Exhibit 10.2
RESTATED STANDARD INDEMNITY AGREEMENT CONFIDENTIAL
AGREEMENT
THIS AGREEMENT, dated September 1, 1992, by and between Showa Denko
America, Inc. ("SDA"), and LHP Holdings Corp., (which, together with the
subsidiaries listed on Attachment 1 hereto, are referred to collectively as the
"Company").
W I T N E S S E T H
WHEREAS, the Company has manufactured, sold, and/or distributed products
containing L-tryptophan ("LTCPs"), some or all of which may have contained L-
tryptophan ("LT") sold by SDA; and
WHEREAS, claims have been asserted and lawsuits have been instituted
against SDA, the Company, and/or direct or indirect customers of the Company for
whom the Company is or may become responsible to provide a defense (individually
a "Secured Customer" and collectively the "Secured Customers"), alleging that
one or more of them is liable for personal injuries arising from ingestion of
LTCPs manufactured, sold, or distributed by the Company; and
WHEREAS, in partial settlement of the Company's claim for indemnification
against SDA arising from SDA's sale of LT to the Company, or to an entity from
which the Company may have purchased, without any admission of liability by SDA
or by the Company with respect to the claims between them or against them, SDA
and the Company wish to provide for their respective responsibilities for the
defense of such claims and for the payment of judgments and settlements in
respect of such claims as provided in this Agreement; and
WHEREAS, the Company is unwilling to enter into this Agreement unless
Showa Denko K.K., a Japanese company ("SDK"), enters into a Guaranty Agreement
with the Company substantially in the form annexed to this Agreement as
Attachment 2;
NOW, THEREFORE:
1. This Agreement shall apply to all claims, whether in litigation or
not, alleging liability for personal injuries arising from the ingestion of
LTCPs manufactured, sold, or distributed by the Company asserted against SDA,
the Company, and/or Secured Customers, or against any one or more of them,
whether on, before, or after the date hereof (except as specifically provided
herein). Each such claim is hereinafter referred to individually as a "Claim,"
and all such claims are hereinafter referred to collectively as the "Claims."
Each person asserting a Claim is hereinafter referred to individually as a
"Claimant" and all such persons are hereinafter referred to collectively as the
"Claimants."
2. SDA agrees to indemnify and to hold harmless the Company from and
against any obligation (whether direct or by virtue of any obligation to a
Secured Customer or any cross-claim, third-party claim, claim for contribution
or indemnification, or otherwise) to make payment of any settlement or judgment
for damages in favor of any person in respect of a Claim where the LTCPs
allegedly ingested by the Claimant or Claimants making such Claim contained LT
sold by SDA, as follows:
(a) If a proximate cause of the personal injuries giving rise to
liability, as determined on the basis of a preponderance of the evidence,
including but not limited to epidemiological, chemical, and medical
evidence, was a constituent of the LT product sold by SDA or was a factor
for which SDK, SDA or any other company or other entity controlling,
controlled by or under common control with SDA (SDK and each such other
company or other entity, an "SDA Affiliate") was responsible, then, subject
to subparagraph (b) below, SDA shall be solely responsible for the
Company's payment
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obligations, whether direct or indirect as noted above, in respect of such
settlement or judgment;
(b) If a proximate cause of the personal injuries giving rise to
liability, as determined on the basis of a preponderance of the evidence,
including but not limited to epidemiological, chemical, and medical
evidence, was (i) the sale of LT, or of an LTCP for which the recommended
daily dosage contained more than 100 mg. of LT, by the Company or by any
Secured Customer subsequent to March 17, 1990, or (ii) the sale of an LTCP
for which the recommended daily dosage contained 100 mg. or less of LT by
the Company or by any Secured Customer subsequent to May 23, 1990, or (iii)
the addition of any substance to, or tampering with, any LT or an LTCP
while that LT or LTCP was in the possession, custody or control of the
Company or any Secured Customer (each such sale, addition or tampering, an
"Exclusion Event"), then SDA and the Company shall seek to reach agreement
regarding the Company's responsibility, if any, for payment in respect of
said settlement or such judgment as is fair under all the circumstances;
(c) If SDA and the Company are unable to agree on the matters which are
the subject of the provisions of subparagraphs (a) or (b) above, then SDA
and the Company shall submit the matter to binding arbitration as specified
in paragraph 15 hereof;
(d) Either SDA or the Company may make any payment contemplated under this
paragraph 2 without prejudice to its right to seek reimbursement from the
other under the procedures set forth in paragraph 15;
(e) Each of the Company-and SDA agrees that it will provide prompt notice
to the other if it learns of the existence of any Exclusion Event (each
such notice, a "Notice of Exclusion"), it being agreed, however, that a
failure by SDA or the Company to provide such notice shall not (i) be
deemed to constitute a material breach of this Agreement or (ii) result in
any change in the rights or obligations of SDA or the Company pursuant to
this Agreement, including without limitation their respective rights and
obligations under
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or arising by virtue of subparagraph (b) above. A Notice of Exclusion of
any Claim shall be null and void and of no effect unless provided prior to
the earlier to occur of (i) sixty (60) days prior to the date of the
commencement of the earliest to occur of the trial, arbitration or
mediation of such Claim and (ii) thirty (30) days prior to any settlement
of such Claim.
(f) Any Notice of Exclusion pursuant to this paragraph shall be made in
the manner provided in paragraph 19 (which paragraph specifies the party to
whom and the place notice is to be delivered).
3. SDA agrees (i) to designate Citibank, N.A., or another bank mutually
acceptable to the parties as the disbursement agent (the "Disbursement Agent")
pursuant to a Disbursement Agent Agreement substantially in the form annexed to
this Agreement as Attachment 3 (such agreement, or any replacement thereof
substantially in such form, the "Disbursement Agent Agreement") and (ii) to
maintain the Disbursement Agent Agreement in effect during the term of this
Agreement. In support of its payment obligations hereunder and under similar
agreements with other customers of SDA, SDA has delivered to the Disbursement
Agent an irrevocable standby letter of credit in favor of the Disbursement Agent
pursuant to the terms of the Disbursement Agent Agreement in the amount of
Twenty Million US Dollars ($20,000,000) substantially in the form of the letter
of credit annexed as Exhibit B to the Disbursement Agent Agreement. If amounts
are drawn on the letter of credit, SDA during the term of this Agreement will
cause an amendment or supplement to the letter of credit or a new letter of
credit to be delivered to the Disbursement Agent providing for a restored limit
of Twenty Million US Dollars ($20,000,000) within thirty (30) days after such
drawing. During the term of this Agreement, no later than thirty (30) days
prior to the expiration date of any letter of credit (as it may have been
extended from time to time), SDA will deliver to the Disbursement Agent a
renewal of the letter of credit for a term of at least two years or a substitute
letter of credit for such term.
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The Company shall be a Beneficiary within the meaning of the Disbursement
Agent Agreement, but only so long as (i) this Agreement remains in effect and to
the extent provided in this Agreement or (ii) the Company otherwise remains
entitled to the benefits of the Disbursement Agent Agreement under paragraph 16
of this Agreement. The Company acknowledges that other direct and indirect
customers of SDA will have equal rights as Beneficiaries under the Disbursement
Agent Agreement.
The Company acknowledges (i) that any claim by it to the benefits of the
Disbursement Agent Agreement must be submitted and administered in strict
compliance with the following procedures, (ii) that the Company has no right to
receive, and the Disbursement Agent has no authority to make, payments by the
Disbursement Agent or draws under the letter of credit unless the claim has been
certified for payment to the Disbursement Agent by the Verification Agent
hereafter referred to, and (iii) that it may claim payment hereunder only as
long as this Agreement remains in effect or the Company otherwise remains
entitled to benefits under paragraph 16 hereof.
The procedures for submission and review of any claim by the Company shall
be the following:
(a) The Verification Agent shall be a mutually acceptable lawyer
independent of the parties. If such Verification Agent or any successor
shall die or resign or otherwise become unable or cease to continue to act
as such, SDA, after consultation with the Company and the parties to any
other similar agreements with SDA, shall appoint a successor Verification
Agent, who shall be a lawyer independent of the parties. The Verification
Agent will act independently and impartially on behalf of both parties in
reviewing claims for payment and certifying amounts to the Disbursement
Agent for payment and shall use professional care in the performance of his
function. The Verification Agent shall not be liable to either party for
determinations made by him in good faith and with due care even though such
determinations subsequently are held to be
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erroneous. The Verification Agent shall have no duties except to SDA, the
Company, and the parties other than SDA to agreements similar to this
Agreement (such parties being referred to in the Disbursement Agent
Agreement as Beneficiaries). Persons asserting Claims, plaintiffs with
judgments against any of SDA, the Company, or Secured Customers, and
Secured Customers shall have no right to assert any third-party beneficiary
relationship against the Verification Agent or any claim to payment from
the Disbursement Agent under this Agreement, except that any Secured
Customer that has entered into a separate indemnification agreement between
itself and SDA entitling it to do so may directly exercise its rights as a
Beneficiary under the Disbursement Agent Agreement pursuant to such
separate indemnification agreement. The Company shall have no
responsibility for any part of the fees and expenses of the Verification
Agent or the Disbursement Agent.
(b) If a judgment for money damages is entered against the Company or its
Secured Customer, or a settlement amount is reduced to a judgment
enforceable against the Company or its Secured Customer, as to which the
Company contends that SDA is required to make payment pursuant to paragraph
2 hereof, the Company may give written notice thereof (the "Payment Request
Notice") to SDA and to the Verification Agent setting forth a brief
statement of the basis for its contention, accompanied by a certified copy
of the judgment, together with evidence that the judgment has become
enforceable against the judgment debtor under applicable law. If SDA does
not respond in the terms permitted by subparagraph (c) hereof within ten
(10) business days of the receipt by it of the Payment Request Notice, the
Verification Agent, subject only to his review of relevant documents and
his verification of any pertinent additional circumstances, shall certify
the amount claimed to the Disbursement Agent for payment pursuant to the
provisions of the Disbursement Agent Agreement.
(c) In response to a Payment Request Notice, SDA may
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(1)acknowledge to the Company and the Verification Agent its obligation
hereunder to pay part or all of the amount claimed, in which event the
Verification Agent shall forthwith certify the amount or such part thereof,
as the case may be, to the Disbursement Agent for payment pursuant to the
provisions of the Disbursement Agent Agreement, and any portion of such
claim as to which SDA does not acknowledge its obligation hereunder to pay
shall be governed by clause (3) of this subparagraph (c);
(2) state that it proposes to take effective steps to stay or suspend
the enforcement of such judgment pending post-trial applications or appeal,
including the posting of any bond or other security required for that
purpose, in which event, provided that the Verification Agent is satisfied
that such stay or suspension has been effected within five (5) business
days after notice to SDA and the Verification Agent from the Company of an
attempted enforcement of such judgment against the Company, further action
by the Verification Agent in respect of such judgment shall be deferred
until such stay or suspension expires; or
(3) object to payment of part or all of the amount requested, stating
briefly its grounds of objection and that it intends to submit its
contentions in arbitration pursuant to paragraph 15 hereof and SDA agrees
to use its best efforts to expedite any such arbitration, to select its
arbitrator promptly pursuant to the applicable procedures and to cause such
person to select the neutral arbitrator expeditiously, and to have the
arbitration held no later than 180 days after submission of the matter to
arbitration. If SDA submits the matter to arbitration within thirty (30)
days of its response, the liability of SDA, if any, shall be determined by
the decision of the arbitrators. If the arbitrators award an amount to the
Company, then the Verification Agent shall certify the sum so awarded by
the arbitrators to the Disbursement Agent for payment pursuant to the
provisions of the Disbursement Agent Agreement. If in subsequent
proceedings in conformity with the CPR Rules (as defined in paragraph 15)
and the U.S. Arbitration Act the award of the arbitrators is overturned and
it is determined that the amount awarded by the arbitrators
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and paid by the Disbursement Agent to or on behalf of the Company exceeds
the amount that was properly owed by SDA, then the Company agrees to pay
promptly such excess amount plus interest at the legal rate. If the
Company shall commence judicial proceedings to review a decision of the
arbitrators, the Verification Agent shall certify to the Disbursement Agent
for payment the amount determined in such judicial proceedings to be due
from SDA. If SDA shall object to payment of less than all the amount
claimed by the Company, then the Verification Agent shall proceed, as to
the balance claimed, pursuant to clause (1) of this subparagraph (c).
(d) If SDA in response to a Payment Request Notice objects to payment of
part or all of the amount requested by the Company, so that the
Verification Agent cannot certify to the Disbursement Agent a payment to be
made in full satisfaction of the judgment, then the Company may elect to
require such a full payment by SDA notwithstanding its objection by (i)
giving notice to the Verification Agent of such election not later than ten
(10) business days after receipt of SDA's objection, including therewith
evidence acceptable to the Verification Agent demonstrating the Company's
compliance with the Escrow Requirement, and (ii) satisfying the Escrow
Requirement, as hereinafter defined, with respect to all that part of the
judgment as to which SDA made objection. Promptly upon receipt of such
timely notice with such evidence, the Verification Agent shall certify the
amount to which SDA objected to the Disbursement Agent for payment pursuant
to the provisions of the Disbursement Agent Agreement. To exercise this
election, the Company must deposit a sum of money in an amount equal to all
that part of the judgment to which SDA made objection in an interest-bearing
escrow account with a substantial mutually acceptable bank and execute an
escrow agreement in standard form (the "Escrow Agreement") with said bank
for the benefit of SDA (the "Escrow Requirement"). If the Company exercises
this election, then SDA will submit the dispute to arbitration within thirty
(30) days as provided in subparagraph 3(c)(3) above. The Escrow Agreement-
shall provide that the deposited escrow funds, with interest earnings
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net after escrow fees thereon, will be released by the escrow agent to the
parties as their interests may appear pursuant to and in accordance with
the award of the arbitrators on the dispute as to such amount to which SDA
made objection, or as otherwise directed in a writing signed by both SDA
and the Company. If the award is overturned in any subsequent proceedings
(as above provided), and it is determined that either SDA or the Company
received an amount from the escrow larger than that to which it was
entitled, then the party receiving such excess agrees to pay promptly such
excess amount, plus the attributable share of the net interest earnings on
the amount that it received, plus interest at the legal rate accruing after
the escrow distribution, to the party determined to be entitled thereto.
(e) In any case in which the Verification Agent is required to verify the
appropriateness of payment of an amount claimed by the Company, the
Verification Agent shall promptly review the documents submitted and
conduct such further investigation, if any, of additional facts and
circumstances as he determines to be appropriate. SDA and the Company
shall cooperate fully in any such investigation and shall respond to
inquiries from the Verification Agent and provide explanations within two
(2) business days of any such inquiry. The Company shall use its best
efforts to cause any Secured Customer to cooperate in like manner.
Whenever he deems it appropriate, the Verification Agent may seek
information by conference telephone calls with counsel for the parties, and
the parties agree to cause their respective counsel to cooperate fully with
the Verification Agent for that purpose, subject to the maintenance of any
privilege.
(f) At the request of either party, the Verification Agent may require
that procedures be followed to assure that a payment from the Disbursement
Agent will be applied solely to payment of the judgment or arbitral award
as to which claim has been made, and for no other purpose. These
procedures may include a direction to the Disbursement Agent to issue a
check directly to the order of a judgment plaintiff against delivery of a
satisfaction
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of the judgment and release of the defendant or defendants against which
the judgment or portion thereof being paid was entered, satisfactory to
counsel for the parties.
4. SDA shall have no obligation to indemnify for or to make any payments
in respect of any judgment or part of a judgment (i) for damages caused by the
intentional tort of the Company or any Secured Customer, (ii) for punitive
damages attributable to conduct of the Company or any Secured Customer, (iii)
for civil or criminal penalties, or (iv) for any award of multiple damages
caused by the intentional misconduct or violations of law by the Company or by
any Secured Customer; but SDA's obligation to indemnify shall apply to the
extent that the Company's or any Secured Customer's liability for such damages
or penalties is attributable solely to the acts or the failure to act of SDA or
of any SDA Affiliate. However, nothing in the preceding sentence shall
constitute a waiver of any rights that the Company or a Secured Customer may
have under common law or statute to seek indemnification or contribution from
SDA or any affiliate thereof in respect of damages or penalties of a type
specifically described in the preceding sentence that are imposed upon the
Company or the Secured Customer, subject to the provisions of paragraphs 14 and
15. SDA shall not be obligated to make any payments in respect of a default
judgment on a Claim against the Company or any Secured Customer unless SDA or
counsel retained by SDA was responsible for defense of the Claim in litigation
at the time of default. SDA shall have no obligation under this Agreement to
pay for any settlement of any Claim entered into by the Company or any Secured
Customer prior to the date of this Agreement, but SDA may agree to accept such
obligation in a separate agreement in writing.
5. The parties hereto agree that the Company shall use best efforts to
secure the compliance of its Secured Customers with the provisions of this
Agreement that pertain to them. Failure of such compliance on the part of a
Secured Customer that adversely affects the ability of SDA to conduct a defense
against any Claim shall be a basis for SDA to withhold the benefits of this
Agreement from such Secured Customer with respect to such Claim, but shall not
be a basis for SDA to withhold the benefits of this Agreement from the Company
except as expressly
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provided in the last sentence of paragraph 6(b), paragraph 9(d), or the third
sentence of paragraph 14 of the Agreement.
6. (a) SDA shall pay the legal fees and expenses as incurred in, and
shall be entitled to supervise and direct, the defense of any Claims
which fall within the provisions of this Agreement made against SDA,
the Company, or any Secured Customer including, without limitation,
any Claim presented to any court, administrative body, other tribunal,
or otherwise and including the negotiation of settlement of any Claim
before or after such presentation.
(b) The Company hereby consents to be jointly represented with SDA by
common counsel selected by SDA (such common counsel, so selected,
"Common Counsel") in respect of any Claim where SDA, in its sole
discretion, deems it advisable to retain such Common Counsel. The
Company will use best efforts to obtain the consent of each Secured
Customer involved in the Claim to such joint representation. SDA
shall be responsible for all fees and disbursements of such Common
Counsel as they are incurred. SDA and the Company agree promptly to
enter into a common representation agreement or agreements
substantially in the form annexed to this Agreement as Attachment 4
(and the Company will use best efforts to cause any involved Secured
Customers to become parties thereto) providing for the retention of
Common Counsel on a Claim-by-Claim basis, which agreements shall
provide for the waiver of any conflicts of interest that may exist.
SDA shall have no obligation to defend any Secured Customer who shall
refuse to agree to a request for such common representation, and SDA
shall have no obligation to make payment hereunder to the extent that
such payment obligation is in respect of a Claim against a Secured
Customer who refused to participate in the common defense against such
Claim.
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(c) If the Company or SDA shall terminate this Agreement, and SDA is
not then in default of its obligations under the provisions of
paragraph 3 above, then the terminating party shall withdraw from
representation by Common Counsel; PROVIDED, HOWEVER, that in the event
SDA terminates this Agreement pursuant to the second sentence of
paragraph 16 of this Agreement, the Company will be deemed to have
withdrawn from all applicable common representation agreements and to
have consented to the continued representation by Common Counsel of
SDA and all other parties to any common representation agreement in
respect of any Claims. Except as set forth in the immediately
preceding proviso, the Company and SDA each hereby expressly agrees
that the non-terminating party may continue to be represented by
Common Counsel. The Company and SDA each waives any conflicts of
interest that continued representation of the other party by Common
Counsel in accordance with this Agreement might otherwise entail. If
SDA is in default of its obligations under the provisions of paragraph
3 above, and if the Company or SDA shall terminate this Agreement,
then at the Company's request SDA shall withdraw from representation
by Common Counsel, and each party hereby expressly agrees that the
Company and the Secured Customers may continue to be represented by
Common Counsel and waives any conflicts of interest that such
representation might otherwise entail. If the Company terminates this
Agreement or if SDA terminates this Agreement pursuant to the
provisions of the second sentence of paragraph 16, SDA shall have no
further obligation to defend Secured Customers under this Agreement.
(d) Nothing herein shall preclude SDA, the Company, or any Secured
Customer from retaining separate counsel in respect of any Claim, but
the party retaining separate counsel shall instruct such separate
counsel to cooperate with SDA's counsel unless it is prejudicial to do
so, and a party retaining separate
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counsel shall be responsible for payment of the fees and disbursements
of its separate counsel unless otherwise agreed by SDA.
(e) At the request of the Company, SDA will pay the reasonable fees,
costs and disbursements of one national coordinating counsel for the
Company, who shall also be responsible for contact with each of the
Company's Secured Customers. If the Company shall have retained
national coordinating counsel, then SDA will use best efforts to
consult with such counsel regarding the selection of counsel for
particular cases and regarding important decisions in the litigation.
SDA will instruct Common Counsel (i) to provide such national
coordinating counsel, on a timely basis, copies of all pleadings,
discovery, and status reports and material correspondence so that such
national coordinating counsel will be kept fairly apprised of the
progression of the litigation; (ii) to consult with such national
coordinating counsel regarding material Court filings made on behalf
of the Company or a Secured Customer on a timely basis in advance of
making such filings; and (iii) to keep such national coordinating
counsel advised of settlement negotiations at least bimonthly. SDA
and Common Counsel shall endeavor to contact the Company and the
Secured Customers through the Company's national coordinating counsel.
National coordinating counsel will be provided reasonable access to
the files of Common Counsel for the review and copying of such files
on all matters related to the joint defense.
7. The Company will cooperate fully with SDA, and will use best efforts
to obtain the Secured Customers' cooperation with SDA, in the investigation and
defense of claims, including but not limited to making its or their records and
personnel available to SDA and its attorneys and providing witnesses to present
testimony at any trial, arbitration, or proceeding, if requested to do so, and
consulting with SDA's attorneys prior to providing any documents or information
to any claimant or any person acting on behalf of a claimant. SDA will also
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cooperate in the defense of Claims in cases in which it is not a party. The
Company agrees promptly to instruct all counsel which, prior to the date of this
Agreement, have represented the Company in connection with any Claim (i) to
provide counsel for SDA with copies of all written communications, and to
disclose to counsel for SDA the substance of all oral communications, made prior
to the date of this Agreement to counsel for any plaintiff in any Claim (other
than documents or oral statements either previously provided to counsel for SDA
or exclusively in respect of procedural issues); and (ii) except with respect to
a Withdrawn Claim (as defined in paragraph 13 below) to refrain from oral or
written communications with any such plaintiff's counsel (x) without providing
Common Counsel prior notice of the opportunity to attend, or (y) as authorized
by counsel for SDA, or (z) as required by law.
8. The Company represents and agrees that (a) no default judgment on any
Claim has been entered against it or to its knowledge any of its Secured
Customers as of the date of this Agreement, and it will not, and will use best
efforts to cause its Secured Customers not to, knowingly permit a default
judgment to be taken against it or them hereafter without SDA's express written
consent; (b) neither it nor, to its knowledge, any of its Secured Customers has
knowingly made, and it will not, and will use best efforts to cause its Secured
Customers not to, knowingly make, any admission of liability for any Claim; and
(c) neither it nor, to its knowledge, any of its Secured Customers has entered
into any agreement for the compromise or settlement of any Claim (except for any
such agreements as have been identified in writing to SDA prior to execution of
this Agreement) or will hereafter enter into any agreements for the compromise
or settlement of any Claim without SDA's consent (which consent shall not be
unreasonably withheld), and any such settlement payment made shall be subject to
paragraph 2(d) above.
9. (a) In the event of any material breach by the Company or by SDA of
this Agreement, then the other party ("the non-breaching party") may,
at its sole option, waive the breach or, in addition to any other
remedies provided herein
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(including without limitation arbitration pursuant to paragraph 15),
(i) terminate this Agreement or (ii) terminate this Agreement with
respect to any Claim the defense of which has been materially
adversely affected by such breach. If the party alleged to be in
material breach disputes the grounds for termination of the Agreement,
then such party must submit the matter to arbitration within 30 days
after the notice of termination or be deemed to have accepted it.
(b) The failure of a Secured Customer to comply with the provisions
of this Agreement shall not be deemed a breach of this Agreement by
the Company entitling SDA to invoke the termination rights in
subparagraph (a) above if and so long as the Company has exercised,
and continues to exercise, its best efforts to persuade the Secured
Customer to comply.
(c) In the event of a material breach by the Company, and in addition
to the remedy in subparagraph (a) above, SDA may seek to reduce (in
whole or in part) the portion of any settlement or judgment it must
pay under this Agreement to the extent such amount was adversely
affected by such breach. If the Company disputes any such reduction
in payment, then SDA must submit the matter to arbitration pursuant to
paragraph 15 hereof. Should SDA reduce its portion of any settlement
or judgment as provided herein, the Company shall not be required to
pay any part or all of said settlement or judgment by virtue of this
provision except by order of the arbitrators.
(d) SDA may also invoke the provisions of paragraph 9(c) above to
seek to reduce its obligation as to amounts attributable to a Secured
Customer in a situation described in paragraph 9(b) above.
(e) Nothing contained in this paragraph 9 shall limit the right of a
party to terminate this Agreement pursuant to paragraph 16 of this
Agreement.
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10. SDA shall be solely responsible for retaining and supervising claims
adjusters for Claims, except for any claims asserted before the date hereof for
which the Company has engaged an adjuster who has already contacted the claimant
or the claimant's lawyer or representative (the "Contacted Claimants"), and the
Company agrees not to retain claims adjusters for any other Claims. The Company
has, concurrently with the execution of this Agreement, provided SDA with a list
of all such Contacted Claimants, specifying the responsible adjuster and the
status of the Claims. SDA will pay all costs of the adjusters retained by it
and, beginning with the date of this Agreement, all reasonable costs of
adjusters previously retained by the Company for purposes of adjusting Claims of
Contacted Claimants. Notwithstanding the foregoing, if SDA shall fail to retain
and supervise such claims adjusters in a timely manner, as a result of which the
Company or the Secured Customers may be adversely prejudiced, the Company shall
have the right to retain and supervise such adjusters at SDA's expense.
11. Adjusters retained by SDA will keep the Company's national
coordinating counsel (if any) and/or its insurer fully apprised of the status of
all Claims not in litigation on at least a bimonthly basis. Adjusters retained
by the Company in respect of Contacted Claimants shall keep SDA apprised of the
status of such Claims as reasonably requested by SDA, and such adjusters shall
be available to pursue settlement as requested by SDA.
12. (a) SDA may settle any Claim without prior approval of or prior
notice to the Company or any Secured Customer if such settlement makes
no admissions, acknowledges no liabilities, includes an unconditional
release of the Company and any involved Secured Customers and either
(i) the amount of the settlement is $5,000 or less, or (ii) the
Company or any Secured Customer will have no responsibility for
payment of such settlement pursuant to paragraph 2 hereof. If SDA
shall settle a Claim without prior notice to the Company or any
Secured Customer, SDA shall provide prompt notice of the settlement
thereafter.
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(b) SDA may settle any claim with prior notice to the Company or any
Secured Customer for an amount in excess of $5,000 if the Company or
any of its Secured Customers may have some responsibility for payment
of such settlement pursuant to paragraph 2, but only if SDA has given
the Company a timely Notice of Exclusion with respect to such claim as
required by paragraph 2(e) hereof. Any such settlement shall make no
admissions, acknowledge no liabilities, and include an unconditional
release of the Company and any involved Secured Customers. If SDA
intends to assert any claim against the Company for contribution
pursuant to paragraph 2(b) relating to the settlement, such prior
notice of the settlement will also contain notice of such intent,
stating the portion of the settlement amount expected to be so claimed
by SDA and an explanation in reasonable detail of SDA's basis for such
claim. SDA shall have no obligation to delay settlement to await a
response from the Company or any Secured Customer, but SDA will
endeavor to give the Company or any Secured Customer such reasonable
period to respond as will not jeopardize the opportunity to settle.
It is agreed that neither party is the agent or the attorney in fact
of the other party and cannot bind the other party to any settlement
agreement in any Claim or suit.
(c) Whether the provisions of paragraphs 2(a) or 2(b) of this
Agreement apply to the settlement of any Claim, unless the parties
hereto have agreed otherwise all amounts payable to the plaintiff or
claimant in such settlement shall be advanced by SDA, without
prejudice to SDA's rights to seek reimbursement pursuant to the
provisions of paragraph 2(b) and, in the event of disagreement, to
arbitrate the dispute pursuant to the provisions of paragraph 15, and
in any such arbitration the Company may raise any disagreement it may
have had regarding the amount of settlement. If SDA settles any Claim
against itself in an action in which a Claim is also asserted against
the Company, such settlement will also extend to and cover the
Company. SDA shall expressly extend releases achieved by such
17
settlement to cover the Company's Secured Customer(s); PROVIDED,
HOWEVER, that the Company's Secured Customer(s) have participated with
SDA in the common defense and have executed a waiver of conflicts
satisfactory to SDA.
13. Notwithstanding any other provision of this Agreement to the contrary,
the Company may elect not to be represented by Common Counsel, or to terminate
its representation by Common Counsel, in respect of any particular Claim (each
such election by the Company, an "Election") in the event that the Company
determines in its sole discretion that representation of the Company by Common
Counsel in respect of such Claim is not or may not be in the best interest of
the Company (each Claim in respect of which the Company makes an Election, a
"Withdrawn Claim"). Any Election (i) shall be made in writing and shall
expressly refer to this paragraph 13, and (ii) shall be effective when delivered
to SDA and, in the event that Common Counsel has represented the Company in
defending the Claim to which such Election relates, to Common Counsel. It is
agreed that SDA's obligations under paragraphs 1, 2, 3 and 6 of this Agreement
shall be inapplicable with respect to any Withdrawn Claim, and, without limiting
the generality of the foregoing, that SDA shall have no obligation (i) to make
any indemnification or other payment to the Company pursuant to this Agreement
in respect of any Withdrawn Claim, or (ii) to provide or pay for any national
coordinating counsel for the Company in respect of any Withdrawn Claim;
provided, HOWEVER, that nothing in the foregoing sentence shall affect the
obligation of SDA to pay any fees or disbursements of Common Counsel incurred in
defending the Company in a Claim prior to the date of an Election by the Company
with respect to that Claim. In addition, the Company irrevocably waives any
right it may have (whether under this Agreement, at common law or otherwise) to
recover from SDA or any SDA Affiliate any fees or disbursements of any counsel
(other than Common Counsel) incurred by the Company in connection with any
Withdrawn Claim or the defense thereof.
14. Each of SDA and the Company hereby covenant during the term of this
Agreement not to xxx or to assert any cross-claim, third-party claim, or other
claim against the
18
other or against any SDA Affiliate or against any parent, subsidiary, or
affiliate of the Company in respect of any Claim, but the foregoing shall not
preclude a judicial action to compel arbitration or to enforce an award
resulting from an arbitration pursuant to the provisions of paragraph 15. The
Company covenants to use its best efforts to cause its Secured Customers to
covenant during the term of this Agreement not to xxx or to assert any cross
claim, third-party claim, or other claim against SDA or any SDA Affiliate, in
which event SDA will agree not to assert any such claims against such Secured
Customers or their parents, subsidiaries, or affiliates in respect of any Claim.
If the Company or any Secured Customer (whether or not such Secured Customer
shall have agreed not to do so) shall bring any claim against SDA or any SDA
Affiliate in respect of a Claim, SDA shall have available the remedies provided
in the last sentence of paragraph 6(b)and paragraph 9(d) hereof. The
provisions of this paragraph only apply for so long as this Agreement is in
effect. After termination by any party, cross-claims, third-party claims or
other claims may be brought without restriction. Each party hereto waives any
statute of limitations, any defense of laches, and any procedural rules of court
which apply to the assertion of cross-claims, third-party claims, or other
claims against each other relating to any Claim for the period from the date
hereof through the date that is one year from and after the latest of (i) the
date a settlement is entered into with the claimant/plaintiff relating to such
Claim, (ii) the date a non-appealable, final judgment relating to such Claim is
entered as to any party hereto; and (iii) the date of termination of this
Agreement. Each party also agrees that no pleading, discovery response, order,
verdict, judgment, or court decision in any lawsuit asserting a Claim shall have
collateral-estoppel or similarly preclusive effect with respect to any
litigation or other proceedings between the parties.
15. Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be settled by arbitration in accordance with the
Center for Public Resources Rules for Non-Administered Arbitration of Business
Disputes (the "CPR Rules"), by three arbitrators, of whom each party shall
appoint one and the third shall be the Chairman. The
19
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. ch.
1, and judgment upon the award rendered by the arbitrators may be entered by any
court having jurisdiction thereof. Arbitration shall take place in a city to be
agreed upon by the parties or, in the absence of agreement, in New York City,
Chicago, Atlanta, Los Angeles, or San Francisco (whichever city is
geographically closest to the venue of the Claim out of which the matter is to
be arbitrated), subject to the power of the arbitrators to hold hearings or
meetings wherever they deem it appropriate. The arbitrators shall apply the
substantive law of the State of New York. Arbitration of disputes concerning
the parties' payment obligations in respect of a judgment rendered on a Claim
shall be based on the trial record with respect to such Claim and such further
evidence as either party may present to the arbitrators. Arbitration of
disputes concerning the parties' payment obligations in respect of a settlement
of a Claim shall be based on the pretrial record developed with respect to such
Claim and such further evidence as either party may present to the arbitrators.
No pleading, discovery response, order, verdict, judgment or court decision in
any lawsuit asserting a Claim shall have a collateral-estoppel or similarly
preclusive effect with respect to an arbitration to determine the proximate
cause of the personal injuries or the cause of damages giving rise to the
liability (the responsibility for which is being disputed in the arbitration).
The parties agree that discovery authorized by the arbitrators can be pursued
anywhere in the world and that each will cooperate to accomplish same. Any
party obstructing orderly discovery can be sanctioned at the discretion of the
Chairman. As provided in the CPR Rules, attorneys fees and costs may be awarded
to a prevailing party as part of the arbitral award.
16. Either party may terminate this Agreement at any time in the event the
terminating party is entitled to do so under Paragraph 9(a). In addition, SDA
may terminate this Agreement in the event that (i) the Company has made an
Election in respect of one or more Claims and (ii) SDA determines in its sole
discretion that the exercise of the right by the Company to make such Election
is or may be prejudicial to SDA. Paragraphs 2, 4, 13 and 15 (with respect only
to all settlements and judgments entered into or awarded prior to termination),
20
paragraph 6(c) (except in respect of any Withdrawn Claim), this paragraph 16 and
paragraph 17 shall survive termination of this Agreement. In addition, SDA will
have the right to terminate this Agreement with respect to a Claim, and promptly
retender the defense of a Claim back to the Company, in the event it is
determined (and SDA shall have the burden of proof to establish) that such Claim
arises solely out of LTCPs and is based upon LT contained therein acquired from
some person or entity other than SDA (directly or indirectly), or that the LTCPs
sold by the Company to the claimant contained no LT sold by SDA; PROVIDED,
HOWEVER, that the right of termination granted to SDA in this sentence may be
exercised no later than sixty (60) days prior to the date of commencement of the
trial, arbitration or mediation of such Claim.
Notwithstanding termination, SDA shall be responsible for adjustment costs
for services rendered pursuant to paragraph 10 and the Company's national
coordinating counsels' fees and costs pursuant to paragraph 6 (except as
otherwise provided in paragraph 13), incurred prior to termination. Once
terminated, this Agreement will not survive or affect the rights of the parties
except as specifically set forth in this paragraph.
17. Communications concerning and/or the exchange of information or
materials of any kind between or among the parties hereto or their counsel,
Secured Customers, insurers, or adjusters concerning the Claims are and shall be
made in furtherance of the common defense of such Claims (whether pursued
through common or separate counsel) and are intended to be, and shall remain,
confidential and privileged to the full extent permitted under the attorney
client privilege, work-product doctrine, trade secret privilege, and any other
applicable privilege or protective doctrine. Neither participation in this
Agreement nor the sharing of information pursuant to it is intended to reduce or
diminish the confidentiality of such information or to waive any privilege or
protection which may apply in the absence of such participation or sharing of
information. The obligations under this paragraph shall survive termination of
this Agreement.
21
This Agreement in no way restricts the rights of any party hereto to use
evidence against each other in any arbitration under this Agreement or
litigation between the parties hereto following termination of this Agreement.
18. This Agreement contains the entire agreement between the parties, and
replaces all prior agreements, if any, between or among the parties, with
respect to the settlement of Claims and to the allocation of responsibility
between the parties for the payment of settlements of or judgments on Claims.
No modifications of this Agreement shall be effective unless in a written
agreement properly executed by authorized representatives of each of the parties
hereto. Nothing in this Agreement shall amend or modify any agreement or
understanding between the parties hereto, or preclude any action, relating to
reimbursement of costs and expenses of the Company, and any other damages
associated therewith, incurred in connection with the product recall of LTCPS,
nor shall this paragraph preclude any party to argue the pertinence to
proceedings between the parties of purchase orders, invoices or other agreements
between the parties relating to the purchase and sale of LT.
19. Notices by either party to the other with respect to the subject
matter of this Agreement shall be provided by facsimile with confirming copy by
mail, addressed as follows:
If to SDA:
Showa Denko America, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx, Xxxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
tel: (000) 000-0000
fax: (000) 000-0000
Attention: President
22
with a copy to:
Xxxxxxxxxxx X. Xxxxxxx, Esq.
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
tel: (000) 000-0000
fax: (000) 000-0000
If to the Company:
LHP Holdings Corp.
0000 X. 000 Xxxxxx
Xxxxxxxx, XX 00000
Attention: President
With a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Ropers, Majeski, Kohn, Bentley, Xxxxxx & Xxxx
0000 Xxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
tel: (000) 000-0000
fax: (000) 000-0000
The Company and SDA each reserves the right to change its address and/or
facsimile number for the purposes set forth above by giving fifteen (15) days'
prior written notice of such change to the other party either at its address for
the giving of notices set forth above in this paragraph or to such other address
as the party giving such notice shall have specified to the other party in the
manner set forth above.
20. The signatures of the representatives of SDA and the Company at the
end of this Agreement constitute the representation by each that it is the duly
authorized representative of SDA and the Company, respectively, and that they
are authorized to enter into this Agreement.
21. This Agreement shall be governed by the law of the State of New York;
provided, however, that if applying Federal law would result in upholding a
claim of the attorney-client privilege, the work product-doctrine, the trade
secret privilege, or any other applicable privilege
23
or protective doctrine which otherwise would be lost or waived if New York law
were to be applied, then Federal law shall govern this Agreement insofar as such
privilege or doctrine is concerned.
22. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original.
23. The Company represents, covenants, and agrees that (i) it will cause
its subsidiaries listed on Attachment 1 to fulfill each of the obligations,
representations, and warranties required of or made by the Company in this
Agreement; (ii) each of the obligations, representations, and warranties
required of or made by the Company will be deemed to have been made by or
required of the Company and each of its subsidiaries listed on Attachment 1;
(iii) a breach of such obligations, representations, or warranties by any one or
more of the subsidiaries listed on Attachment I that is not timely performed by
the Company deemed to be a breach by the Company; and (iv) the Company has full
authority to act for and bind its said subsidiaries, and can act for them, in
all matters covered by this Agreement. It is further agreed that each
subsidiary listed on Attachment 1 shall be considered to be part of the Company
and shall be entitled to benefits under this Agreement only so long as it
remains a wholly-owned subsidiary (direct or indirect) of the Company, and the
Company shall no longer be responsible under this paragraph 23 for conduct of
any such subsidiary after the date the subsidiary ceases to be a wholly-owned
subsidiary of the Company.
24
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives.
SHOWA DENKO AMERICA, INC.
By /s/ Xxxxx Xxxxxxxxx
-------------------------
Xxxxx Xxxxxxxxx
President
LHP HOLDINGS CORP.
By /s/ Xxxx X. Xxxxxxxxx
-------------------------
Xxxx X. Xxxxxxxxx
President
25
Attachment 1
to Agreement Dated as of September 1, 1992
By and Between Showa Denko America, Inc.
and LHP Holdings Corp.
LIST OF SUBSIDIARIES
Xxxxxx Health Products Inc.
Xcel Laboratories, Inc.
26
