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(e)
The
terms "Reversed" or "Reversal" shall mean any ruling that reverses,
vacates or remands the punitive damages component of the Judgment (or, if applicable, a
Renewed Judgment or New Judgment) against the Participating Defendant in question,
including any ruling, however styled, that leaves such Participating Defendant with no
present obligation actually to pay at that time any amount under such component of such
Judgment (or, if applicable, such Renewed Judgment or New Judgment); and (f)
The
term "Tax Rate" shall mean a percentage equal to the sum of (i) the maximum
marginal federal corporate income tax rate (such rate being 35% as of the date this
Stipulation was executed, and approved by the Court) in effect on the last day of the
relevant tax period to which payment of the Tax in question is due, plus (ii) 4.472
percentage points. 7. No Participating Defendant shall seek to hold the Class, any member of the Class or Class Counsel responsible, in the event of the Judgment against such Participating Defendant is reversed in whole or in part, for the costs or premiums incurred by such Participating Defendant in posting the Existing Bond or providing the Escrowed Funds of for nay other taxable or other costs or attorney's fees incurred by such Participating Defendant in this case. 8.
The
Class and each Participating Defendant will not contend that this Stipulation provides any
grounds for staying or delaying the review of the Judgment and will oppose any such
contention by any other person or entity, including any defendant that is not a
Participating Defendant. 9.
Each
Participating Defendant will: (a) oppose any claim that is filed in any court (including
in any bankruptcy case or proceeding) by any State, person or entity (other than the Class
or any person or entity to which funds provided pursuant to this Stipulation were ordered
paid by order of the Court) claiming to be a creditor of such Participating Defendant,
where such creditor's claim is to obtain or realize on or against any portion of the
Guaranteed Sum, Existing Bond or Escrowed Funds posted or provided by such Participating
Defendant (including, but not limited to, any portion of such funds that has been paid
into the registry of the Court); (b) take the position in any bankruptcy case or
proceeding that such funds may be paid only in accordance with the terms of this
Stipulation and the Escrow Agreements; and (c) not oppose any proceeding brought by or on
behalf of the Class in any bankruptcy case to obtain relief from the automatic stay
imposed upon Bankruptcy Code section 362(a) to permit the Class to obtain any payment
required to be made in accordance with the terms of this Stipulation. 10.
Nothing
in this Stipulation shall: (a) permit the withdrawal of the bond that a Participating
Defendant has posted with respect to the compensatory damages component of the Judgment;
or (b) extend the duration of the stay of execution of such component of such Judgment
beyond that entailed by the posting of such bond under Florida law and the Florida Rules
of Appellate Procedure. 11. Until Completion of Review, the Participating Defendants shall not: (a) remove, or join in the removal of, this action to a United States District Court, except where such removal is based on the commencement of proceedings under the Bankruptcy Code; (b) file a petition for writ of certiorari in the United States Supreme Court from the dismissal by the United States Court of Appeals for the Eleventh Circuit dated February 15, 2001 of the appeal in Engle, et al. v. R.J. Reynolds Tobacco Co., et al., No. 00-15962 DD (11th Cir.); or (c) commence an original action if any court (including, but not limited to, any United States District Court) other than the Third District Court of Appeal of Florida, the Florida Supreme Court and the United States Supreme Court contending that a Judgment or any rulings by or proceedings before the Court in this action violate the United States Constitution or any other provision of law. 12.(a)
Upon
Completion of Review, the disposition of the Total Contribution shall be as follows
depending upon the amount (if any) that the Participating Defendant in question is
obligated actually to pay at that time on account of the punitive damages component of the
Judgment (including any statutory interest owed thereon) as a result of such Judgment
having been Reversed, modified, affirmed or otherwise treated upon such Completion of
Review:
(c)
Nothing
in this paragraph 12, this Stipulation or the Escrowed Agreements shall be argued, deemed
or construed; (i) to constitute an acknowledgement or concession by a Participating
Defendant of the propriety of certification of the Class, of the trial plan employed by
the Court, of any award of lump-sum punitive damages or of the propriety of entry of
judgment thereon; (ii) to be any form of waiver or compromise of or limit upon, or in any
way to undermine or impair, the Participating Defendants' position that such
certification, such trial plan and any award of lump-sum punitive damages and entry of
judgment thereon are improper, invalid and/or unconstitutional; or (iii) to be any form of
waiver or compromise of or limit upon, or in any way to undermine or impair, the
Participating Defendants' rights to review of the Judgment or any of their respective
positions in any such review. (d)
Where
funds are payable pursuant to paragraph 12(a) into the registry of the Court or a
restricted bank escrow designated by Class Counsel, Class Counsel shall elect whether such
funds are to be paid into the registry of the Court or a restricted bank escrow. 13.(a)
If
the Judgment against a Participating Defendant is Reversed or is reduced as described in
any of paragraphs 12(a)(i)-(iii), and either (i) the Judgment is subsequently re-entered,
renewed or otherwise reinstituted ("Renewed Judgment") against such
Participating Defendant, or (ii) a new, modified or substitute judgment ("New
Judgment") is entered that is predicated upon the jury verdict of July 14, 2000
(rather than on a new trial and jury verdict as to punitive damages) and that contains a
punitive damages award against such Participating Defendant in favor of the Class (whether
as presently defined or as that definition may be modified in the future), such
Participating Defendant shall (at its election) have the right to stay of such Renewed
Judgment or New Judgment upon terms substantively identical to those set forth in
paragraphs 6-11, 13 and 15-28 of this Stipulation. (b)
In
the case of Philip Morris, in order to exercise the right set forth in paragraph 13(a):
(i) if Philip Morris previously withdrew any of the $1.2 billion Participating Defendant
Escrowed Funds pursuant to paragraph 12(a)(i), (ii) or (iii), it must re-deposit into
escrow for the benefit of the Class an amount equal to the amount of the total
Participating Defendant Escrowed Funds that it withdrew, and if Philip Morris withdrew its
Existing Bond pursuant to any of those clauses, it must either re-post such bond or
deposit the amount of such bond into escrow for the benefit of the Class (such
re-deposited escrow funds, re-posted bond and/or bond amount deposited into escrow
collectively being the "Re-deposited Escrowed Funds"); except that (ii) if the
amount of the Renewed Judgment or New Judgment is less than the amount Re-deposited
Escrowed Funds that would be required under clause (i), Philip Morris may exercise such
right by depositing or posting Re-deposited Escrowed Funds equal to the amount of such
Renewed Judgment or New Judgment. Nothing in
this paragraph shall be construed as meaning that Philip Morris, in order to exercise the
right set forth in paragraph 13(a), must deposit or re-deposit into escrow any Escrowed
Funds that it did not withdraw, post or re-post any bond that it did not withdraw, or
provide any new or additional Guaranteed Sums. (c)
Re-deposited
Escrowed Funds, if any, shall be treated for purposes of interest or other investment
income as Participating Defendant Escrowed Funds, and no part of any Re-deposited Escrowed
Funds shall constitute Guaranteed Sums. Upon
Completion of Review of a Renewed Judgment or New Judgment against Philip Morris (as the
definition of the term "Completion of Review" is modified to the sole extent of
making it applicable to the Renewed Judgment or New Judgment is Reversed, Philip Morris
shall be entitled to withdraw all of the Re-deposited Escrowed Funds; and if such Renewed
Judgment or New Judgment against Philip Morris is reduced to, or is required to be paid
in, an amount that, after including any statutory interest owed on the remaining portion,
is less than the amount of the Re-deposited Escrowed Funds, Philip Morris shall be
entitled to withdraw the excess of the Re-deposited Escrowed Funds. 14.
The
Guaranteed Sum provided by a Participating Defendant (and any other portion of the Total
Contribution that is required to be paid into the registry of the Court or a restricted
bank escrow designated by Class Counsel pursuant to paragraph 12(a)(i)-(iv) upon
Completion of Review) shall constitute a dollar-for-dollar credit against, and shall not
be construed to be a payment obligation in addition to, payment of the punitive damages
component of the Judgment against such Participating Defendant in the event such component
of such Judgment (or an portion thereof) is affirmed or required to be paid. 15.
Prior
to Completion of Review, each Participating Defendant that is required to provide Escrowed
Funds: (a)
shall
maintain a balance sheet net worth no lower than the net worth it presented to the jury in
Phase II-B of the trial, meaning: Philip Morris -- $6,411,000,000; Lorillard --
$921,205,000; Liggett -- $33,781,000. To
ensure its compliance with paragraphs 15(a) and (b) (as determined in accordance with
United States generally accepted accounting principles in effect as of July 14, 2000 and
as applied on such date by the Participating Defendants in question), each such
Participating Defendant shall, at its sole expense, cause a nationally recognized
accounting firm (or firms) to issue reports confirming such compliance to Class Counsel
quarterly on the basis of non-audited financial statements (no later than the latest date
on which such Participating Defendant and/or its parent or other affiliated companies file
reports for the corresponding quarter on Form 10-Q with the Securities and Exchange
Commission ("SEC") and annually on the basis of audited financial statements (no
later than the latest date on which such Participating Defendant and/or its parent or
other affiliated companies file a report for the corresponding year on Form 10-K with the
SEC). In employing a balance sheet formula
for the purposes of this Stipulation, the Class is no way agrees to the accuracy of the
foregoing balance sheet net worth figures and in no way waives or compromises its position
for all purposes (including for purposes of review of the Judgment) that a balance sheet
measure of net worth does not fully or accurately reflect the financial condition and
value of the Participating Defendants, and each Participating Defendant (while fully
reserving its position contrary to that held by the Class) agrees that it will not argue
that this Stipulation effects any such waiver or compromise; and (b)
shall
not, without the written consent of Class Counsel or the approval of the Court: (i) sell
or otherwise transfer title to, in one transaction or series or related transactions, any
trademark of or flavor and blend formula comprising a cigarette brand having a market
share of 0.5% or more of the total number of cigarettes sold in the United States during
the preceding calendar year; or (ii) with respect to cigarettes upon which federal
exercise tax is collected, license to anyone else the right to manufacture or sell a
cigarette brand having such a market share (other than a license to a third party to
permit that party to manufacture cigarettes to be sold by the Participating Defendant that
gave the license). 16.
Until
the Completion of Review: (a) the Judgment against each Participating Defendant and all
execution or enforcement or each such Judgment is stayed; (b) the Class (and each member
thereof) agrees that any award or judgment of punitive damages to an individual member or
members of the Class against any Participating Defendant that depends in whole or in part
upon the punitive damages findings or award giving rise to the Judgment (each such award
or judgment, a "Derivative Judgment"), and all execution or enforcement of any
such Derivative Judgment, is stayed; and (c) the Class (and each member thereof) is barred
and prohibited from seeking to collect, execute on or enforce any such Judgment or
Derivative Judgment in any way or to take any other action with respect to any such
Judgment or Derivative Judgment, including, but not limited to: by hereafter recording the
Judgment or Derivative Judgment (including a certified copy thereof); by seeking to obtain
or perfect any liens on property; by seeking the appointment of a conservator or receiver
or other similar relief; or by seeking, on the basis of any contention that in any way
arises from or relates to the Judgment or Derivative Judgment of any of the claims that
have been or could have been advanced in this action, any determination or declaration
with respect to any Participating Defendant (other than proceedings to enforce this
Stipulation) or any past or present parent, sister or other affiliated companies, persons
or entities of any Participating Defendant, or any restrictions or encumbrances upon,
injunctions against or other interference with such parents', sisters' or other
affiliates' business, operations or sales, transfers of title or other dispositions or
transfers of assets, or other transactions (whether undertaken or proposed to be
undertaken). Such parents, sisters or other
affiliates are intended beneficiaries of this paragraph.
This paragraph shall not apply with respect to any Participating Defendant
that either files for relief under the Bankruptcy Code or becomes the debtor in a
bankruptcy case in which the order for relief has become final. 17.
Until
the Completion of Review, neither the Class nor any member thereof shall: (a)
seek,
on the basis of any contention that in any way arises from or relates to the Judgment or
Derivative Judgment or any of the claims that have been or could have been advance in this
action, any restrictions or encumbrances upon injunctions against or other interference
with any business, operation or sale, transfer of title or other disposition or transfer
of assets, or other transaction undertaken or proposed to be undertaken by the
Participating Defendant in question, or its past or present parent, sister or other
affiliated, persons or entities, that is not barred by paragraph 15(b). Such parents, sisters or affiliates are intended
beneficiaries of this paragraph 17(a)-(b). This
paragraph 17(a) shall not apply with respect to any Participating Defendant that either
files for relief under the Bankruptcy Code or becomes the debtor in a bankruptcy case in
which the order for relief has become final; or (b)
seek
from the Participating Defendant in question or any of its past or present parent, sister
or other affiliated companies, persons or entities (including, but not limited to, under
the provisions of Fla. Stat. § 768.733(3) or otherwise) any increase in or supplement to
the Existing Bond or other security beyond that provided for in this Stipulation, any
determination that the security provided by such Participating Defendant pursuant to this
Stipulation is inadequate, or any elimination of or limit on the stay of execution of the
Judgment or Derivative Judgment against such Participating Defendant (including all
restrictions on collection, execution and enforcement described in paragraph 16),
including on the ground of any business, operation or sale, transfer of title or other
disposition of assets, or other transaction undertaken or proposed to be undertaken by an
defendant in this action or any of its past or present parent, sister or other affiliated
companies, persons or entities (other than as prohibited by this Stipulation). 18.
Neither
the Class nor any member thereof shall object to or challenge the existing stay of
execution of the punitive damages components of the Judgment with respect to any
Participating Defendant that exists by virtue of Fla. Stat. § 768.733 (including, but not
limited to, challenging the constitutionality or applicability of that statute (or any of
its provisions) as it applies to any Participating Defendant). This Stipulation and the Escrow Agreements shall
remain in effect without regard to any development with respect to Fla. Stat. § 768.733
(including, but not limited to, any repeal, invalidation or interpretation of, or
amendment to, such statute, or the outcome of any challenge to such statute with respect
to any other party) in this or any other litigation or forum. 19.
The
Class shall hereafter not agree with any defendant to a stay of execution of the judgment
in this action (as heretofore and hereinafter amended) against that defendant or to
refrain from challenging or objecting to the stay of execution of such judgment (or
portion thereof) that exists by virtue of Fla. Stat. § 768.733 where that agreement
contains any term more favorable to such defendant than any of the terms provided by this
Stipulation to any Participating Defendant without adjusting this Stipulation (and, if
applicable, the Escrow Agreements) so that each Participating Defendant will receive the
benefit of such more favorable terms. With
respect to Guaranteed Sum, such an agreement shall be deemed to contain a term more
favorable to a defendant than the terms provided by this Stipulation to each of the
Participating Defendants if it provides for payment of a Guaranteed Sum by such defendant
that is lower in amount than a Guaranteed Sum by such defendant that would be strictly
proportionate to the Guaranteed Sum being provided by Lorillard pursuant to this
Stipulation, based on the size of the punitive damages award against such defendant
pursuant to paragraph 12 of the judgments in this action entered on November 3, 2000 (as
heretofore and hereinafter amended) relative to the size of the punitive damages award
against Lorillard pursuant to such paragraph. In
the event this Stipulation is adjusted pursuant to this paragraph, all other provisions of
this Stipulation shall remain in full force and effect.
Each Participating Defendant may, at its sole election, waive the provisions
of this paragraph insofar as this paragraph would provide for an adjustment of this
Stipulation in its own favor. Nothing in this
paragraph shall obligate the Class to challenge the stay of execution of the judgment (or
portion thereof) against any non-participating defendant that exists by virtue of Fla.
Stat. § 768.733; in the absence of an agreement on the part of the Class as described in
the first sentence of this paragraph, any election by the Class not to undertake such a
challenge shall not create any right to adjustment of this Stipulation under this
paragraph in favor of any Participating Defendant. 20. Notwithstanding anything else in this Stipulation, this Stipulation and the Escrow Agreements shall not be argued, deemed or construed: (a) to be an admission or evidence of any violation of any statute or law or of any liability or wrongdoing by any defendant, of the truth of any of the claims or allegations in this action or otherwise, or of the legality, validity, propriety or constitutionality of the Judgment (including the propriety of its having been entered at this stage of the action); (b) to be an admission or evidence regarding the constitutionality, validity, applicability, interpretation or operation of Fla. Stat. § 768.733 or the duration of the stay provided for by that statute; (c) to be any form of waiver or compromise of or limit upon, or in any way to undermine or impair, an of the Class's or the Participating Defendants' rights to review of the Judgment or any of their respective positions in any such review, including, but not limited to, (i) the Class's rights to object to or contest on any grounds the exercise of jurisdiction over and review of some or all issues by the Florida Third District Court of Appeal, the Florida Supreme Court or the United States Supreme Court, and (ii) Participating Defendants' position that the certification of the Class, the trial plan employed by the Court and any award of lump-sum punitive damages are improper, invalid and/or unconstitutional; (d) to be any form of waiver of the Class's right, if any, to challenge, after Completion of Review, any business operation or sale, transfer of title or other disposition of assets, or other transaction undertaken prior to that time; or (e) to be or constitute a settlement or compromise of any claim or judgment (including any claim or judgment as to punitive damages or any other claim or judgment in this action) against any Participating Defendant. Nothing in this paragraph shall limit the provisions of paragraph 11. 22.
The
Class and each Participating Defendant will jointly submit this Stipulation for approval
by the Court. The Class and each
Participating Defendant will oppose: any claim that the Court's approval of this
Stipulation and the Escrow Agreements should be modified or set aside or that this
Stipulation should be otherwise invalidated or declared unlawful; any claim that any
member of the Class is not bound by or subject to this Stipulation or the Escrow
Agreements; and any attempt by any member of the Class to take any action that the Class
may not take under this Stipulation or the Escrow Agreements. 23. The obligations of the Participating Defendants under this Stipulation and the Escrow Agreements shall be several, not joint; a breach by any Participating Defendant of any provision of this Stipulation or the Escrow Agreements, including but not limited to the failure of any Participating Defendant to maintain the Existing Bond or to provide Escrowed Funds as required by this Stipulation, shall constitute a breach only by that Participating Defendant and shall not be deemed a breach by any other Participating Defendant. Except as provided in paragraph 19, nothing in this Stipulation shall be applicable to any defendant herein that is not a Participating Defendant. 25.
A
breach of this Stipulation or either of the Escrow Agreements shall subject the breaching
party (whether it be a Participating Defendant, the Class or any member thereof) to
court-ordered injunction and/or specific performance; provided, however, that in the case
of an uncured breach by a Participating Defendant of paragraph 15(a); the sole remedy
shall be to relieve the Class from the stays and restrictions provided for in paragraphs
16 and 17 as to such Participating Defendant; the Existing Bond and Escrowed Funds posted
or provided by such Participating Defendant shall continue to be payable or subject to
return and/or withdrawal as provided by paragraph 12 and the remaining terms of this
Stipulation; and there shall be no effect on the stay imposed by Fla. Stat. § 768.733 or
on the Class's and such Participating Defendant's rights and obligations under this
Stipulation with respect to that statute (except for those set forth in paragraphs 16 or
17). 26.
The
Participating Defendants and the Class agree that the Court has exclusive subject-matter
jurisdiction over disputes arising out of this Stipulation and that the Stipulation is to
be interpreted, construed, enforced and administered in accordance with the internal
substantive law (and not the choice of law rules) of the State of Florida. Solely for the purposes of such proceedings, the
Participating Defendants and the Class waive any claim or objection that they are not
subject to the jurisdiction of the Court or that the Court is an improper venue or an
inconvenient forum. The Court reserves
jurisdiction over the allocation of all funds payable into the registry of the Court (or a
restricted bank escrow designated by Class Counsel) pursuant to this Stipulation, and will
direct that notice be provided to the Class and will conduct a hearing prior to ordering
any such allocation. The Court further
reserves jurisdiction to award attorney's fees and costs to Class Counsel out of such
funds (whether such funds were payable into the registry of the Court (or a restricted
bank escrow designated by Class Counsel) pursuant to paragraphs 12(a)(i), (ii), (iii) or
(iv)). 27.
This
Stipulation is subject to being approved and adopted by the Court as constituting an
enforceable order of the courts of the State of Florida, and to each of the forms of
Escrow Agreements being approved by the Court, and will become effective upon such
approval and adoption. In the event that
such approval is not forthcoming or is set aside, or if this Stipulation or the Escrow
Agreements is otherwise invalidated or declared unlawful in whole, this Stipulation shall
be canceled and terminated as to all parties. If
this Stipulation (or the Court's approval of it and the forms of Escrow Agreements) is
modified, or if this Stipulation or either of the Escrow Agreements is invalidated or
declared unlawful in part, this Stipulation shall be cancelable and terminable at the
option of any party adversely affected by the modification, invalidation or declaration;
provided, however, (a) that the exercise of the foregoing option by one Participating
Defendant shall not operate or cancel or terminate this Stipulation as to any other
Participating Defendant that does not possess or determines not to exercise such option,
and (b) that the foregoing option shall not be available to a Participating Defendant that
has voluntarily filed for relief under the Bankruptcy Code unless such voluntary filing
was occasioned by any action taken by the Class or any member of the Class that would give
rise to an option to cancel and terminate this Stipulation under paragraph 21. With respect to each Participating Defendant as to
which this Stipulation is canceled and terminated pursuant to this paragraph: this
Stipulation and the Escrow Agreements shall be null and void as to each such Participating
Defendant; the Class and each such Participating Defendant shall be restored to their
original positions, including that the Class shall return the Class Escrowed Funds paid by
each such Participating Defendant and that each such Participating Defendant shall have
the right to withdraw the Existing Bond and all Participating Defendant Escrowed Funds it
had posted or provided; and the Class and each such Participating Defendant shall have no
obligations under the Escrow Agreements or this Stipulation (including that each such
Participating Defendant shall not be obligated to pay the Guaranteed Sum) except as to the
provisions of paragraph 20 and the Class's obligation to return the Class Escrowed Funds
paid by each such Participating Defendant. 28.
The
escrow agent with respect to each of the Escrow Agreements shall be selected by the
Participating Defendants from among the following institutions: Bank of New York;
Citibank, N.A.; The Chase Manhattan Bank; Credit Suisse First Boston; and Deutsche Bank
Bankers Trust; provided, however, that if the First Escrow Agreement has not been executed
within 14 days after the Court's approval of this Stipulation and the forms of Escrow
Agreements, Class Counsel shall be entitled to cause the parties to engage in negotiations
with another institution of Class Counsel's choice from among those listed above. Each Escrow Agreement shall provide that it is to
be interpreted, construed, enforced and administered in accordance with the internal
substantive laws (and not the choice of law rules) of the State of Florida and that the
Court shall have exclusive subject-matter jurisdiction over disputes arising out of such
Escrow Agreement. If non of the institutions
listed above agrees to serve as escrow agent on terms acceptable to the parties, then the
Participating Defendants shall select another banking or trust institution to serve as
escrow agent that will agree to such terms. The
identity of such other banking or trust institutions shall be subject to the consent of
Class Counsel, which consent shall not be unreasonably withheld. FOR THE CLASS
X
(Signed)
X
(Signed) Stanley M. Rosenblatt, P.A. FOR LORILLARD TOBACCO CO. and LORILLARD, INC. FOR LIGGETT GROUP, INC. and BROOKE GROUP HOLDING INC.
X
(Signed)
Text courtesy of the Tobacco Products Litigation Reporter |