AGREEMENT TO PAY
BLUE CROSS AND BLUE SHIELD OF MINNESOTA
ATTORNEYS' FEES AND COSTS
Xxxxxx Xxxxxx Incorporated (hereinafter "PM"), X.X. Xxxxxxxx Tobacco
Company (hereinafter "RJR"), Xxxxx & Xxxxxxxxxx Tobacco Corporation
(hereinafter "B&W"), and Lorillard Tobacco Company (hereinafter "Lorillard")
(collectively referred to as "The Settling Defendants"), hereby enter into
this Agreement To Pay Blue Cross and Blue Shield of Minnesota Attorneys' Fees
And Costs (hereinafter the "Agreement") with Xxxxxx, Xxxxxx, Xxxxxx & Xxxxxx
L.L.P. (hereinafter "RKM&C") providing for the payment of all attorneys' fees
and costs incurred in the prosecution of the lawsuit captioned The State of
Minnesota and Blue Cross and Blue Shield of Minnesota vs. Xxxxxx Xxxxxx
Incorporated, et al., Court File C1-94-8565 (hereinafter "The Case"), by
BCBS, Inc., d/b/a Blue Cross and Blue Shield of Minnesota (hereinafter
"BCBS").
BACKGROUND
1. On August 17, 1994, The State of Minnesota, together with BCBS,
commenced The Case in Xxxxxx County District Court in St. Xxxx, Minnesota.
2. From August 1994 until January 1998, RKM&C engaged in extensive and
unprecedented pretrial and discovery proceedings, which led to the
establishment of a document depository in Minneapolis, Minnesota, into which
was placed in excess of 28 million pages of documents. A second document
depository was established in Guildford, England, into which was placed in
excess of six million pages of documents. The majority of the documents in
the U.S. and Guildford depositories were never previously produced by
defendants in any lawsuit. Also included among the documents in the
Minneapolis depository are in excess of 40,000 documents obtained by RKM&C
over which defendants had continuously maintained the claim of
attorney-client privilege.
1
The production of the attorney-client privilege documents was the subject of
numerous appeals, including an appeal to the U.S. Supreme Court.
3. RKM&C painstakingly reviewed the 34 million documents and selected
those it deemed the most probative and relevant, which set of documents
became nationally known as the "Minnesota select" documents. The Minnesota
select documents have been provided to other litigants (including state
attorneys general and private parties), Congress and Governmental
authorities.
4. RKM&C took or defended the depositions of more than 300 fact and
expert witnesses.
5. Throughout the pretrial proceedings, more than 190 motions were
prosecuted and defended by Xxxxxxxxxx and RKM&C, resulting in 200 orders
being issued by the trial court.
6. Interlocutory appeals were taken by Defendants of numerous trial
court orders resulting in 12 appeals to the Minnesota Court of Appeals; four
appeals to the Minnesota Supreme Court; and two appeals to the U.S. Supreme
Court.
7. On January 20, 1998, trial of The Case began before the Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxxxx. The trial proceeded for 74 trial days until May 4,
1998. Forty-one witnesses testified, and the transcript of the trial is
more than 15,000 pages in length.
8. On May 8, 1998, after all parties to the trial had rested, but
before the case was submitted to the jury, The Case was settled. After
settlement of the BCBS's claims, RKM&C relinquished its right to receive
attorneys' fees and costs pursuant to the retainer agreement entered into
between RKM&C and BCBS based upon the undertaking by The Settling
Defendants to negotiate directly with RKM&C for payment of attorneys' fees
and costs. This Agreement between
2
The Settling Defendants and RKM&C is the result of those negotiations and
represents The Settling Defendants' undertaking to pay attorneys' fees and
costs to RKM&C
AGREEMENT
Now, therefore, the undersigned parties agree as follows:
9. For and in consideration of the payment of attorneys' fees and costs
as set forth herein, RKM&C relinquishes its right to receive attorneys' fees
and costs pursuant to the retainer agreement entered into between RKM&C and
BCBS.
10. For and in consideration of the facts set forth above and in
consideration of RKM&C agreeing to relinquish its right to claim any fees and
costs under its retainer agreement with BCBS, and in partial consideration
for the settlement of The Case, The Defendants agree to pay to RKM&C
attorneys' fees in the amount of One Hundred Seventeen Million Two Hundred
Fifty Thousand Dollars ($117,250,000) to be paid as follows: Sixty Million
Dollars ($60,000,000) on July 1, 1998; Fifty-seven Million Two Hundred Fifty
Thousand Dollars ($57,250,000) on September 4, 1998.
11. Defendants also agree to pay Four Million Dollars ($4,000,000) as
and for costs due and owing by BCBS to RKM&C on or before May 18, 1998.
12. The amount of fees and costs due and owing pursuant to paragraphs 10
and 11 shall be paid by Settling Defendants pro rata in proportion to their
Market Share. No Settling Defendant shall be obligated to make any payment
due from any other Settling Defendant. All obligations of The Settling
Defendants pursuant to this Agreement are intended to be and shall remain
several, and not joint.
3
13. The payment of fees pursuant to paragraph 10 shall constitute the
entire obligation of The Settling Defendants with respect to attorneys' fees
in connection with the representation by RKM&C of BCBS in connection with
this action, and the exclusive means by which RKM&C may seek payment of fees
from defendants, or otherwise, in connection with its representation of BCBS
in this action. RKM&C represents that it has served as sole outside counsel
to BCBS in connection with this action.
MISCELLANEOUS PROVISIONS
14. In the event either party to this Agreement is required to seek
enforcement of the terms of this Agreement in court, all attorneys' fees and
costs incurred in enforcing the Agreement shall be paid by the party against
whom enforcement is obtained.
15. Each Defendant has all requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated herein. This Agreement has been duly and validly
executed and delivered by each Defendant and constitutes its legal, valid and
binding obligation.
16. This Agreement constitutes the entire agreement among the parties
with regard to the subject matter of the Agreement and supersedes any
previous agreements and understandings between the parties with respect to
the subject matter. This Agreement may not be modified or amended except in
writing and signed by all parties.
17. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.
4
18. Except as otherwise specifically provided for in this Agreement, no
party shall be liable for any costs or expenses incurred by or on behalf of
any other party in connection with this Agreement and the actions
contemplated hereby.
19. This Agreement shall be construed in accordance with and governed by
the laws of Minnesota applicable to agreements made and to be performed in
Minnesota.
20. Any disputes regarding the interpretation of this Agreement and any
actions to enforce its terms shall be venued in Xxxxxx County District Court
in the State of Minnesota.
21. The parties agree that the payment of attorneys' fees and costs
provided for in this Agreement shall be made strictly according to its terms.
The Settling Defendants will not seek to avoid through legislation any of
their obligations under this Agreement.
22. This Agreement is not intended to, and does not, vest standing in
any third party with respect to the terms hereof, or create for any person
other than the parties hereto a right to enforce the terms hereof.
23. For and in consideration for the payment of fees as provided herein,
RKM&C hereby releases Settling Defendants from any and all claims (other than
a claim to enforce this Agreement) arising out of or in any way related to
the litigation or settlement of The Case.
24. Unless otherwise specified, the terms used in this Agreement are
subject to the definitions contained in the Settlement Agreement.
IN WITNESS WHEREOF, the parties hereto, through their fully authorized
representatives, have agreed to this Agreement To Pay Blue Cross and Blue
Shield of Minnesota Attorneys' Fees and Costs as of this ____ day of May,
1998.
XXXXXX, XXXXXX, XXXXXX & XXXXXX L.L.P.
5
By:
-------------------------------------
Xxxxxxx X. Xxxxxx
XXXXXX XXXXXX INCORPORATED
By:
-------------------------------------
Xxxxx X. Xxxxxx
Counsel
By:
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
General Counsel
X.X. XXXXXXXX TOBACCO COMPANY
By:
-------------------------------------
X. Xxxxx Xxxx
Counsel
By:
-------------------------------------
Xxxxxxx X. Xxxxx
General Counsel
BROWN & XXXXXXXXXX TOBACCO CORPORATION
By:
-------------------------------------
Xxxxxxx X. Xxxxxx
Counsel
By:
-------------------------------------
X. Xxxxxxx Xxxxx
Vice President and General Counsel
LORILLARD TOBACCO COMPANY
6
By:
-------------------------------------
Xxxxxx X. Xxxxxxx
Senior Vice President & General Counsel
7
