SETTLEMENT AGREEMENT AND RELEASE
Xxxxxxx
00.0
XXXXXX
XXXXXX BANKRUPTCY COURT
FOR
THE
DISTRICT OF DELAWARE
|
In
re:
DELTA
XXXXX, INC., et al., 1
Debtors.
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)
)
)
)
)
)
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Chapter
11
Case
No. 06-11144 (CSS)
(Jointly
Administered)
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SETTLEMENT
AGREEMENT AND RELEASE
This
Settlement Agreement and Release (hereinafter, the “Agreement”) is made
and entered into by and between the above-captioned debtors and
debtors-in-possession (the “Debtors”) and the Official Committee of
Unsecured Creditors appointed in the Debtors’ cases (the “Committee”) on
the one hand, and Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xx., and
Xxxxxx X. Xxxxxx (collectively, the “Executives”) on the other
hand.
WHEREAS,
on October 13, 2006 (the “Petition Date”), the Debtors each filed
voluntary petitions for relief under Chapter 11 of Title 11 of the United States
Code (as amended, the “Bankruptcy Code”) with the United States
Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”);
and
WHEREAS,
prior to the Petition Date, the Executives had received payments from the
Debtors for, among other things, deferred compensation and (in the case of
Xx.
Xxxxxxx) bonuses; and
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1
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These
jointly administered cases are those of the following debtors:
Delta
Xxxxx, Inc.; Delta Woodside Industries, Inc.; and Delta Xxxxx Marketing,
Inc.
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WHEREAS,
as part of its review of potential claims that might be asserted or abandoned
by
the Debtors’ plan of reorganization or liquidation, the Committee identified
certain alleged claims against the Executives, and the Committee and its
counsel
have engaged in extensive negotiations with the Executives and their counsel;
and
WHEREAS,
more particularly, the Committee has alleged that certain payments made to
the
Executives prior to the Petition Date may be avoidable and recoverable by the
Debtors’ estates pursuant to sections 547, 548 and 550 of the Bankruptcy Code;
and
WHEREAS,
the Executives deny that any amounts which they received prior to the Petition
Date are avoidable and recoverable under the Bankruptcy Code, and assert that
they maintain valid and complete defenses to any such claims by the Committee
or
the Debtors’ estates; and
WHEREAS,
the Debtors and the Committee on the one hand, and the Executives on the other
hand, desire to settle their disputes and avoid future litigation;
and
WHEREAS,
the parties intend
to
obtain Bankruptcy Court approval of this Agreement;
NOW,
THEREFORE, in consideration of the foregoing and the covenants hereinafter
set
forth, and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, it is hereby agreed by the parties as
follows:
1. The
Executives shall forego and waive receipt from the Debtors’ estates, subject to
paragraph 2 below, of the following amounts to which they are otherwise
entitled:
$162,000
by Xx. Xxxxxxx;
$26,000
by
Xx. Xxxxxxx; and
$12,000
by
Xx. Xxxxxx.
-2-
The
foregoing amounts shall be foregone and waived by each of the Executives waiving
incentive payments aggregating the applicable amount set forth above owed to
that Executive by the Debtors pursuant to the Order Authorizing the Debtors
(I)
To Pay (A) Employees for Accrued Vacation Upon Termination; (B) Salary and
Compensation Exceeding the Cap Under Section 507(a)(4) of the Bankruptcy Code
to
Employees; (C) Non-Executive Employees Under the Modified Severance Plan; and
(D) Incentive Payments to Executive Employees and (II) To Honor the 2004 Stock
Plan, dated October 25, 2006 (the “October 25, 2006 Order”) (D.I.
63).
2. No
later than two (2) business days after Bankruptcy Court approval of this
Agreement, each of the Executives shall irrevocably select (by written
notice to the undersigned counsel to the Committee and the undersigned counsel
to the Debtors) one of the following options (which selection may differ from
the selection made by the other Executives):
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a.
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Option
One: Each Executive may elect to add the amount he individually
waived pursuant to paragraph 1 above to his respective unsecured
claim
against the Debtors’ estates for severance. Any Executive who
chooses Option One shall not be required to provide “no cost” employment
services to the Debtors’ estates at any
time.
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b.
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Option
Two: Each Executive may elect to earn-back the amount he
individually waived pursuant to paragraph 1 above on the basis of
a
sliding scale depending on the % yield on their pre-petition allowed
claims to unsecured creditors (Class 6 of the proposed Delta
Xxxxx, Inc. Plan of Liquidation (in final form, the “Plan”)) of cumulative
distributions from the Debtors’ estates from 20.01% to 27.00% as set forth
on Exhibit 1 attached hereto. Any Executive who chooses Option Two
will not be entitled to add any portion of the amount waived pursuant
to
paragraph 1 above to his respective unsecured claim against the Debtors’
estates for severance, whether or not such waived amount is earned
back. Earn-back amounts will be paid by Delta Xxxxx, Inc. in
increments consistent with the sliding scale on Exhibit 1 as the
cumulative % yield to unsecured creditors on their pre-petition allowed
claims from the Debtors’ estates is accomplished. Further, any
Executive who chooses Option Two will provide consulting services
to Delta
Xxxxx, Inc. from and after the effective date (the “Effective Date”) of
the Plan for an aggregate of sixty (60) hours at no cost to the Debtors’
estates.
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-3-
3. Until
the Effective Date, the Executives will be paid their respective current
salaries for their services. From and after the Effective Date
(subject to the obligation to provide an aggregate of sixty (60) hours of
consulting services to Delta Xxxxx, Inc. at no cost to the Debtors’ estates, if
the applicable Executive elects Option Two above), Xx. Xxxxxxx will be
compensated at the rate of $240 per hour, Xx. Xxxxxxx will be compensated at
the
rate of $89 per hour and Xx. Xxxxxx will be compensated at the rate of $81
per
hour by Delta Xxxxx, Inc. for the Executive’s services pursuant to paragraph 4
below. Each Executive will also be entitled to reimbursement of all
expenses incurred related to such post-Effective Date services provided to
Delta
Xxxxx, Inc. The Executives will not receive any employee benefits
after the Effective Date other than as outlined herein or in the
Plan.
4. Each
of the Executives will serve as a post-Effective Date Designated Officer for
the
post-Effective Date liquidating Debtors, as needed, consistent with the terms
set forth in the Plan, subject to the terms of this Agreement; provided,
however, that, after the Effective Date, (i) the chief Designated Officer for
Delta Xxxxx, Inc. may terminate the services of any of the Executives upon
ten
(10) business days’ notice (in which event the Executive will have no obligation
to compensate the Estate for any of the aggregate of sixty (60) hours of no-cost
consulting services that had not been provided by that Executive by the date
of
termination, if applicable) and (ii) (subject to the obligation to provide
an
aggregate of sixty (60) hours of consulting services to Delta Xxxxx, Inc. at
no
cost to the Debtors’ estates, if the Executive elects Option Two above), any
Designated Officer may terminate his services without penalty upon ten (10)
business days’ notice. Upon any such termination, all accrued but
unpaid amounts of compensation shall be promptly paid to the applicable
Executive, and the Executive shall be paid, as earned, any earn-back amounts
to
which he may become entitled under Option Two above (if that option was
elected).
-4-
5. The
parties agree that the allowed amount of Xx. Xxxxxxx’x unsecured claim against
the Debtors’ estates for severance shall be $401,575.00, less the sum of (a) the
amounts of Incentive Payments actually paid to Xx. Xxxxxxx pursuant to the
October 25, 2006 Order and (b), if Xx. Xxxxxxx elects Option Two, the amount
of
Incentive Payments that he forgoes and waives pursuant to paragraph 1
above.
6. Upon
Bankruptcy Court approval of this Agreement, the Committee, the Debtors, and
the
Debtors’ estates, hereby release, acquit and forever discharge each of the
Executives from any and all claims, counterclaims, rights, demands, costs,
damages, losses, liabilities, attorneys’ fees, actions and causes of action
whatsoever, whether known or unknown, liquidated or unliquidated, fixed or
contingent, material or immaterial, disputed or undisputed, legal or equitable,
matured or unmatured, or foreseen or unforeseen, which are in any way related
to
any of the following: (i) payments received by any of the Executives for
deferred compensation, (ii) payments received by Xx. Xxxxxxx for any bonuses,
(iii) payments to which any of the Executives are entitled under the October
25,
2006 Order (except as specifically set forth herein), (iv) prepetition and/or
postpetition payments to or claims made by any of the Executives for accrued
vacation pay, expense reimbursements, salary and/or severance, and (v) payments
or benefits to which any of the Executives are entitled under the Debtors’ 2004
Stock Plan (hereinafter “Claims”), which the Committee, the Debtors
and/or the Debtors’ estates now have or hereafter may have against the
Executives from the beginning of time to the date of this
Agreement. The immediately preceding sentence is in addition to, and
not in substitution for, any and all applicable releases, exculpations and
injunctions that may inure to the benefit of any of the Executives under the
Plan.
-5-
7. Except
as otherwise expressly provided in this Agreement, this Agreement, along with
the documents referred to in this Agreement, constitute the entire agreement
between the parties with regard to the subject matter hereof. This
Agreement may not be modified or amended except in writing signed by all parties
hereto or their successors in interest. If the Committee is
disbanded, from and after the Effective Date, the chief Designated Officer
of
Delta Xxxxx, Inc. will succeed to the rights of the Committee
hereunder.
8. It
is understood and agreed that this Agreement shall be construed without regard
to any presumption or other rule requiring construction against the party
causing the document to be drafted. Each party is entering into this
Agreement voluntarily, without duress, and with full understanding of its
terms.
9. This
Agreement shall be interpreted and construed in accordance with the provisions
of the Bankruptcy Code and, where not inconsistent, the laws of the State of
Delaware, without regard to the conflict of laws jurisprudence of the State
of
Delaware.
10. Any
dispute, action or proceeding arising out of or relating to this Agreement
shall
be within the exclusive jurisdiction of the United States Bankruptcy Court
for
the District of Delaware.
11. This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original but all of which shall constitute one and the same
document.
12. This
Agreement shall become effective upon its approval by the Bankruptcy
Court.
-6-
IN
WITNESS
WHEREOF, the parties hereto, intending to be legally bound, have caused this
Agreement to be duly executed as of ________, 2007 as set forth
below:
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Date:
4-23-07
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CROSS
& SIMON, LLC
By
/s/ Xxxxx X. Xxxxxx
Xxxxx
X. Xxxxxx (#3740)
000
X. Xxxxxx Xx., 00xx
Xxxxx
X.X.
Xxx 0000
Xxxxxxxxxx,
XX 00000-0000
(000)
000-0000
Counsel
for the Executives
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Date:
May 9, 2007
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MORRIS,
NICHOLS, ARSHT & XXXXXXX, LLP
By:
/s/ Xxxxxx X. Xxxxxx
Xxxxxx
X. Xxxxxx (#3578)
Xxxxxxx
X. Xxxxxxx (#4244)
0000
X. Xxxxxx Xx.
X.X.
Xxx 0000
Xxxxxxxxxx,
XX 00000-0000
(000)
000-0000
and
XXXXXXX
XXXXXX & XXXXXX, P.A.
C.
Xxxxxxx Xxxxxxx, Xx.
000
Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx,
XX 00000
Counsel
for the Debtors
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Date:
4/24/07
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COZEN
X’XXXXXX
By:
/s/ Xxxxxxx X. Xxxxxx
Xxxx
X. Xxxxxx (#3919)
Xxxxxxx
X. Xxxxxx (#4159)
0000
X. Xxxxxx Xx., Xxxxx 0000
Xxxxxxxxxx,
XX 00000
(302)
295-2000
and
STROOCK
& STROOCK & XXXXX LLP
Xxxxxxxxxxx
X. Xxxxxx III
000
Xxxxxx Xxxx
Xxx
Xxxx, XX 00000-0000
Counsel
for the Committee
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-7-
Delta
Xxxxx, Inc.
Earn-Back
Option Sliding Scale
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%of
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||||
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Return
to
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Forfeited
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WFG
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WHH
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DCW
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Unsecured
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Earned
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$ 162,000
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$ 26,000
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$ 12,000
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||||
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20.01-20.99%
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12.5%
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$ 20,250
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$ 3,250
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$ 1,500
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21.00-21.99%
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25.0%
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$ 40,500
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$ 6,500
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$ 3,000
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22.00-22.99%
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37.5%
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$ 60,750
|
$ 9,750
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$ 4,500
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23.00-23.99%
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50.0%
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$ 81,000
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$ 13,000
|
$ 6,000
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24.00-24.99%
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62.5%
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$ 101,250
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$ 16,250
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$ 7,500
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25.00-25.99%
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75.0%
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$ 121,500
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$ 19,500
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$ 9,000
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26.00-26.99%
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87.5%
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$ 141,750
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$ 22,750
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$ 10,500
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27.00%
or greater
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100.0%
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$ 162,000
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$ 26,000
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$ 12,000
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-8-
