EXHIBIT 10.6
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SETTLEMENT AGREEMENT
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This SETTLEMENT AGREEMENT, dated as of the Execution Date(1) ("Agreement")
is entered into by and between CHATTEM, INC., a Tennessee corporation
("Chattem"), and THE DELACO COMPANY, a Delaware corporation and Chapter 11
debtor-in-possession, and successor by merger to Xxxxxxxx Medical Company, Inc.
RECITALS
WHEREAS, on December 21, 1998 (the "Sale Date"), Chattem purchased the
Dexatrim(R) products line from Xxxxxxxx Medical Company, Inc., the predecessor
to Delaco ("Xxxxxxxx") pursuant to the Purchase and Sale Agreement dated
November 16, 1998 (the "Sale Agreement");
WHEREAS, in the Sale Agreement, Xxxxxxxx agreed to hold harmless and
indemnify Chattem from claims related to injuries arising from Dexatrim(R)
products sold by Xxxxxxxx prior to the Sale Date, and Chattem agreed to hold
harmless and indemnify Xxxxxxxx from claims related to injuries arising from
Dexatrim(R) products sold by Chattem on or after the Sale Date;
WHEREAS, Delaco has succeeded to the rights and obligations of Xxxxxxxx
under the Sale Agreement;
WHEREAS, Chattem and Delaco have been named, either individually or as
codefendants, in numerous lawsuits and/or claims filed in the United States by
individuals on their own behalf who allege to have suffered injuries as a result
of the ingestion of Dexatrim(R) products, or by others claiming independently or
derivatively by reason of a personal or family relationship with a Dexatrim
Product User ("Dexatrim Litigation");
WHEREAS, (i) Xxxxxxxx distributed Dexatrim Products before the Sale Date
which remained in the market for a period after the Sale Date, (ii) Chattem
contends that Delaco has all of the exposure for the claims of Plaintiffs who
allege injuries occurring before the Sale Date and has substantial exposure for
the claims of Plaintiffs who allege injuries occurring after the Sale Date, and
(iii) Delaco contends that Chattem may have substantial exposure for the claims
of Plaintiffs who allege injuries occurring before and after the Sale Date;
WHEREAS, issues and disputes have arisen between the Parties regarding (i)
which company distributed the Dexatrim(R) products that allegedly were ingested
by the Plaintiffs in the Dexatrim Litigation and (ii) the Parties'
indemnification obligations under the Sale Agreement to each other;
WHEREAS, the Parties generally have coordinated their defense efforts but
are pursuing different means to resolve each of their respective potential
liabilities in the Dexatrim Litigation
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(1) Capitalized terms shall have the meanings set forth in Section 1 -
Definitions.
and are now seeking to coordinate their efforts to resolve and settle globally
their respective potential liabilities in connection with the claims of the
Plaintiffs and Codefendant Claimants as well as the disputed indemnification
claims between the Parties;
WHEREAS, the Parties have agreed, subject to the terms of this Agreement,
that (i) the potential liability to the Plaintiffs and Codefendant Claimants
alleging claims against Delaco and/or Chattem to the extent based on injuries
occurring before the Sale Date ("Pre-Sale Date Dexatrim Claims") would be
allocated to the Trust, (ii) the potential liability to the Plaintiffs and
Codefendant Claimants alleging claims against Delaco and/or Chattem to the
extent based on injuries occurring on or after the Sale Date ("Post-Sale Date
Dexatrim Claims") would be allocated to Chattem, and (iii) Delaco would provide
in the Plan for the Trust to assume the responsibility to pay, indirectly
through payment to Chattem of a set sum, the Post-Sale Date Dexatrim Claims of
Plaintiffs and Codefendant Claimants to the extent arising from allegations of
injury occurring during the time period between the Sale Date and June 30, 1999;
WHEREAS, Chattem, with Delaco's cooperation, has pursued a class action in
the Class Action Court and obtained approval of a Class Action Settlement which
provides for the payment of Dexatrim(R)-related claims of Class Members; and
through that Class Action Settlement has provided Delaco with a release from the
Dexatrim(R)-related claims of Class Members and a release from the
indemnification claims of other parties except Chattem and Sidmak to the extent
such indemnification claims arise from the Dexatrim(R)-related claims of Class
Members;
WHEREAS, on February 12, 2004, Delaco filed for relief under Chapter 11 of
the Bankruptcy Code in the Bankruptcy Court;
WHEREAS, Chattem has filed a claim in the Bankruptcy Case based on, INTER
ALIA, its indemnification rights pursuant to the Sale Agreement and has advised
Delaco that it has expended in excess of $60,000,000 to fund the Settlement
Trust and has started paying the claims of Class Members pursuant to the terms
of the Class Action Settlement so that that it now asserts liquidated claims in
excess of $8,750,000 and unliquidated claims against the bankruptcy estate of
Delaco;
WHEREAS, Chattem and Delaco both recognized early in their negotiations
that attempts to determine the source of the Dexatrim(R) products allegedly
ingested by each Plaintiff would be costly and time consuming; and Chattem and
Delaco now seek to resolve this disputed issue in an equitable fashion;
WHEREAS, Delaco is seeking to confirm a plan of reorganization which will
resolve and satisfy Delaco's obligations to the Plaintiffs;
WHEREAS, Chattem and Delaco desire to resolve their respective rights,
claims and obligations to one another; and
WHEREAS, Delaco seeks approval of certain settlements with insurance
carriers that were reached, in part, because Dexatrim Claims with injury dates
on or after the Sale Date trigger insurance coverage under one or more insurance
policies. Consummation of Delaco's insurance settlement agreements with certain
of its insurers will provide funds to the estate on
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account of Post-Sale Date Dexatrim Claims which will exceed the amount to be
paid by the Trust to Chattem under this Agreement. In addition, the agreement
Delaco reached with Sidmak was, in part, based upon Chattem taking
responsibility within its Class Action Settlement for all Dexatrim(R)-related
claims based on injury occurring on or after the Sale Date.
NOW, THEREFORE, Chattem and Delaco hereby agree to the following, subject
to compliance with applicable legal requirements and other conditions, all as
set forth below:
SECTION 1 - DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
set forth in this Section 1. Terms used in the singular shall be deemed to
include the plural and vice versa.
a) "$" shall denote United States dollars.
b) "Agreement" shall mean this document and all attachments,
appendices, and annexes thereto, as amended and supplemented from time to time.
c) "Bankruptcy Case" shall mean the proceeding instituted by Delaco
under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court styled In re
Delaco, Case No. 04-10899.
d) "Bankruptcy Code" shall mean Title 11 of the United States Code, 11
U.S.C. ss.ss.101-1330.
e) "Bankruptcy Court" shall mean the United States Bankruptcy Court
for the Southern District of New York.
f) "Bankruptcy Court Approval" shall mean the Bankruptcy Court's
approval of this Agreement, evidenced by order entered on its docket.
g) "Chattem" shall mean Chattem, Inc., a Tennessee corporation.
h) "Chattem Bankruptcy Claim" shall mean the proof of claim filed by
Chattem and SIMC in the Bankruptcy Case, designated as Claim No. 626, as it may
be amended.
i) "Chattem Pre-Sale Date Claimant" shall mean a Plaintiff asserting a
Pre-Sale Date Dexatrim Claim who has sued Chattem, but has not filed a claim in
the Bankruptcy Case.
j) "Chattem Released Parties" shall mean Chattem, SIMC, and their
respective past, present and future, direct or indirect parent companies,
subsidiaries, affiliates, divisions, joint venturers, predecessors, successors
and assigns, and their directors, officers, attorneys and other professionals.
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k) "Class Action Court" shall mean the United States District Court
for the Western District of Washington at Seattle presiding over the case IN RE:
PHENYLPROPANOLAMINE (PPA) PRODUCTS LIABILITY LITIGATION, MDL No. 1407.
l) "Class Action Settlement" shall mean that Settlement Agreement
approved by the Class Action Court on November 12, 2004.
m) "Class Member" shall mean a Plaintiff who alleges injuries
occurring on or after the Sale Date from the ingestion of a Dexatrim(R) product.
n) "Class Member Bankruptcy Creditor" shall mean a Class Member who
has filed a claim in the Bankruptcy Case.
o) "Class Member Claimant" shall mean a Class Member who has not filed
a claim in the Bankruptcy Case.
p) "Codefendant Claimant" shall mean a person or entity holding a
Codefendant Claim.
q) "Codefendant Claim" shall mean a claim asserted or that could be
asserted by a codefendant in the Dexatrim Litigation against Chattem and/or
Delaco, including without limitation, claims for indemnification or contribution
whether created by contract, statute, law or equity.
r) "Delaco" or "Debtor" shall mean The Delaco Company, a Delaware
corporation, which is the successor by merger to Xxxxxxxx Medical Company, Inc.
and debtor-in-possession in the Bankruptcy Case.
s) "Delaco Bankruptcy Creditor" shall mean a Plaintiff asserting a
Pre-Sale Date Dexatrim Claim who has filed a claim in the Bankruptcy Case and
who also has sued, or could xxx, Chattem.
t) "Derivative Claimant" shall mean any person asserting the right to
xxx Chattem or Delaco, independently or derivatively, by reason of their
personal or family relationship with a Dexatrim Product User.
u) "Dexatrim Claims" shall mean any and all claims, including assigned
claims, whether known or unknown, asserted or unasserted, regardless of the
legal theory, existing now or arising in the future by a Plaintiff or
Codefendant Claimant arising out of or relating to any of the Dexatrim Products
or their development, manufacture, formulation, testing, distribution,
marketing, labeling, regulatory submissions, advertising, sale, or ingestion.
These "Dexatrim Claims" include, without limitation and by way of example, all
claims for damages or remedies of whatever kind or character, known or unknown,
that are now recognized by law or that may be created or recognized in the
future by statute, regulation, judicial decision, or in any other manner, for:
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i) personal injury and/or bodily injury, damage, death, fear of
disease or injury, mental or physical pain or suffering, emotional or mental
harm, or loss of enjoyment of life;
ii) loss of wages, income, earnings, and earning capacity,
medical expenses, doctor, hospital, nursing, and drug bills;
iii) loss of support, services, consortium, companionship,
society or affection, or damage to familial relations, by spouses, parents,
children, other relatives or "significant others" of Plaintiffs;
iv) wrongful death and survival actions;
v) medical screening and monitoring, injunctive and declaratory
relief;
vi) consumer fraud, refunds, unfair business practices, deceptive
trade practices, Unfair and Deceptive Acts and Practices ("UDAP"), unjust
enrichment, disgorgement and other similar claims whether arising under statute,
regulation, or judicial decision;
vii) compensatory damages, punitive, exemplary, statutory and
other multiple damages or penalties of any kind including, without limitation,
economic or business losses or disgorgement of profits arising out of personal
injury;
viii) pre-judgment or post-judgment interest; and/or
ix) attorneys' fees, costs of court or litigation expenses.
v) "Dexatrim Litigation" shall have the meaning set forth in the
Recitals.
w) "Dexatrim Product User" shall mean any person who allegedly
ingested one or more Dexatrim Products.
x) "Dexatrim Products" shall mean all appetite suppressant products
marketed, distributed, formulated and/or manufactured by or on behalf of
Chattem, Delaco and/or Xxxxxxxx that contained phenylpropanolamine, including
without limitation, products with the brand names "Dexatrim(R)," "Control(R),"
"Appedrine(R)," "Prolamine(R)," "Anorexin(R)," "Coffee, Tea and a New Me(R),"
"Grapefruit Plus(R)," and "Vita-Slim(R)."
y) "Effective Date" shall mean the first Business Day after which all
conditions to the consummation of the Plan set forth in the Plan have been
satisfied or waived, and is the date on which the Plan is substantially
consummated.
z) "Execution Date" shall mean the date of the last signature of
either of the Parties placed on this Agreement.
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aa) "Final Order" shall mean an order of the Bankruptcy Court: (i) as
to which no appeal, notice of appeal, motion to amend or make additional
findings of fact, motion to alter or amend judgment, motion for rehearing or
motion for new trial has been timely filed or, if any of the foregoing has been
timely filed, it has been disposed of in a manner that upholds and affirms the
subject order in all material respects without the possibility for further
appeal or rehearing thereon; (ii) as to which the time for instituting or filing
an appeal, motion for rehearing or motion for new trial shall have expired; and
(iii) as to which no stay is in effect; provided, however, that the filing or
pendency of a motion under Federal Rule of Bankruptcy Procedure 9024 shall not
cause an order not to be deemed a "Final Order" unless such motion shall be
filed within ten (10) days of the entry of the order at issue.
bb) "Parties" shall mean Chattem and Delaco, collectively.
cc) "Party" shall mean either of Chattem or Delaco.
dd) "Person" shall mean an individual, corporation, partnership,
governmental unit, joint venture, association, joint stock company, limited
liability company, limited liability partnership, trust estate, unincorporated
organization, or other entity.
ee) "Plaintiff" shall mean (i) a person asserting a claim arising out
of being a Dexatrim Product User who allegedly sustained bodily injury as a
result of his or her ingestion of a Dexatrim Product, (ii) a Derivative
Claimant, or (iii) a Representative Claimant.
ff) "Plan" shall mean the plan of reorganization to be submitted by
Delaco in the Bankruptcy Case, including all exhibits thereto, as such plan may
be modified or amended from time to time in accordance with its terms, which
plan shall, INTER ALIA, contain the releases and channeling injunction described
in Section 3.2 of this Agreement and not be inconsistent with the terms and
provisions of this Agreement.
gg) "Post-Sale Date Dexatrim Claims" shall have the meaning set forth
in the Recitals.
hh) "Pre-Sale Date Dexatrim Claims" shall have the meaning set forth
in the Recitals.
ii) "Protected Parties" shall have the meaning set forth in Section
3.4.
jj) "Released Claims" shall have the meaning set forth in Section 3.2.
kk) "Released Parties" shall have the meaning set forth in the Class
Action Settlement.
ll) "Reorganized Debtor" shall mean the Debtor on and after the
Effective Date.
mm) "Representative Claimant" shall mean an estate, administrator, or
other legal representative, trust or "special needs trust" of a Dexatrim Product
User or Derivative Claimant.
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nn) "Sale Agreement" shall have the meaning set forth in the Recitals.
oo) "Sale Date" shall have the meaning set forth in the Recitals.
pp) "Settlement Payment" shall mean the payment of $8,750,000
described in Section 2.4.
qq) "Sidmak" shall mean Sidmak Laboratories, Inc., now known as Pliva,
Inc.
rr) "SIMC" shall mean Signal Investment and Management Co., a Delaware
corporation and an affiliate of Chattem.
ss) "Xxxxxxxx" shall have the meaning set forth in the Recitals.
tt) "Trust" shall mean the trust to be established pursuant to the
terms of the Plan to, INTER ALIA, receive funds paid by or on behalf of
insurance companies and other third party plan funders and assume liability for
payment of certain Dexatrim Claims.
SECTION 2- SETTLEMENT TERMS
Section 2.1. Acknowledgement of Existing Obligations. Delaco and Chattem
acknowledge that indemnification obligations to one another exist under the Sale
Agreement, and also acknowledge that for a period after the Sale Date,
Dexatrim(R) products distributed by both companies were available for consumer
purchase in the over the counter pharmaceutical market. In many of the Dexatrim
Litigations, Plaintiffs have identified both Chattem and Delaco as the
distributor of the Dexatrim(R) product allegedly ingested. Significant time and
expenses would be required in an effort to determine which Party distributed
each Dexatrim(R) product. In an effort to resolve that issue fairly and
efficiently and for settlement purposes only, the Parties have agreed to
allocate between themselves the potential liability to Plaintiffs and
Codefendant Claimants. Accordingly, (a) Chattem has included all persons who
allege injuries based on ingestion of Dexatrim(R) occurring on or after the Sale
Date as members of the class of claimants in its Class Action Settlement, (b)
the Trust shall assume the potential liability as between the Parties to
Dexatrim Product Users who allege injuries occurring before the Sale Date, and
(c) the Trust shall assume the responsibility for payment, indirectly through
payment to Chattem of the Settlement Payment, of the Post-Sale Date Dexatrim
Claims of Plaintiffs and Codefendant Claimants to the extent such claimants
allege injuries occurring during the time period between the Sale Date and June
30, 1999.
Section 2.2. Chattem Allocated Liability. On and after the Effective Date,
(a) as between the Parties, Chattem and SIMC shall assume the potential
liabilities for all Post-Sale Date Dexatrim Claims of (i) Plaintiffs who are
either Class Member Bankruptcy Creditors or Class Member Claimants, and (ii)
Codefendant Claimants, and (b) Chattem and SIMC shall indemnify and hold Delaco
and the Trust harmless from Post-Sale Date Dexatrim Claims asserted by Class
Member Bankruptcy Creditors, Class Member Claimants, and Codefendant Claimants,
regardless of when the claim is asserted, and any liability or costs of defense
incurred in respect of such Post-Sale Date Dexatrim Claims, and for breach by
Chattem of any representation in this Agreement.
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Section 2.3. Delaco Allocated Liability. On and after the Effective Date,
(a) as between the Parties, the Trust shall assume the potential liabilities for
all Pre-Sale Date Dexatrim Claims of (i) Plaintiffs who are either Chattem
Pre-Sale Date Claimants or Delaco Bankruptcy Creditors, and (ii) Codefendant
Claimants, and (b) the Trust shall indemnify and hold Chattem and SIMC harmless
from Pre-Sale Date Dexatrim Claims asserted by Chattem Pre-Sale Date Claimants,
Delaco Bankruptcy Creditors, and Codefendant Claimants, regardless of when the
claim is asserted, and any liability or costs of defense incurred in respect of
such Pre-Sale Date Dexatrim Claims, and for breach by Delaco of any
representation in this Agreement.
Section 2.4. Indemnification Payment by the Trust. In consideration of
Chattem's assumption of the potential liability for the Class Member Bankruptcy
Creditors and Chattem's indemnification of Delaco and the Trust for the claims
of any Post-Sale Date Plaintiffs, and in satisfaction of the Trust's
responsibility for payment, indirectly through payment to Chattem of the
Settlement Payment, of the Post-Sale Date Dexatrim Claims of Plaintiffs and
Codefendant Claimants to the extent such claims allege injuries occurring during
the time period between the Sale Date and June 30, 1999, the Trust shall pay
Chattem, within thirty (30) days after the Effective Date, the sum of $8,750,000
(the "Settlement Payment") from funds in the Trust. The Settlement Payment shall
be in full satisfaction, release and discharge of and in exchange for the
Chattem Bankruptcy Claim and the Parties' respective indemnity obligations with
respect to Dexatrim(R) products under the Purchase Agreement, including, without
limitation, any claim for reimbursement of fees or expenses of defense.
Notwithstanding anything to the contrary in this Agreement, the satisfaction,
release and discharge of the Chattem Bankruptcy Claim set forth in this Section
2.4 is not intended to and shall not extend to or otherwise release or discharge
any rights, privileges, benefits, duties, or obligations of either of the
Parties under this Agreement, including without limitation, Section 2.3.
Section 2.5. Reservation of Defenses. This Agreement is for settlement
purposes only and is not and shall not be interpreted to be an admission of
liability by the Parties to each other, or by a Party to any Plaintiff,
Codefendant Claimant, or any other third party. The Parties expressly reserve
any defense which either Party may have to the Dexatrim Claim of any Plaintiff
or Codefendant Claimant.
SECTION 3- CONDITIONS PRECEDENT TO SETTLEMENT
Section 3.1. Conditions Precedent. Prior to the consummation of the
settlement set forth in this Agreement,
(a) Delaco shall have obtained a Final Order granting Bankruptcy Court
Approval of this Agreement;
(b) Delaco shall have obtained a Final Order confirming the Plan;
(c) All of the releases, injunctions and other protections afforded
the Delaco Released Parties under the Class Action Settlement shall be and
remain in full force and effect; and
(d) United States Fidelity and Guaranty Company shall have paid the
cash contribution due to the Trust pursuant to its settlement agreement with
Delaco.
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Notwithstanding the foregoing, Delaco and Chattem, by mutual written
agreement, may waive the conditions contained in (a) and (b) above that the
order confirming the Plan and/or the order granting Bankruptcy Court Approval of
this Agreement shall have become Final Orders.
Section 3.2. Releases; Bankruptcy Channeling Injunction.
Delaco shall provide in the Plan for the Trust to assume any and all
potential liability for the Pre-Sale Date Dexatrim Claims of Chattem Pre-Sale
Date Claimants, Delaco Bankruptcy Creditors and Codefendant Claimants (the
"Released Claims"). Upon the Effective Date, (a) the Released Claims shall be
conclusively compromised, settled and released as to each Protected Party and
(b) the Chattem Pre-Sale Date Claimants, Delaco Bankruptcy Creditors and
Codefendant Claimants shall be permanently enjoined and barred from initiating,
asserting or prosecuting any claims or actions (whether presently held or
asserted or which may in the future be held or asserted), including without
limitation, claims for contribution, indemnity or subrogation and whether
contractual or non-contractual, sounding in tort, contract, warranty, or any
other theory of law, equity, or admiralty, whether by common law or by statute,
arising from or out of, attributable to or in any way causally connected with or
relating to the Released Claims against any Protected Party. Such channeling
injunction shall enjoin against:
(i) making any claim or commencing, conducting, or continuing in any
manner, whether directly or indirectly, any suit, action or other proceeding of
any kind (including a judicial, arbitration, administrative, or other
proceeding) in any forum with respect to any Released Claim against or affecting
any Protected Party or any property or interests in property of any Protected
Party;
(ii) enforcing, attaching, collecting, or recovering, by any manner or
means, whether directly or indirectly, any judgment, award, decree or other
order against any Protected Party with respect to any Released Claim;
(iii) creating, perfecting or enforcing in any manner, whether
directly or indirectly, any lien of any kind against any Protected Party, with
respect to any Released Claim;
(iv) asserting or accomplishing, whether directly or indirectly, any
setoff, right of subrogation, indemnity, reimbursement, contribution or
recoupment of any kind against any obligation due any Protected Party or against
the property of any Protected Party, with respect to any Released Claim;
(v) taking any act, in any manner, in any place whatsoever, that does
not conform to, or comply with, the provisions of the Plan or this Agreement
relating to any Released Claim.
Notwithstanding anything to the contrary herein, the channeling
injunction shall not enjoin:
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(i) the rights of Persons to the treatment accorded them under the
Plan, as applicable, including the rights of Persons with Dexatrim Claims to
assert such claims solely against the Trust;
(ii) the rights of the Debtor, the Reorganized Debtor, the Trust and
Chattem to enforce and to assert any claim under this Agreement.
Such releases and injunctions shall remain effective regardless of
changes in circumstances or the condition of Delaco or the Trust, the Protected
Parties or the claimants holding Released Claims, discovery of new or additional
facts, or changes in applicable law. The releases or injunctions granted in the
Plan shall release and enjoin the pursuit of any Released Claim against Chattem
and any other Protected Party in exchange for the rights of the holder of such
Released Claim to participate in the Trust pursuant to the Plan.
Delaco shall give Chattem prior written notice of any intended waiver
by Delaco of any condition to the Effective Date of the Plan, or any proposed
modification or amendment to the Plan, if such waiver, modification or amendment
relates to or affects the releases and channeling injunction set forth herein or
any other material provision of this Agreement. Such notice shall be given at
any time after the Execution Date, whether or not this Agreement has been
previously approved by the Bankruptcy Court.
Section 3.3. Withdrawal of Objection to Claims Objection.
Upon the order granting Bankruptcy Court Approval of this Agreement
becoming a Final Order, Chattem's objection to the relief requested in Delaco's
First Omnibus Objection to Claims shall be deemed withdrawn with prejudice,
without the requirement of any further act or action by Chattem or Delaco.
Section 3.4. Protected Parties.
Protected Parties shall mean the following:
a) Chattem Released Parties;
b) suppliers of the raw material phenylpropanolamine used in the
manufacture of Dexatrim Products (other than Alps Pharmaceuticals Ind. Co. Ltd
and Sidmak);
c) suppliers of materials other than phenylpropanolamine, machines or
equipment used in the manufacture of Dexatrim Products;
d) Chattem's contract manufacturers of finished Dexatrim Products
(other than Alps Pharmaceuticals Ind. Co. Ltd. and Sidmak);
e) any and all distributors of Dexatrim Products, including, without
limitation, wholesale distributors, private label distributors, retail
distributors, pharmacies and pharmacists;
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f) any other Person (specifically including the Consumer Healthcare
Products Association and its predecessors ("CHPA") but excluding Alps
Pharmaceuticals Ind. Co. Ltd and Sidmak) involved in the development, design,
manufacture, formulation, testing, distribution, marketing, labeling, regulatory
submissions, advertising or sale of Dexatrim Products (including, without
limitation, consultants to Delaco or Chattem); and
g) for each entity identified above, all of its past, present and
future direct or indirect parent companies, subsidiaries, affiliates, divisions,
joint venturers, predecessors, successors and assigns and, collectively, all of
their past, present and future directors, officers, employees, agents,
attorneys, shareholders, underwriters and insurers, and for each person
identified above, all of his, her, or their respective past, present or future
heirs, estates and personal representatives.
SECTION 4- MISCELLANEOUS
Section 4.1. Confidentiality. Any information provided by a Party regarding
a Plaintiff or otherwise obtained pursuant to the settlement evidenced by this
Agreement shall be kept confidential and shall not be disclosed except to
appropriate persons to the extent necessary to process bankruptcy claims of
Class Members, or support the motion for approval of this Agreement before the
Bankruptcy Court, support confirmation and consummation of the Plan, or as
otherwise required by law or the Bankruptcy Court. If any third party requests
disclosure of any settlement negotiations and communications leading up to this
Agreement, the Parties agree that all such negotiations and communications are
confidential and shall be deemed to fall within the protection afforded to
compromises and to offers to compromise under Rule 408 of the Federal Rules of
Evidence and any parallel state law provisions.
Section 4.2. Amendment/Waivers. No amendment or waiver of any provision of
this Agreement shall be effective unless the same shall be in writing and signed
by a duly authorized representative of the Party against which such amendment or
waiver is sought to be enforced, and such written and signed amendment or waiver
shall be effective only in the specific instance and for the specific purpose
set forth in the text of the amendment or waiver. The failure of a Party to seek
redress for violation of, or to insist upon strict performance of, any provision
of this Agreement shall not be deemed a waiver of that provision or estop that
Party from asserting fully all its rights under this Agreement.
Section 4.3. Arms' Length, Good Faith Agreement. The Parties acknowledge
and agree that this Agreement was negotiated at arms' length, and was mutually
drafted and entered into freely by the Parties. The Parties represent and
warrant to each other that they have read and fully understand each of the
provisions of this Agreement and have relied on the advice of competent legal
counsel of their own choosing. In the event any ambiguity is found to exist in
this Agreement, such ambiguity is not to be construed against either Party as
the drafter of the document. The Parties further agree to cooperate in
demonstrating to a court, should the issue arise, that this Agreement was
negotiated and implemented in good faith.
Section 4.4. Entire and Integrated Agreement. This Agreement, including any
Exhibit referenced herein and attached hereto, is intended by the Parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and
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understanding of the Parties with respect to the subject matters contained
herein. This Agreement supersedes any and all prior promises, representations,
warranties, agreements, understandings and undertakings between the Parties and
their representatives with respect to such subject matters and there are no
promises, inducements, considerations, representations, warranties, agreements,
understandings, or undertakings with respect to such subject matters other than
those set forth or referred to herein.
Section 4.5. Representations. Each Party represents on behalf of itself
that (a) subject to Bankruptcy Court Approval of this Agreement, this Agreement
is the legal and valid obligation of such Party, enforceable in accordance with
its terms, covenants, and conditions, (b) subject to Bankruptcy Court Approval
of this Agreement with respect to Delaco, such Party has all requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the settlement contemplated hereby, (c) the
execution, delivery and performance of this Agreement have been duly and validly
authorized by all requisite action on its part, and (d) the person executing
this Agreement on its behalf is duly authorized to do so. Delaco represents that
(a) other than Dexatrim(R) and Appedrine(R) products, Dexatrim Products have not
been distributed by Xxxxxxxx or Delaco at any time after July 1, 1996, (b) other
than Dexatrim(R) and Appedrine(R) products, neither Xxxxxxxx nor Delaco has
sold, transferred or licensed the trademarks in connection with distribution in
North America for any product distributed by Xxxxxxxx that contained
phenylpropanolamine, and (c) it has no knowledge or notice of any pending
Dexatrim Claims based on injuries resulting from the alleged ingestion of any
Dexatrim Product other than Dexatrim(R).
Section 4.6. Successors and Assigns. This Agreement shall be binding on the
successors and assigns of the Parties, including, without limitation, the Trust.
Section 4.7. No Admission of Liability or Lack of Merit; No Precedential
Value. This Agreement is intended solely for settlement purposes and neither
this Agreement, the Plan, the motion seeking Bankruptcy Court Approval of this
Agreement, any of the statements in the notice documents in connection with the
Bankruptcy Case, nor any statement, transaction or proceeding in connection with
the negotiation, execution or implementation of this Agreement or the Plan, is
intended to be or shall be construed as or deemed to be evidence of an admission
or concession by Chattem or Delaco to each other or of any liability or
wrongdoing or of the truth of any allegations asserted by any Plaintiff against
it or them, and no such statement, transaction or proceeding shall be admissible
in evidence for any such purpose except for purposes of the enforcement of this
Agreement in any proceeding.
Section 4.8. Bankruptcy Court Approval. This Agreement is subject to
Bankruptcy Court Approval. Delaco shall file a motion as soon as reasonably
practicable after the Execution Date of this Agreement to obtain such Bankruptcy
Court Approval, and Chattem shall use reasonable best efforts to cooperate with
Delaco in obtaining such Bankruptcy Court Approval and in obtaining confirmation
of the Plan. Such cooperation shall include, without limitation, providing
non-privileged information (reasonably requested by Delaco and not prohibited by
existing agreements between Chattem and third parties) regarding the Class
Action Settlement, Dexatrim Claims, and settlement negotiations with Plaintiffs,
all such information to be subject to the confidentiality restrictions in
Section 4.1. Chattem shall not object to or oppose confirmation of the Plan
provided that the Plan incorporates this Agreement and does not impair,
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diminish or detract from the terms of this Agreement. If the Bankruptcy Court
does not approve this Agreement in its entirety on or before the earlier of (a)
confirmation of the Plan or (b) December 31, 2005, or denies with prejudice
approval of this Agreement, either Party may terminate this Agreement upon prior
written notice to the other Party. In the event of termination of this
Agreement, this Agreement shall be null and void for all purposes and the
Parties shall be restored to their respective positions as of the Execution
Date.
Section 4.9. Titles and Headings. The headings of the sections of this
Agreement are included for convenience only and shall not be deemed to
constitute part of this Agreement or to affect its construction.
Section 4.10. Notice to Parties. Any notice, request, instruction or other
document to be given by any Party to another Party shall be in writing and
delivered personally or sent by Federal Express or facsimile (which such
facsimile notice shall be deemed effective as of the time of receipt of
confirmation by the sending party) as follows, or as otherwise instructed by a
notice delivered to the other Party pursuant to this Section 4.10:
If to Chattem:
Xxxxxx & Xxxxxx PLLC
Suite 1000 Volunteer Building
000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx, Esq.
X. Xxxxx Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
-and-
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Delaco:
Xxxxx X. Xxxxxxx
The Delaco Company
0000 Xxxxxx xx xxx Xxxxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
-and-
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Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: X.X. Xxxxx, Esq.
Xxxxxxxxx Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
-and-
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Any notice to the Trust, made from and after the Effective Date, shall be made
to such address as the Trust shall specify or as shall be specified in the Plan.
Section 4.11. No Third Party Beneficiaries. No provision of this Agreement
is intended to create any third party beneficiary to this Agreement, except the
Protected Parties and the Trust.
Section 4.12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflicts of law and principles thereunder.
Section 4.13. Original Signatures. This Agreement may be signed in multiple
counterparts, each of which shall be deemed to be an original and all of which
shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
dates set forth opposite the respective signatures below.
CHATTEM, INC.
Dated: June 30, 2005 By: /s/ A. Xxxxxxxxx Xxxxxx XX
--------------- -------------------------------
A. Xxxxxxxxx Xxxxxx XX
President & Chief Operating Officer
THE DELACO COMPANY
Dated: July 5, 2005 By: /s/ Xxxxx X. Xxxxxxx
--------------- -------------------------------
Xxxxx X. Xxxxxxx
Chief Restructuring Officer
SIGNAL INVESTMENT & MANAGEMENT CO.,
solely for purposes of Sections 2.2, 2.3
and 2.4
Dated: June 30, 2005 By: /s/ A. Xxxxxxxxx Xxxxxx XX
--------------- -------------------------------
A. Xxxxxxxxx Xxxxxx XX
President
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