SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT ("Agreement"), made as of June ___ 1996, by and
between X.X. Xxxxxxx Company, a corporation organized under the laws of the
State of Missouri ("JCN"), and Deloitte & Touche LLP, formerly known as Deloitte
& Touche, and successor to Touche Xxxx & Co. ("Deloitte").
WHEREAS, JCN believes it may have one or more claims against Deloitte,
arising out of professional services Deloitte performed or was engaged to
perform for JCN, the JCN Employee Stock Ownership Plan or the JCN Employee Stock
Ownership Trust (collectively, "the JCN ESOT"), and certain of JCN's affiliates
and subsidiaries (all such professional services shall collectively be
hereinafter called the "Services");
WHEREAS, Deloitte denies all liability and all allegations of wrongdoing
directed at Deloitte, and the settlement provided for herein is not and shall
not in any way be construed or deemed to be evidence or an admission or a
concession of any fault, liability, fact or amount of damages, or any other
matter whatsoever on the part of Deloitte, and Deloitte is entering into this
Agreement solely to avoid the further substantial expense and inconvenience of
potential litigation and finally put to rest all Claims (as such term is defined
herein);
WHEREAS, for purposes of this Agreement, the term "Claims" shall mean any
and all claims or causes of action, including, without limitation, any and all
debts, suits, rights of action, dues, sums of money, accounts, bonds, bills,
covenants, contracts, controversies, agreements, promises, damages, judgments,
executions, demands or obligations of any kind or nature whatsoever, matured or
unmatured, liquidated or unliquidated, absolute or contingent, known or
unknown, at law, admiralty, equity or otherwise, (i) which are directly or
indirectly related in any way to the Services, irrespective of for whom, or
on whose behalf, such Services are claimed to have been performed, including,
without limitation, any request that Deloitte reissue, or consent to the use
of, any independent auditor's report Deloitte has issued on any financial
statements of JCN; (ii) in connection with any pending, settled or potential
litigation, including any litigation or claims that were settled as part of a
certain document titled "SETTLEMENT AGREEMENT AND MUTUAL RELEASE AS OF JUNE
30, 1995," including, without limitation, claims for indemnity or
contribution, or for costs, expenses (including, without limitation, amounts
paid in settlement) and attorneys' fees incurred; and/or (iii) which a person
or entity has, owns or holds, or might have had or owned or held, or
hereafter might have, own or hold, individually, representatively,
derivatively or in any other capacity that were, might, could or should have
been, alleged in, or relate to, or which are in any way based upon or arise
from any pending, settled or potential litigation, or which arise out of,
relate to, or are in any way respecting any of the acts, facts, events,
circumstances, matters, claims, transactions or occurrences alleged or that
were, might, could or should have been alleged in any pending, settled or
potential litigation or in any discovery or other proceedings in connection
therewith;
WHEREAS, the parties to this Agreement consider it desirable and in
their best interests that the Claims be compromised and settled upon and
subject to the terms and conditions herein;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the parties agree as follows:
1. INCORPORATION OF RECITALS. Each of the foregoing recitals is
incorporated by reference herein and made a part hereof.
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2. SETTLEMENT AMOUNT. (a) Any and all Claims shall be and hereby are
fully and finally settled, satisfied, released and discharged for the sum
of U.S. four million six hundred thousand dollars ($4,600,000.00)
("Settlement Payment"), such sum to be paid by Deloitte to
JCN no later than four (4) business days after the final execution of this
Agreement and the delivery to Deloitte of all duly executed Releases
provided for herein ("Payment Date").
(b) From the Settlement Payment, the sum of U.S. seven hundred fifty
thousand dollars ($750,000.00) will be deposited into an escrow account
established on terms agreed to by JCN's and Deloitte's counsel ("Defense
Escrow") as security for the payment of amounts required to be paid by JCN
to any Indemnified Person (as that term is defined in paragraph 8(a))
pursuant to paragraph 8 of this Agreement. JCN shall pay any Indemnified
Person amounts justifiably and reasonably due to the Indemnified Person
pursuant to paragraph 8 of this Agreement within thirty (30) days after the
Indemnified Person sends notice to JCN of any such payments that are due to
the Indemnified Person, and if JCN does not so pay the Indemnified Person
those amounts justifiably and reasonably due pursuant to paragraph 8 within
the 30-day period, then the Indemnified Person shall have the right,
pursuant to paragraph 8 of this Agreement, to obtain payment of such
amounts to be paid from the Defense Escrow. The Defense Escrow shall be
established at a bank to be mutually agreed upon ("Escrow Agent"), and
shall be invested in the manner set forth in the Escrow Agreement by and
among JCN, Deloitte and the Escrow Agent, and any accrued interest shall be
paid quarterly to JCN. Any funds
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remaining in the Defense Escrow eighteen (18) months after the
Payment Date shall be paid by the escrow agent to JCN
on the first business day thereafter that (i) there are no Third Party
Claims (as defined in paragraph 8(a)) pending against any Indemnified
Person, and (ii) JCN represents and warrants in writing to Deloitte that
JCN will not thereafter assert any claims that might reasonably result in
Third Party Claims, provided that any duty of JCN to indemnify pursuant to
paragraph 8 hereof shall survive any such payment to JCN of the funds
remaining in the Defense Escrow.
3. COSTS. Each party hereto shall pay its own costs, expenses
(including, without limitation, amounts paid in settlement) and attorneys'
fees incurred in connection with this Agreement.
4. RELEASES. (a) Concurrently with the signing and delivery of this
Agreement, JCN shall execute and deliver to Deloitte a properly executed
Release in the form annexed hereto as Exhibit A.
(b) Concurrently with the signing and delivery of this Agreement, JCN
shall also deliver to Deloitte Releases in the forms set forth in Exhibits
B and C, as appropriate, in favor of Deloitte properly executed by the
persons and entities identified in Exhibit D.
5. REPRESENTATIONS AND WARRANTIES BY JCN. JCN represents and warrants
to Deloitte as of the date of this Agreement, with knowledge that Deloitte is
relying thereon, as follows:
(a) JCN has been duly incorporated and is validly existing and in
good standing as a corporation under the laws of the State of Missouri as
of the date of this Agreement.
(b) JCN has all requisite corporate power and authority under the
laws of the State of Missouri to execute, deliver and perform this
Agreement.
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(c) All necessary corporate proceedings of JCN have been duly taken
to authorize the officers of JCN to execute, deliver and perform this
Agreement on behalf of JCN.
(d) This Agreement constitutes the legal, valid and binding
obligation of JCN and is enforceable against JCN in accordance with its
terms.
(e) JCN is the sole and lawful owner of all rights, title and
interest in any and all Claims against Deloitte which are released or
intended to be released by JCN pursuant to this Agreement, and has not
assigned any of its rights, title or interest in said Claims to any person
or entity.
(f) JCN represents that it has provided to Deloitte true and correct
copies of its audited financial statements for the years ended December 31,
1994, and December 31, 1995, and the most currently available interim
financial statements for the year ending December 31, 1996. JCN represents
that these financial statements are presented in conformity with generally
accepted accounting principles, consistently applied, and that these
financial statements are free of any material misstatements.
(g) JCN represents that neither it nor its counsel is aware of any
person or entity with any present intent to assert claims against any
Indemnified Person relating to the Services.
(h) No representation or warranty made by JCN in this Agreement
contains or will contain any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein not
misleading.
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6. COVENANT BY JCN. JCN covenants that it will not xxx or prosecute
any claim or action regardless of the form of the action (whether in
contract, statute, tort, including, without limitation, negligence, or
otherwise) against Deloitte in connection with any request to reissue, use or
consent to the use of a previously issued independent auditor's report on any
of JCN's financial statements, including, without limitation, any decision by
Deloitte at any time, whether in the past or in the future, with respect to
any such request.
7. REPRESENTATIONS AND WARRANTIES BY DELOITTE. Deloitte represents
and warrants to JCN as of the date of this Agreement, with knowledge that JCN
is relying thereon, as follows;
(a) Deloitte is validly existing and in good standing as a limited
liability partnership duly registered under the laws of the State of
Delaware as of the date of this Agreement.
(b) Deloitte has all requisite partnership power and authority to
execute, deliver and perform this Agreement.
(c) This Agreement constitutes the legal, valid and binding
obligation of Deloitte and is enforceable against Deloitte in accordance
with its terms.
(d) Deloitte represents that neither it nor its counsel is aware of
any person or entity with any present intent to assert claims against any
Indemnified Person relating to the Services.
(e) No representation or warranty made by Deloitte in this Agreement
contains or will contain any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein not
misleading.
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8. INDEMNIFICATION. (a) JCN agrees to indemnify and hold harmless each
of Deloitte and its present and former parent companies, subsidiaries,
affiliates, predecessors and successors, their present and former
directors, officers, partners, principals, employees, agents, servants and
attorneys, and their respective representatives, heirs, executors,
administrators and assigns (each, an "Indemnified Person") from any and all
loss, liability, obligation, damage or expense (including, without
limitation, reasonable attorneys' fees and reasonable and necessary
expenses) (collectively, "Indemnified Expenses") up to an aggregate maximum
of U.S. two million five hundred thousand dollars ($2,500,000.00) suffered
or incurred by all Indemnified Persons arising from, relating to, or
otherwise in respect of any claim made or action commenced (regardless of
the form of the action, whether in contract, statute, tort, including,
without limitation, negligence, or otherwise) at any time by any person or
entity (including, without limitation, present and former subsidiaries,
affiliates, directors, officers and shareholders of JCN, participants in
the JCN ESOT, trustees of the JCN ESOT, the insurers of JCN, the JCN ESOT,
and their respective officers, directors, and trustees, JCN's counsel, and
advisers or consultants to the JCN ESOT), (i) which relates directly or
indirectly to the Services or the Claims (as defined herein); or (ii) which
arises out of any breach or alleged breach of the representations and
warranties in paragraph 5 of this Agreement. All such claims and actions
are referred to in this Agreement as "Third Party Claims."
(b) Each Indemnified Person agrees to give prompt notice to JCN of
the assertion of any Third Party Claim against such Indemnified Person;
provided, that the
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omission so to promptly notify JCN with respect to a Third Party
Claim will not relieve JCN from any liability which it may have
to such Indemnified Person under this paragraph 8 except to the extent that
such failure has materially prejudiced JCN with respect to the defense of
such Third Party Claim. The Indemnified Person shall have the right to
control the defense of any such Third Party Claim. JCN's obligation to pay
any of the Indemnified Person's attorneys' fees and expenses incurred in
defense shall be limited to payment of reasonable attorneys' fees and
reasonable and necessary expenses. JCN shall have the right to participate
in (but not control) the defense of any Third Party Claim and to retain its
own counsel in connection therewith, but the fees and expenses of any such
counsel for JCN shall be borne by JCN. JCN shall not settle any Third
Party Claim without the prior written consent of the Indemnified Person,
which consent shall not be unreasonably withheld.
(c) To the extent that an Indemnified Person may have rights to
recover from any person or entity, other than another Indemnified Person,
all or part of any payment JCN has made to or on behalf of the Indemnified
Person pursuant to this paragraph 8, those rights shall be assigned to
JCN. The Indemnified Person shall execute appropriate documents, in a form
acceptable to counsel for JCN and Deloitte, reasonably necessary to
effectuate the assignment of such rights of recovery to JCN.
(d) Any indemnification required by this paragraph 8 shall be made
by periodic payments of the amounts thereof during the course of the
investigation or defense, as and when bills are received or loss,
liability, obligation, claim, damage or expense is incurred by an
Indemnified Person, and such payments shall be made within the time
period and in the manner provided for in paragraph 2(b) hereof.
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(e) In the event that JCN enters into any settlement of claims
between JCN and any person or entity that has or may have any Claims
against Deloitte, JCN agrees, unless Deloitte agrees in writing it is not
necessary, to use its best efforts to obtain, as a condition of settlement,
either (i) a covenant, in a form acceptable to Deloitte, by such person or
entity not to bring suit against Deloitte relating to the Claims, or (ii) a
release, substantially in the form annexed hereto as Exhibit A, or as
otherwise agreed to in writing by Deloitte, by such person or entity of
Deloitte as to all Claims. Deloitte acknowledges that in obtaining any
such covenant or release, it may be necessary for JCN to disclose to such
person or entity, subject to paragraph 10 hereof, certain confidential
information concerning this Agreement.
(f) Any amount that JCN may recover (by judgment, settlement or
otherwise) from any person or entity arising from or relating to any Claims
shall be reduced (or eliminated) by the amount of any judgment or
settlement that any such person or entity recovers or becomes entitled to
recover from any Indemnified Person by way of contribution,
indemnification, or otherwise, as the result of any claims asserted by JCN
against such person or entity arising from or relating to any Claims. The
determination, in litigation or otherwise, of the amount of the foregoing
reduction or elimination, including, without limitation, the amount such
person or entity may be entitled to recover from any Indemnified Person,
may be made without either JCN or such person or entity having to commence
against any Indemnified Person, or otherwise having to name any Indemnified
Person as a party in, an action. Nothing in this subparagraph (f) relieves
JCN of its obligations pursuant to paragraph 8(a) to indemnify and hold
harmless Deloitte and all other Indemnified Persons.
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(g) Any disputes that relate solely to obligations arising under
this paragraph 8 shall, at the request of either JCN or Deloitte, be
resolved by the submission of the same to arbitration in accordance
with the Expedited Commercial Rules of the American Arbitration
Association, except as modified in this subparagraph (g). The
arbitration proceeding shall be conducted in Missouri or such
other location to which the parties may agree. If JCN or
Deloitte pursues a claim under this paragraph 8 and such claim
results in an Arbitrator's decision, both parties agree to accept
such decision as binding and nonappealable. The decision shall be issued
in the form of a written opinion not more than thirty (30) days after
written submissions by each party and any arbitration hearing. Unless the
parties otherwise agree, there shall be no prehearing discovery. Each
party shall bear its own attorneys' fees relating to any arbitration. All
arbitration costs shall be shared equally between the parties.
9. NO ADMISSION OF LIABILITY. Deloitte does not admit any liability to
JCN or any other person or entity, nor does Deloitte admit any malpractice,
negligence, wrongdoing or liability, however described. Deloitte expressly
denies any such wrongdoing or liability. The parties hereto are settling the
Claims (as the term is defined herein) solely in the interest of reasonable
compromise and avoidance of continued expense associated with the Claims.
Neither this Agreement, nor any of its terms and provisions, nor any of the
negotiations or proceedings in connection with it (i) is, or is intended to be,
an admission by Deloitte or any evidence of the truth of any matter alleged or
the validity of any claim that could have been asserted, or of any liability,
fault or wrongdoing of Deloitte, or (ii) subject to the provisions of
paragraph 9 of this
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Agreement, shall be offered or received in evidence in any action or other
proceeding of any kind other than such proceedings as may be necessary to
consummate, defend or enforce this Agreement.
10. CONFIDENTIALITY. (a) The parties to this Agreement and their
respective attorneys represent, warrant and covenant that the existence of
this Agreement and all of its terms ("Confidential Information") are and
shall be treated as confidential and shall not be disclosed, described or
characterized to any other person or entity. In light of the confidential
matters addressed by this Agreement, JCN agrees that it will not in any way
make reference to or suggest to any person or entity that Deloitte or its
partners, principals, employees or agents engaged in any conduct which
could be construed directly or indirectly to be malpractice, negligence, or
any other conduct that forms the basis of or constitutes the Claims
released herein. This confidentiality provision and agreement is a
material term of this Agreement, breach of which the parties hereby agree
will cause Deloitte damage. Any disputes between Deloitte and JCN that
relate solely to obligations arising under this paragraph 10 shall, at the
request of either JCN or Deloitte, be resolved by submission of the same to
arbitration, in accordance with the procedures set forth in paragraph 8(g)
hereof. In any such arbitration, Deloitte and JCN shall respectively have
the customarily applicable burdens of proof in civil actions in Missouri.
In no event shall JCN be liable for any damages to Deloitte for breaches of
this paragraph 10 in any amount exceeding $400,000.
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(b) In the case of a subpoena, court order or other third party
request seeking or purporting to require access to this Agreement or
information about its terms, JCN agrees to notify Deloitte immediately upon
receipt of the subpoena, court order or other request and promptly to
provide Deloitte a copy thereof, to use its best efforts to obtain an
appropriate protective order, stay of disclosure or other available
remedies to provide Deloitte a reasonable opportunity to take action to
prevent disclosure of the Agreement or any information relating to the
Agreement, and to otherwise cooperate in such efforts by Deloitte. Except
to the extent that any failure to produce or delay in disclosure or
production of this Agreement or any information relating to the Agreement
would subject JCN or its agents or attorneys to any penalties for
noncompliance with a court order, such disclosure or production shall be
made only after (i) receiving written consent from Deloitte, and (ii)
obtaining a stipulation of confidentiality substantially in the form
annexed hereto as Exhibit E, executed by or on behalf of each person or
entity who will be provided access to this Agreement or any information
concerning its terms. JCN agrees to deliver promptly to Deloitte copies of
all executed stipulations of confidentiality.
(c) JCN shall obtain and deliver to Deloitte separately executed
stipulations of confidentiality substantially in the form set forth in
Exhibit E executed by or on behalf of each person or entity who will be
provided access to this Agreement or any information concerning its terms
in connection with the execution of a release: (i) as provided for in
paragraph 4 hereof, concurrently with the execution of this Agreement; and
(ii) as provided for in paragraph 8(e) hereof, at the time of any
applicable disclosure of Confidential Information.
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(d) Notwithstanding the provisions of subparagraph (a), JCN may
produce or disclose Confidential Information to JCN's insurers to the
extent necessary in connection with any dispute relating to the Claims
without further written consent from Deloitte; provided that, prior to such
disclosure, JCN (i) requires its insurers to execute a stipulation of
confidentiality substantially in the form attached hereto as Exhibit E; and
(ii) promptly delivers copies of all executed stipulations to Deloitte.
Deloitte also acknowledges that Confidential Information may be disclosed
to JCN's accountants and attorneys to the extent necessary for the
provision of professional services to JCN; provided that, prior to any such
disclosure, JCN (i) requires any such accounting firms and law firms to
execute a stipulation of confidentiality substantially in the form attached
hereto as Exhibit E; and (ii) promptly delivers copies of all executed
stipulations to Deloitte. Notwithstanding the provisions of the
immediately preceding sentence, to the extent that Confidential Information
has been disclosed prior to the date of execution of this Agreement to the
persons or entities set forth on Exhibit F, which JCN hereby represents and
warrants are the only persons or entities to whom such Confidential
Information has been disclosed prior to such date, such persons or entities
shall execute a stipulation of confidentiality substantially in the form
attached hereto as Exhibit E promptly after the execution of this
Agreement, and JCN shall promptly deliver copies of all such executed
stipulations to Deloitte.
(e) Deloitte acknowledges that JCN believes JCN may be requested to
disclose Confidential Information to the Securities and Exchange Commission
("SEC") or to any exchange on which JCN may seek to have its securities
listed ("Exchange"), in the event
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that JCN seeks to register its securities with the SEC or list
them on an Exchange, or to otherwise disclose Confidential
Information in connection with, and in a manner consistent
with, JCN's financial statement reporting to the extent required by
applicable law. Deloitte further acknowledges that JCN believes that in
such circumstances JCN may be requested to file this Agreement with the SEC
and the Exchange. JCN agrees not to disclose any Confidential Information
in any filing with or submission to the SEC or the Exchange, or in
connection with such financial statement reporting, without first (i)
giving Deloitte twenty (20) days written notice, where practicable, but not
less than ten (10) days written notice, of any such filing, submission or
proposed use, and at that time copies thereof to the extent they relate to
the Confidential Information; (ii) consulting with Deloitte, and, as
applicable, the SEC staff and/or the Exchange concerning the Confidential
Information to be disclosed and the manner in which any such Confidential
Information may be disclosed; and (iii) using its best efforts to avoid any
disclosure of Confidential Information, and to otherwise pursue the most
restrictive method of disclosure reasonably available.
11. HEIRS AND SUCCESSORS BOUND. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns, and any corporation, partnership or other entity into or
with which any party hereto may merge, consolidate or reorganize.
12. NOTICE. Except as to any notice required in paragraph 10, any notice
required by this Agreement shall be deemed delivered if sent by first class mail
or by facsimile. With respect to any notice required in paragraph 10, such
notice shall be deemed delivered only by facsimile or by overnight delivery.
Any notice shall be delivered to the following persons:
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If to Deloitte:
Deloitte & Touche LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: General Counsel
Facsimile No.: 000-000-0000
and to
Xxxxxxx X. Xxxxx
Xxxxxx & Xxxxxx
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: 312-853-7036
If to JCN:
Price Xxxxx
General Counsel
X.X. Xxxxxxx Company
000 Xxxx Xxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Facsimile No.: 000-000-0000
and to
Xxxxxx X. Xxxxxx
Xxxxxxx & Xxxx X.X.
Suite 2500
0000 Xxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Facsimile No.: 000-000-0000
Each party may change the address for notice by providing notice to the other
party as set forth above.
13. VENUE; CHOICE OF LAW. The parties hereto submit themselves to the
jurisdiction of the courts of the State of Missouri and the United States
District Court for the Western District of Missouri for the purposes of the
enforcement of this Agreement. This Agreement shall be
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governed by and shall be interpreted in accordance with the laws of the State
of Missouri, without regard to Missouri's rules governing conflicts of law.
14. AUTHORIZATION; CONSULTATION WITH ATTORNEYS. Each party and signatory
to this Agreement and the Releases attached hereto represents and warrants to
each other party hereto that such party or signatory has full power, authority
and legal right, and has obtained all approvals and consents necessary, to
execute, deliver and perform all actions required under this Agreement. Each
party to this Agreement acknowledges that this Agreement was drafted jointly by
the parties hereto, that each party has consulted with such party's own
attorneys and fully understands the terms hereof, and that each party has
received legal advice from such party's own attorneys regarding the advisability
of entering into the settlement provided for herein and is voluntarily executing
the Agreement.
15. PARAGRAPH HEADINGS. Paragraph headings contained in this Agreement
are inserted solely as reference aids for the ease and convenience of the
reader; they shall not be deemed to define or limit the scope or substance of
the provisions they introduce, nor shall they be used in construing the intent
or effect of such provisions or any other aspect of this Agreement.
16. EXECUTION IN COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered the same as if a single
document shall have been executed, but shall become effective when such
counterparts have been signed by each of the parties hereto and delivered to
counsel for the undersigned parties.
17. DOCUMENT RETENTION. Within twenty (20) days after execution of this
Agreement, JCN shall deliver to Deloitte or its counsel all copies of any and
all documents in the possession, custody or control of any of JCN, JCN's
directors, officers, employees, shareholders, agents or
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attorneys, and any advisers, consultants or experts engaged by any of them,
that were produced by Deloitte in connection with any legal proceedings,
including any litigation that has been settled. IN WITNESS WHEREOF, this
Agreement is executed by the undersigned as of the 7th day of June, 1996.
Deloitte & Touche LLP
By: /s/ XX XXXXXXXX
---------------------------------
X.X. Xxxxxxx Company
By: /s/ XXXXXXX XXXXX
---------------------------------
Name: Xxxxxxx Xxxxx
Title: President and Chief Executive Officer
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