AriZona Tea co-founder Domenick Vultaggio, above, and his former partner...

AriZona Tea co-founder Domenick Vultaggio, above, and his former partner and co-founder John Ferolito have agreed to an outline of a settlement to their long, contentious effort to go their separate ways. This is Vultaggio on Aug. 29, 2012. Credit: Newsday / Audrey C. Tiernan

The feuding co-founders of the AriZona Iced Tea group of companies have agreed to the outline of a settlement that would specify payment terms and end an epic legal battle that has stretched more than seven years, lawyers said Tuesday in State Supreme Court in Mineola.

Louis Solomon, lead attorney for Domenick Vultaggio, the co-founder who remains with the Woodbury company, said that his team had filed a motion on Monday seeking the court's preliminary approval of the settlement with formal papers to be filed next week.

Terms of the settlement were not disclosed and lawyers said they would seek to have the payment amounts redacted in public court papers.

In October, State Supreme Court Justice Timothy Driscoll had ruled that AriZona would have to pay co-founder John Ferolito and a family trust about $1 billion for their 50 percent stake in the company.

After the 11/2-hour hearing, Vultaggio, of Sands Point, said that he was happy with the outcome and that he planned to devote his energy to maintaining the company, No. 2 in the U.S. ready-to-drink iced tea market, as a going concern in Nassau County.

Asked if this was the end of a long road, he said, "No, this is the beginning."

Nicholas Gravante Jr., attorney for Ferolito and the family trust, said "settlements by definition are always compromises, and compromises are always bittersweet."

Still, he said the deal is in the "best interests" of all the parties.

Ferolito, who did not attend Tuesday's hearing, filed a lawsuit in 2008 asking a New York judge to invalidate an agreement with Vultaggio that restricted his right to sell his stake. Courts ruled against Ferolito, who then filed a 2010 lawsuit to dissolve the company.

The two parties have been hammering out the settlement to that 2010 suit with the help of a court-appointed mediator since November.

Legal expenses in the case have run into the tens of millions of dollars for each side and the settlement includes a provision to have AriZona reimburse Ferolito for his expenses and for interest to accrue on any balance that is unpaid as of February 2016.

The settlement also calls for an increase in Ferolito's payout should the company be sold.

Driscoll said the settlement appears to maintain the financial stability of the company and the "300 families" supported by AriZona jobs in Nassau County. AriZona has about 1,000 employees overall.

Euromonitor International ranked Pepsico-Lipton as the top U.S. ready-to-drink iced tea company with a 25 percent market share in 2014, edging out AriZona, which slipped to second place with a 23 percent share. U.S. ready-to-drink tea sales were estimated at more than $5.2 billion in 2014, according to the Tea Association of the USA. Inc.

During the previous phase of the trial to set the valuation of the company and the size of the settlement, Driscoll kept assorted cans and bottles of Arizona products on his bench. With the settlement still requiring final approval, the justice said he was not throwing away his bottles just yet.

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