EXHIBIT 10.5
AGREEMENT TO PAY
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BLUE CROSS AND BLUE SHIELD OF MINNESOTA
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ATTORNEYS' FEES AND COSTS
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Philip Morris Incorporated (hereinafter "PM"), R.J. Reynolds
Tobacco Company (hereinafter "RJR"), Brown & Williamson 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 Robins, Kaplan, Miller & Ciresi 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. Philip Morris 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
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1. On August 17, 1994, The State of Minnesota, together with
BCBS, commenced The Case in Ramsey County District Court in St. Paul, 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.
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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 Defendants 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
Honorable Kenneth J. Fitzpatrick. 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
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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
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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
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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.
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
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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
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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.
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.
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20. Any disputes regarding the interpretation of this
Agreement and any actions to enforce its terms shall be venued in Ramsey 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 8th day of May,
1998.
ROBINS, KAPLAN, MILLER & CIRESI L.L.P.
By: /s/ Michael V. Ciresi
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Michael V. Ciresi
PHILIP MORRIS INCORPORATED
By: /s/ Meyer G. Koplow
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Meyer G. Koplow
Counsel
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By: /s/ Martin J. Barrington
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Martin J. Barrington
General Counsel
R.J. REYNOLDS TOBACCO COMPANY
By: /s/ D. Scott Wise
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D. Scott Wise
Counsel
By: /s/ Charles A. Blixt
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Charles A. Blixt
General Counsel
BROWN & WILLIAMSON TOBACCO CORPORATION
By: /s/ Stephen R. Patton
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Stephen R. Patton
Counsel
By: /s/ F. Anthony Burke
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F. Anthony Burke
Vice President and General Counsel
LORILLARD TOBACCO COMPANY
By: /s/ Arthur J. Stevens
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Arthur J. Stevens
Senior Vice President & General
Counsel
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