xxxxxxxx Tobacco Co., No. 939359
(Cal. Super. Ct., San Francisco County). In addition, Private Counsel retained
in connection with Xxxxxxx x. Xxxxx & Xxxxxxxxxx Tobacco Corp., No. 993893 (Cal.
Super. Ct., San Francisco County), may under the terms of the settlement in that
action "apply to participate in any national, reasonable, 'public benefit' fee
award or arbitration process created by a 'national settlement' or
'Congressional Resolution.'"
SECTION 17. Payments with Respect to Annual Amounts for 1997 and 1998.
(a) On or before December 21, 1998, each Settling Defendant shall
severally pay, pro rata in proportion to its Market Share and subject to
reduction
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pursuant to section 12 hereof, its share of an initial fee payment with respect
to the Contract Counsel Award and the Fee Awards, if any, on behalf of Other
Participating Florida Counsel (the "Initial Florida Fee Payment"), which shall
include:
(i) Florida Counsel's Allocable Share for 1997 as provided in section
15 hereof or, in the event that the Panel has not rendered Fee Awards
with respect to all Private Counsel described in section 15(a) hereof
as of December 10, 1998, Settling Defendants' reasonable estimation of
Florida Counsel's Allocable Share for 1997; and
(ii) Florida Counsel's Allocable Share for 1998 as provided in section
16 hereof for each month of 1998 except those with respect to which
Florida Counsel's Allocable Share could not be determined as of
December 10, 1998, as a result of there being other Eligible Counsel
that, as of such date, had not yet been granted or denied a Fee Award
by the Panel (either because such counsel's application for a Fee Award
was still under consideration by the Panel or for any other reason).
(b) On January 15, 1999, each Settling Defendant shall severally pay,
pro rata in proportion to its Market Share and subject to reduction pursuant to
section 12 hereof, its share of Florida Counsel's Allocable Share for those
months of 1998 not included in the Initial Florida Fee Payment. Florida
Counsel's Allocable Share for any such month shall be based on an allocation of
the monthly amount among Eligible Counsel having Fee Awards as of December 31,
1998, without regard to whether there may be other Eligible Counsel that have
not been granted or denied a Fee Award by the Panel as of such date.
(c) In the event that Settling Defendants pay an estimation of Florida
Counsel's Allocable Share for 1997, as provided in subsection (a)(i) of this
section, subsequent payments pursuant to this Agreement shall be adjusted to
ensure that Florida Counsel receive their actual Allocable Share for 1997.
(d) Notwithstanding any provision of this Agreement, individual
Florida Counsel Scruggs, Millette, Bozeman & Dent, P.A. ("Xxxxxxx, Xxxxxxxx")
and Xxxx, Motley, Loadholt, Xxxxxxxxxx & Xxxxx ("Xxxx, Xxxxxx") agree to defer
payment of the amounts of their respective Payments Shares of the Contract
Counsel Payment due from Settling Defendant X.X. Xxxxxxxx Tobacco Company
("Xxxxxxxx") on December 21, 1998 insofar as necessary for the sum of all
deferred amounts of any payments by Xxxxxxxx in 1998 with respect to Fee Awards
to equal $62 million. Under no circumstances shall this subsection require any
increase in any payment to be made by any other Settling Defendant.
14
On January 5, 1999, Xxxxxxxx shall pay to Xxxxxxx, Xxxxxxxx and Ness, Motley the
amount, if any, of their respective Payment Shares of the Initial Florida Fee
Payment deferred pursuant to this subsection.
SECTION 18. Quarterly Amounts for 1999 and Subsequent Years; Allocation.
Within 10 business days after the end of each calendar quarter
beginning with the first calendar quarter of 1999, Settling Defendants shall
pay, in the manner provided in subsection (d) of this section, the Unpaid Fees
of Florida Counsel, and those Participating Defendants so obligated shall make
payments with respect to the Unpaid Fees of all other Private Counsel, in an
amount not to exceed $125 million for all such payments, as follows:
(a) In the event that Federal Legislation has been enacted by the end
of the calendar quarter with respect to which such quarterly payment is being
made (the "Applicable Quarter"):
(i) the quarterly amount shall be allocated among Private
Counsel, up to the amount of their respective Unpaid Fees. Each Private
Counsel shall be allocated an amount of each quarterly payment for the
calendar year up to (or, in the event that the sum of such Private
Counsel's Unpaid Fees exceeds the quarterly amount, in proportion to)
the amount of such Private Counsel's Unpaid Fees. Each quarterly
payment shall be allocated among Private Counsel having Unpaid Fees,
without regard to whether there are other Private Counsel that have not
yet been granted or denied a Fee Award by the Panel as of the end of
the Applicable Quarter. Subsequent quarterly payments shall be
adjusted, if necessary, to account for Private Counsel that are granted
Fee Awards in a subsequent quarter of the calendar year, as provided in
paragraph (ii)(B) of this subsection.
(ii) In the event that a quarterly payment for the calendar
year is less than the sum of all Private Counsel's Unpaid Fees:
(A) in the case of the first such quarterly payment, the
quarterly amount shall be allocated among Private Counsel in
proportion to the amounts of their respective Unpaid Fees.
(B) in the case of a quarterly payment after the first
quarterly payment that is less than the sum of all such Unpaid
Fees, the quarterly amount shall be allocated only to those
Private Counsel, if any, that were not paid a proportionate
share of all prior quarterly payments for the calendar year
(either because such
15
Private Counsel's applications for Fee Awards were still under
consideration as of the end of the calendar quarters with
respect to which such quarterly payments were made or for any
other reason), until each such Private Counsel has been
allocated a proportionate share of all prior quarterly
payments (each such share of each such Private Counsel being a
"Payable Proportionate Share"). In the event that the sum of
all Payable Proportionate Shares exceeds the amount of the
quarterly payment, such payment shall be allocated among such
Private Counsel in proportion to the amounts of their
respective Unpaid Fees (without regard to whether there are
other Private Counsel that have not yet been granted or denied
a Fee Award by the Panel as of the end of the Applicable
Quarter). In the event that the sum of all Payable
Proportionate Shares is less than the amount of the quarterly
payment, the amount by which the quarterly payment exceeds the
sum of all such shares shall be allocated among Private
Counsel up to (or, in the event that the sum of such Private
Counsel's Unpaid Fees exceeds such amount, in proportion to)
the amount of such Private Counsel's Unpaid Fees.
(b) In the event that Federal Legislation has not been enacted by the
end of the Applicable Quarter:
(i) the quarterly amount shall be allocated equally among each
of the three months of the calendar quarter. The amount for each such
month shall be allocated among those Private Counsel retained in
connection with Tobacco Cases settled before or during such month (such
Private Counsel being "Eligible Counsel" with respect to such monthly
amount), each of whom shall be allocated a portion of each such monthly
amount up to (or, in the event that the sum of Eligible Counsel's
respective Unpaid Fees exceeds such monthly amount, in proportion to)
the amount of such Eligible Counsel's Unpaid Fees. The monthly amount
for each month of the calendar quarter shall be allocated among
Eligible Counsel having Unpaid Fees, without regard to whether there
may be Eligible Counsel that have not yet been granted or denied a Fee
Award by the Panel as of the end of the Applicable Quarter. Subsequent
quarterly payments shall be adjusted, as necessary, to account for
Eligible Counsel that are granted Fee Awards in a subsequent quarter of
the calendar year, as provided in paragraph (ii)(B) of this subsection.
(ii) In the event that the amount for a given month is less
than the sum of all Eligible Counsel's Unpaid Fees:
16
(A) in the case of a first quarterly payment, such
monthly amount shall be allocated among Eligible Counsel for
such month in proportion to the amount of their respective
Unpaid Fees.
(B) in the case of a quarterly payment after the
first quarterly payment, the quarterly amount shall be
allocated among only those Private Counsel, if any, that were
Eligible Counsel with respect to any monthly amount paid in a
prior quarter of the calendar year but were not allocated a
proportionate share of such monthly amount (either because
such counsel's applications for Fee Awards were still under
consideration as of the end of the calendar quarter containing
the month in question or for any other reason), until each
such Eligible Counsel has been allocated a proportionate share
of all such prior monthly payments for the calendar year (each
such share of each such Private Counsel being a "Payable
Proportionate Share"). In the event that the sum of all
Payable Proportionate Shares exceeds the amount of the
quarterly payment, the quarterly payment shall be allocated
among Eligible Counsel in proportion to the amounts of their
respective Unpaid Fees (without regard to whether there may be
other Eligible Counsel with respect to such prior monthly
amounts that have not yet been granted or denied a Fee Award
by the Panel as of the end of the Applicable Quarter). In the
event that the sum of all Payable Proportionate Shares is less
than the amount of the quarterly payment, the amount by which
the quarterly payment exceeds the sum of all such shares shall
be allocated among each of the three months of the calendar
quarter, and the amount for each month shall be allocated
among each Eligible Counsel with respect to such monthly
amount up to (or, in the event that the sum of Eligible
Counsel's Unpaid Fees exceeds such monthly amount, in
proportion to) the amount of such Eligible Counsel's Unpaid
Fees.
(c) Adjustments pursuant to paragraphs (a)(ii)(B) and (b)(ii)(B) of
this section shall be made separately for each calendar year. No amounts paid in
any calendar year shall be subject to refund, nor shall any payment in any given
calendar year affect the allocation of payments to be made in any subsequent
calendar year.
(d) Each Settling Defendant shall severally pay, pro rata in
proportion to its respective Market Share and subject to reduction pursuant to
section 12 hereof,
17
its share of the amounts, if any, allocated to Florida Counsel pursuant to this
section.
SECTION 19. Credits and Limitations.
Notwithstanding any other provision of this Agreement:
(a) The advance against future Contract Counsel Payments described in
section 13 hereof shall be credited against and shall reduce subsequent Contract
Counsel Payments, beginning with the first quarterly payment for 1999 pursuant
to section 18 hereof, in an amount equal to 50% of the Contract Counsel Payment
in question, until the advance paid by Settling Defendants is fully credited;
provided, however, that the sum of all such credits applied in any calendar year
with respect to the advance to Participating Contract Counsel described in
section 13 hereof shall not exceed $50 million. The amount of any credit made
against any such Contract Counsel Payment shall be counted in computing the
annual and quarterly aggregate national caps on all payments made with respect
to Private Counsel, in the amount of the credit applied to any such Contract
Counsel Payment in any quarterly or annual period. All credits against Contract
Counsel Payments pursuant to this subsection shall be allocated among Settling
Defendants in proportion to their respective contributions toward the amounts of
the advance described in section 13 hereof.
(b) Under no circumstances shall Settling Defendants be required to
make payments that would result in aggregate national payments and credits by
Participating Defendants with respect to Fee Awards:
(i) for 1997, totaling more than $250 million;
(ii) during 1998, totaling more than $500 million, except
insofar as payments under the separate $250 million cap for 1997 are
made in 1998 pursuant to section 17 hereof, and except insofar as
advances are made in 1998 against payments due in years after 1998;
(iii) during any year beginning with 1999, totaling more than
$500 million, excluding payments with respect to any Private Counsel's
Allocable Shares for 1998 that are paid in 1999; and
(iv) during any calendar quarter beginning with the first
calendar quarter of 1999, totaling more than $125 million, excluding
payments with respect to any Private Counsel's Allocable Shares for
1998 that are paid in
18
1999 and except to the extent that payments and credits with respect to
any prior quarter of the calendar year did not total $125 million.
(c) Under no circumstances shall the sum of all Contract Counsel
Payments (including the advance described in section 13 hereof) exceed the
amount of the Contract Counsel Award.
(d) Under no circumstances shall Settling Defendants be required to
make any Contract Counsel Payment until the fourth business day following the
receipt by Settling Defendants of the certification described in section 12(a)
hereof.
(e) Payments with respect to Fee Awards on behalf of Florida Counsel
shall be made exclusively as provided by the terms of this Agreement, and
notwithstanding any other provision of law, such Fee Awards shall not be entered
as or reduced to a judgment against Settling Defendants or considered as a basis
for requiring a bond or imposing a lien or any other encumbrance.
SECTION 20. Contribution to National Legislation.
If Federal Legislation is enacted that implements the Proposed
Resolution, a three-member national panel including the two permanent members of
the Panel shall consider any application for Fee Awards on behalf of Private
Counsel for contributions made toward the enactment of such Federal Legislation,
along with all applications for Fee Awards for professional fees by any other
persons who claim to have made similar contributions (other than attorneys or
agents of Participating Defendants). No person shall make more than one
application for a Fee Award in connection with any such contributions toward
enactment of such Federal Legislation. All payments with respect to such Fee
Awards, if any, shall be paid on the payment schedule and subject to, and
counted in computing, the annual and quarterly national caps described in
sections 16, 17, 18 and 19 hereof.
SECTION 21. Payments on Market Share Basis.
All payments due hereunder shall be paid by Settling Defendants pro
rata in proportion to their respective Market Shares as provided herein, and
each Settling Defendant shall be severally liable for its share of all such
payments. Due to the particular corporate structures of Settling Defendants X.X.
Xxxxxxxx Tobacco Company ("Xxxxxxxx") and Xxxxx & Xxxxxxxxxx Tobacco Corporation
("Xxxxx & Xxxxxxxxxx") with respect to their non-domestic tobacco operations,
Settling Defendants Xxxxxxxx and Xxxxx & Xxxxxxxxxx shall be severally liable
for their respective shares of each payment due pursuant to this Agreement up to
19
(and their liability hereunder shall not exceed) the full extent of their assets
used in, and earnings and revenues derived from, their manufacture and sale in
the United States of Tobacco Products intended for domestic consumption, and no
recourse shall be had against any of their other assets or earnings to satisfy
such obligations. Under no circumstances shall any such payment or portion
thereof become the joint obligation of Settling Defendants or the obligation of
any party other than the Settling Defendant from which such payment is
originally due, nor shall any Settling Defendant be required to pay a portion of
any such payment greater than its respective Market Share. With respect to
payment of the advance described in section 13 hereof and the amount for 1997
described in section 15 hereof, the Market Share of each Settling Defendant
shall be as provided in Schedule A hereto. With respect to the amount for 1998
described in section 16 hereof, the Market Share of each Settling Defendant
shall be its respective share pursuant to Appendix A hereto for 1998. With
respect to all other payments pursuant to this Agreement, each Settling
Defendant's Market Share shall be its respective share pursuant to Appendix A
hereto for the 12 month period ending on the last day of the calendar quarter
immediately preceding the calendar quarter with respect to which such payment is
made.
SECTION 22. Determination of Market Share.
In the event of a disagreement between or among any Settling Defendants
as to their respective shares of any payment pursuant to this Agreement (except
payments for which each Settling Defendant's Market Share is expressly provided
herein), each Settling Defendant shall pay its undisputed share of such payment
promptly, on or before the date on which such payment is due, and shall within
21 days submit copies of its audited reports of shipments of Tobacco Products
provided to the U.S. Securities and Exchange Commission ("SEC") for the period
in question (or, in the case of any Settling Defendant that does not provide
such reports to the SEC, audited reports of shipments containing the same
shipment information as contained in the reports provided to the SEC) ("Shipment
Reports") to a third party to be selected by agreement of Settling Defendants
(the "Third Party"), who shall within three business days determine the Market
Share of each Settling Defendant. The decision of the Third Party shall be final
and non-appealable, and shall be communicated by facsimile to each party hereto.
Each Settling Defendant shall, within two business days of receipt of the Third
Party's decision, pay Florida Counsel or such other Settling Defendant, as
appropriate, the difference, if any, between (1) the amount that such Settling
Defendant has already paid with respect to the payment in question and (2) the
amount of the payment in question that corresponds to such Settling Defendant's
Market Share as determined by the Third Party, together with interest accrued
from the original date on which the payment in question was due, at the prime
rate
20
as published in the Wall Street Journal on the latest publication date on or
before the original date on which the payment in question was due plus 3%. In
the event of any disagreement by or among Settling Defendants as to their
respective shares of the Initial Florida Fee Payment due on December 21, 1998
pursuant to section 17 hereof, the procedures for resolving such disagreement
shall be as described in this section, except that each Settling Defendants
shall not be required to provide its Shipment Reports to the Third Party until
January 21, 1999.
SECTION 23. Limited Waiver as to Other Terms.
In consideration of Settling Defendants' agreement to the terms hereof,
each Participating Florida Counsel hereby covenants and agrees that it will not
argue in any forum (other than in proceedings before the Panel relating to their
Fee Award application) that the arrangements made in connection with the Texas
Settlement, the Mississippi Settlement or the Minnesota Settlement for payment
of fees to private counsel for the States of Texas, Mississippi or Minnesota
give rise to any claim or entitlement on the part of Florida Counsel (or any
other person) in connection with this Action.
SECTION 24. State's Identification of Florida Counsel.
The Governor, on behalf of the State of Florida, hereby represents and
warrants that Schedule B hereto identifies all Florida Counsel, including all
Contract Counsel.
SECTION 25. Intended Beneficiaries.
No part of this Agreement creates any rights on the part of, or is
enforceable by, any person or entity that is not a party hereto or a person
covered by the releases described in section 3 hereof. Nor shall any part of
this Agreement bind any non-party or determine, limit or prejudice the rights of
any such person or entity.
SECTION 26. Definitions.
Terms used herein that are defined in the Settlement Agreement or the
Stipulation of Amendment are, unless otherwise defined herein, used in this
Agreement as defined in the Settlement Agreement or the Stipulation of
Amendment, as applicable.
SECTION 27. Representations of Parties.
21
The parties hereto hereby represent 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 the parties
hereto.
SECTION 28. No Admission.
This Agreement 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 any
liability or wrongdoing whatsoever on the part of any party hereto or any person
released pursuant to subsection (b) or (c) of section 3 hereof. Settling
Defendants specifically disclaim and deny any liability or wrongdoing whatsoever
with respect to the claims released under section 3 hereof and enter into this
Agreement for the sole purposes of memorializing Settling Defendants' rights and
obligations with respect to payment of attorneys' fees pursuant to the
Settlement Agreement and avoiding the further expense, inconvenience, burden and
uncertainty of litigation.
SECTION 29. Non-admissibility.
This Agreement having been undertaken by the parties hereto in good
faith and for settlement purposes only, neither this Agreement nor any evidence
of negotiations relating hereto shall be offered or received in evidence in any
action or proceeding other than the Action or an action or proceeding arising
under this Agreement.
SECTION 30. Amendment and Waiver.
This Agreement may be amended only by a written instrument executed by
the Attorney General on behalf of the State of Florida, Settling Defendants and
a majority of Participating Florida Counsel. 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 Agreement shall not
be deemed to be or construed as a waiver of any other breach, whether prior,
subsequent or contemporaneous, of this Agreement.
SECTION 31. Notices.
All notices or other communications to any party hereto shall be in
writing (including but not limited to telex, telecopy or similar writing) and
shall be given to the respective parties hereto listed on Schedule C hereto at
the addresses therein indicated. Any party hereto may change the name and
address of the person
22
designated to receive notice on behalf of such party by notice given as provided
in this section including an updated list conformed to Schedule C hereto.
SECTION 32. Governing Law.
This Agreement shall be governed by the laws of the State of Florida,
without regard to the conflict of law rules of such State.
SECTION 33. Construction.
None of the parties hereto shall be considered to be the drafter of
this 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.
SECTION 34. Captions.
The captions of the sections of this Agreement are included for
convenience of reference only and shall be ignored in the construction and
interpretation hereof.
SECTION 35. Execution of Agreement.
This Agreement may be executed in counterparts. Facsimile or
photocopied signatures shall be considered valid signatures for purposes of
execution of this Agreement as of the date of their receipt by all parties
hereto, although the original signature pages shall thereafter be appended to
this Settlement Agreement. Subject to the written consent of the State of
Florida, any Florida Counsel (as identified by the Governor pursuant to section
24 hereof) that is not a signatory hereto as of the date hereof may at any time
prior to December 15, 1998 become a party hereto by serving upon all parties
hereto a signed letter of agreement to the terms hereof. Any such person shall
thereafter promptly execute this Agreement. Any Florida Counsel that is not a
signatory hereto prior to December 15, 1998 shall have forfeited any opportunity
to become a signatory hereto; provided, however, that notwithstanding any other
provision of this Agreement, after December 15, 1998 any Florida Counsel may,
subject to the written consent of Settling Defendants and the State of Florida,
become a signatory hereto, and any such Florida Counsel so permitted to become a
signatory hereto after December 15, 1998 shall be a Participating Florida
Counsel for purposes of this Agreement.
23
SECTION 36. Court Orders.
(a) In the event that the Court does not enter an order amending the
Court's April 16, 1998 Order Implementing Most Favored Nation Provision of
Florida Settlement Agreement and Exhibit 1 thereto (including all other orders
of the Court relating thereto) (the "April 16th Order") so as to conform it to
the terms of this Agreement, or that any Court order so amending the April 16th
Order is itself modified or set aside on appeal in a manner unacceptable to
Settling Defendants, the parties hereto agree that the procedures, schedule and
process described herein shall govern any arbitration proceedings pursuant to
the April 16th Order (the "Alternative Arbitration"). Participating Florida
Counsel hereby waive any claim they may have to any advances (or any portion
thereof) to be paid by Settling Defendants or the State of Florida under the
April 16th Order. In the event that any of the procedures or the schedule or the
process described herein is not followed in connection with the Alternative
Arbitration, Settling Defendants may elect (in their sole discretion) either:
(i) to pay attorneys' fees to Participating Florida Counsel solely in
accordance with this Agreement, in which case each Participating
Florida Counsel shall be deemed to have waived any claim it may have to
amounts payable under the Alternative Arbitration, shall take all
actions reasonably likely to prevent the Alternative Arbitration in
favor of the procedures, schedule and process described herein and
shall be obligated to take all actions as may be necessary to ensure
that Settling Defendants are not liable for any amounts that might be
allocable to such Participating Florida Counsel under such Alternative
Arbitration (including, without limitation, returning any such amounts
to Settling Defendants) and are not subject to any judgment or lien
that might be available under such Alternative Arbitration; or
(ii) to pay attorneys' fees solely in accordance with the Alternative
Arbitration, in which case (A) Settling Defendants shall no longer be
obligated to perform any of their obligations under this Agreement not
performed as of the date of Settling Defendants' election and (B) any
payments made by Settling Defendants pursuant to this Agreement
(including the advance paid pursuant to paragraph 13 hereof) shall be
credited against any payments due to be paid by Settling Defendants to
Participating Florida Counsel pursuant to the Alternative Arbitration.
24
SECTION 37. Entire Agreement of Parties.
This Agreement contains an entire, complete and integrated statement of
each and every term, provision and condition with respect to payment of
attorneys' fees by Settling Defendants in connection with the Action agreed to
(1) by and between Settling Defendants and the State of Florida and (2) by and
among Settling Defendants, the State of Florida and Participating Florida
Counsel.
25
IN WITNESS WHEREOF, the parties hereto, through their fully authorized
representatives, have agreed to this Florida Fee Payment Agreement as of this
the eleventh day of September, 1998.
STATE OF FLORIDA, acting by and through
Xxxxxx X. Xxxxxx, Xx., its duly elected and
authorized Governor, and Xxxxxx X. Xxxxxxxxxxx,
its duly elected and authorized Attorney General
By:
-----------------------------------
Xxxxxx X. Xxxxxx, Xx.
Governor
By:
-----------------------------------
Xxxxxx X. Xxxxxxxxxxx
Attorney General
26
Florida Fee Payment Agreement,
dated September 11, 1998
XXXXXX XXXXXX INCORPORATED
By:
-----------------------------------
Xxxxx X. Xxxxxx
Counsel
By:
-----------------------------------
Xxxxxx X. Xxxxxxxxxx
General Counsel
X.X. XXXXXXXX TOBACCO COMPANY
By:
-----------------------------------
Xxxxxx X. Xxxxxx
Counsel
By:
-----------------------------------
Xxxxxxx X. Xxxxx
Executive Vice President & General Counsel
27
Florida Fee Payment Agreement,
dated September 11, 1998
XXXXX & XXXXXXXXXX TOBACCO
CORPORATION
By:
-----------------------------------
Xxxxxxx X. Xxxxxx
Counsel
By:
-----------------------------------
F. Xxxxxxx Xxxxx
Vice President & General Counsel
LORILLARD TOBACCO COMPANY
By:
-----------------------------------
Xxxxxx X. Xxxxxxx
Senior Vice President & General Counsel
28
Florida Fee Payment Agreement,
dated September 11, 0000
XXXXXX XXXXXX TOBACCO COMPANY
By:
-----------------------------------
Xxxxxxx X. Xxxxxxx
Executive Vice President & General Counsel
29
Florida Fee Payment Agreement,
dated September 11, 1998
PARTICIPATING CONTRACT COUNSEL
By: By:
-------------------------------------- -------------------------------------------
C. Xxxxx Xxxxxxxxx Xxxxxxx X. Xxxxxx
for Xxxxxxxxx, Xxxxxx & Xxxxx, P.A. for Xxxxxx, Xxxxxxxx & Xxxxx, P.A.
By: By:
-------------------------------------- -------------------------------------------
Xxxxx Xxxxx Xxxxxx X. Xxxxxxxx
for Brown, Terrell, Hogan, Ellis, for Kerrigan, Estess, Xxxxxx & XxXxxx
XxXxxxxx & Yegelwel, P.A.
By: By:
-------------------------------------- -------------------------------------------
Xxxxxxx Xxxxx Xxxxxx Xxxxxxxxxx
for Xxxxx, Xxxxxx & Xxxxxx, P.A. for Xxxxxxxxxx & Larmoyeux
By: By:
-------------------------------------- -------------------------------------------
Xxxxx X. Xxxxx Xxxxxx X. Xxxx
for Nance, Cacciatore, Sisserson, for Ness, Motley, Loadholt, Xxxxxxxxxx &
Duryea & Xxxxxxxx, P.A. Xxxxx
By: By:
-------------------------------------- -------------------------------------------
Xxxxxxx X. Xxxxxxxxxxx Xxxxxxx X. Xxxxxxx
for Xxxxxxx X. Xxxxxxxxxxx, P.A. for Scruggs, Millette, Bozeman & Dent, P.A.
By:
--------------------------------------
C. Xxxxxx Xxxxxx
for Yerrid, Xxxxxx & Xxxxxxx, P.A.
30
APPENDIX A
MARKET SHARE CALCULATION
The Market Share of each Settling Defendant for purposes of any payment
required hereunder shall be equal to the proportion of (1) such Settling
Defendant's Aggregate Sales Volume for the period in question to (2) the sum of
all Settling Defendants' Aggregate Sales Volumes for the period in question. For
purposes of the foregoing:
(a) Each Settling Defendant's Aggregate Sales Volume shall be the sum
of such Settling Defendant's Sales Volumes with respect to each type of Tobacco
Product referenced in paragraph (c) of this Appendix.
(b) Each Settling Defendant's Sales Volume with respect to each type of
Tobacco Product referenced in paragraph (c) of this Appendix shall be the number
of Units of such type of Tobacco Product sold within the United States by such
Settling Defendant during the period in question, as measured by such Settling
Defendant's applicable Shipment Reports.
(c) A Unit of Tobacco Product means:
(1) one Cigarette;
(2) .12 ounces of Moist Snuff;
(3) .3 ounces of Loose Leaf, Plug, Twist, Roll or
other form of chewing tobacco;
(4) .25 ounces of Dry Snuff; and
(5) .16 ounces of Loose Leaf tobacco suitable for
user preparation of cigarettes.
SCHEDULE A
MARKET SHARE PERCENTAGES
Settling Defendant Percentage
------------------ ----------
Xxxxxx Xxxxxx Incorporated ............................................49.26
X.X. Xxxxxxxx Tobacco Company..........................................24.49
Xxxxx & Xxxxxxxxxx Tobacco Corp........................................16.20
Lorillard Tobacco Company...............................................8.77
United States Tobacco Company...........................................1.28
------
TOTAL 100.00
SCHEDULE B
DESIGNATION of FLORIDA COUNSEL
by the Governor
1. Pursuant to section 24 of the Florida Fee Payment Agreement, on
behalf of the State of Florida, I hereby identify as Florida Counsel those
private counsel that are appropriate, legal and authorized parties to the
contingent-fee agreement titled "Standard Contract -- State of Florida, Agency
for Health Care Administration" and executed in February 1995 (the "Contract,"
attached as Exhibit A hereto), and I hereby identify as Contract Counsel those
same private counsel.
2. Xxxxxxxx X. Tribe, G. Xxxxxx Xxxxxx and persons working under their
direction undertook activities on behalf of the State of Florida in connection
with the Action but are not Contract Counsel or Florida Counsel for purposes of
the Florida Fee Payment Agreement.
3. Xxxxxxx X. Xxxxx of the firm Levin, Middlebrooks, Thomas, Mitchell,
Green, Echsner, Xxxxxxx & Papantonio, P.A. (collectively, "Xxxxx") undertook
activities on behalf of the State of Florida in connection with the Action but
is not Contract Counsel or Florida Counsel for purposes of the Florida Fee
Payment Agreement, and it is the State's understanding that Xxxxx will be
compensated for his services by Contract Counsel from the fees paid to Contract
Counsel pursuant to the Florida Fee Payment Agreement.
4. Xxxxxxx X. Xxxxxxx has declared an intent to seek an award of
attorneys' fees pursuant to the arbitration provisions described in the Court's
April 16, 1998 Order Implementing Most Favored Nation Provision of Florida
Settlement Agreement and Exhibit 1 thereto and the Court's Order of May 12, 1998
(collectively, the "Arbitration Orders"). It is the State's understanding that
any activities of Xx. Xxxxxxx or others acting under his direction
(collectively, "Daynard") in connection with the Action were undertaken on a
strictly pro xxxx basis as to the State and without any obligation of
compensation by the State, and Daynard is not Contract Counsel or Florida
Counsel for purposes of the Florida Fee Payment Agreement. Notwithstanding the
foregoing, in the event that Daynard is determined to be entitled, as a result
of the Arbitration Orders, to participate in the fee arbitration process
described in the Florida Fee Payment Agreement despite the provisions thereof
and of the Stipulation of Amendment, Daynard shall be treated as Florida Counsel
(but not as Contract
Counsel) for purposes of the Florida Fee Payment Agreement. In the event that
Daynard is treated as Participating Florida Counsel for purposes of the Florida
Fee Payment Agreement and makes an application to the Panel as provided therein,
the State of Florida will not support or oppose Daynard's application for an
award of attorneys' fees by the Panel.
5. Except as expressly provided in paragraph 4 hereof, no person other
than the persons identified in paragraph 1 hereof is entitled as Contract
Counsel or Florida Counsel to seek payment of attorneys' fees by Settling
Defendants.
-----------------------------
Xxxxxx X. Xxxxxx, Xx.
Governor
2
SCHEDULE C
NOTICES
State of Florida
Xxx. Xxxxxx X. Xxxxxxxxxxx
Attorney General's Xxxxxx
Xxx Xxxxxxx
Xxxxx XX00
Xxxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
With copies to:
----------------
Xxxxxxx X. Xxxxxxx
Scruggs, Millette, Bozeman & Dent, P.A.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
and:
----
Xxxxxx X. Xxxx, Esq.
Ness, Motley, Loadholt, Xxxxxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
(continued)
Settling Defendants
---------------------
Xxxxxx Xxxxxx Incorporated: X.X. Xxxxxxxx Tobacco Company:
--------------------------- ------------------------------
Xxxxxx X. Xxxxxxxxxx, Esq. Xxxxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxx Incorporated X.X. Xxxxxxxx Tobacco Company
000 Xxxx Xxxxxx 000 Xxxxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000 Xxxxxxx-Xxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
With a copy to: With a copy to:
--------------- ---------------
Xxxxx X. Xxxxxx, Esq. Xxxxxx X. Xxxxxx, Esq.
Wachtell, Lipton, Xxxxx & Xxxx Xxxxx Xxxx & Xxxxxxxx
00 Xxxx 00xx Xxxxxx 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Xxxxx & Xxxxxxxxxx Tobacco Corp.: Lorillard Tobacco Company:
--------------------------------- ---------------------------
F. Xxxxxxx Xxxxx, Esq. Xxxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxxxxxx Tobacco Corp. Lorillard Tobacco Company
200 Xxxxx & Xxxxxxxxxx Tower 000 Xxxxx Xxxxxx Xxxx
000 Xxxxx Xxxxxx Xxxxxx Xxxxxxxxxx, XX 00000
Xxxxxxxxxx, XX 00000 Fax: (000) 000-0000
Fax: (000) 000-0000
With a copy to: United States Tobacco Company:
--------------- ------------------------------
Xxxxxxx X. Xxxxxx, Esq. Xxxxxxx X. Xxxxxxx
Xxxxxxxx & Xxxxx UST Inc.
000 Xxxx Xxxxxxxx Xx. 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
(continued)
2
Contract Counsel
----------------
Xxxxxx X. Xxxx Xxxxxxx X. Xxxxxxx
Xxxx, Motley, Loadholt, Xxxxxxxxxx & Scruggs, Millette, Bozeman & Dent, P.A.
Xxxxx 000 Xxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000 Xxxxxxxxxx, XX 39568-1425
Xxxxxxxxxx, XX 00000 Fax: (000) 000-0000
Fax: (000) 000-0000
Xxxxx Xxxxx Xxxxxxx X. Xxxxxx
Xxxxx, Terrell, Hogan, Ellis, Gentry, Xxxxxxxx & Xxxxx, P.A.
XxXxxxxx & Yegelwel, P.A. 0 Xxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxxxx Xxxxxxxx, Xxxxx 000 Post Xxxxxx Xxx 000
000 Xxxx Xxx Xxxxxx Xxxxxxxxxxxx, Xxxxxxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000 (000) 000-0000
(000) 000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000
Xxxxxxx Xxxxx C. Xxxxxx Xxxxxx
Xxxxx, Xxxxxx & Xxxxxx, P.A. Yerrid, Xxxxxx & Xxxxxxx, P.A.
00 Xxxx Xxxxxxxxxx, Xxxxx 000 000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000 Xxxxx, Xxxxxxx 00000
(000) 00000000 (000) 000-0000
(000) 000-0000 Fax: (000) 000-0000
C. Xxxxx Xxxxxxxxx Xxxxx X. Xxxxx
Xxxxxxxxx, Xxxxxx & Xxxxx, P.A. Nance, Cacciatore, Sisserson, Duryea &
0000 Xxxxxxx Xxxxxx Xxxxxxxxx Xxxxxxxx, P.A.
Building A P.O. Drawer 361817
Xxxxxxxxxxx, Xxxxxxx 00000 Xxxxxxxxx, Xxxxxxx 00000
(000) 000-0000 (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
(continued)
3
Xxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxxxxxxx
Kerrigan, Estess, Xxxxxx & XxXxxx Xxxxxxx X. Xxxxxxxxxxx, P.A.
000 Xxxx Xxxxxxxxxx Xxxxxx 0000 Xxxxxxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx 00000 Ft. Xxxxxxxxxx, Xxxxxxx 00000
(000) 000-0000 (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Xxxxxx Xxxxxxxxxx
Xxxxxxxxxx & Xxxxxxxxx
0000 Xxxxxxxxxx Xxxxx
X.X. Xxxxxx 0000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
(000) 000-0000
Fax: (000) 000-0000
4
