EXHIBIT 10.1
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FINAL SETTLEMENT TRUST AGREEMENT
AMONG
CHATTEM, INC.,
AS SETTLOR
AND
AMSOUTH BANK,
AS TRUSTEE
DATED MARCH 16, 2005
FINAL SETTLEMENT TRUST AGREEMENT
This FINAL SETTLEMENT TRUST AGREEMENT, dated as of the 16th day of
March, 2005, (this "TRUST AGREEMENT") is entered into by and between Chattem,
Inc., a Tennessee corporation (the "SETTLOR"), and AmSouth Bank, a bank
organized and existing under the laws of the State of Alabama, (the "TRUSTEE")
to establish the Final Settlement Trust (the "TRUST") to hold, administer and
distribute certain assets, as follows:
RECITALS
WHEREAS, the Settlor has executed and delivered that certain Class
Action Settlement Agreement (the "SETTLEMENT AGREEMENT") whereby the Settlor has
agreed to provide for certain payments to be made to a final settlement trust in
consideration of the compromise, settlement, and release of claims of the class
members in that certain class action litigation in Federal District Court
captioned In Re Phenylpropanolamine (PPA) Products Liability Litigation (MDL No.
1407) (the "CLASS ACTION LITIGATION"); and
WHEREAS, the Settlement Agreement has been approved by the United
States District Court for the Western District of Washington (the "COURT") by
Order dated November 12, 2004, (the "ORDER") and the Settlor desires to
establish this Trust as the final settlement trust as envisioned by the
Settlement Agreement and the Trustee is willing to serve as trustee of the trust
under the terms hereinafter set forth; and
WHEREAS, the parties hereto intend that this Trust will be a "Qualified
Settlement Fund" within the meaning of Section 468B of the Internal Revenue Code
of 1986, as amended, and the Treasury Regulations promulgated thereunder.
NOW, THEREFORE, it is agreed as follows:
ARTICLE 1 - DEFINITIONS
SECTION 1.1 GLOSSARY OF TERMS
For purposes of this Trust Agreement, the following terms shall have the
meanings set forth in this Article 1. Terms used in the singular shall be deemed
to include the plural and vice versa.
(a) "BENEFICIARIES" shall have the meaning set forth in section 2.2(a).
(b) "BENEFIT FUND" shall have the meaning set forth in section 2.6.
(c) "CLAIMS" shall have the meaning set forth in section 2.7.
(d) "CLAIMS ADMINISTRATOR" shall mean the person(s) or entity(ies) appointed by
the Court, and his/her agents, to administer claims under the Settlement
Agreement.
(e) "CLASS COUNSEL" shall mean those attorneys representing the Class Members,
or such other attorneys as shall be approved by the Court as counsel to the
Class Members.
(f) "CLASS MEMBERS" shall have the meaning set forth in section 2.2(a).
(g) "CLASS ACTION LITIGATION" shall have the meaning set forth in the recitals
set forth above.
(h) "COURT" shall have the meaning set forth in the recitals set forth above.
(i) "EXTRAORDINARY DAMAGES FUND" shall have the meaning set forth in section
2.9.
(j) "FINAL BENEFIT DETERMINATION" shall have the meaning set forth in section
2.7.
(k) "FINAL CHATTEM SETTLEMENT TRUST" shall mean the Trust established hereby
pursuant to the terms of the Settlement Agreement and the Trial Court
Approval.
(l) "INDEMNIFIED PARTIES" shall have the meaning set forth in section 3.5(a).
(m) "INITIAL CHATTEM SETTLEMENT TRUST" shall mean the trust established by that
certain Initial Settlement Trust Agreement dated April 12, 2004, to hold
funds paid by or on behalf of the Settlor and certain other released
parties pursuant to the terms of the Settlement Agreement pending the Trial
Court Approval and the establishment of the Final Chattem Settlement Trust.
(n) "NOTICE FOR WITHDRAWAL FORM" shall have the meaning set forth in section
2.7.
(o) "ORDER" shall have the meaning set forth in the recitals set forth above.
(p) "SETTLEMENT AGREEMENT" shall have the meaning set forth in the recitals set
forth above.
(q) "SETTLOR" shall have the meaning set forth in the preamble hereof.
(r) "SETTLOR'S COUNSEL" shall mean Miller & Martin PLLC, or any other person or
entity selected by Settlor to represent it in connection with the Trust.
(s) "SPECIAL MASTER" shall mean the arbitrator appointed by the Court having
the authority to make Final Benefit Determinations under the provisions of
the Settlement Agreement.
(t) "TRIAL COURT APPROVAL" shall mean the granting, by the Order, of the
approval of the Settlement Agreement by the Court.
(u) "TRUST" shall have the meaning set forth in the preamble hereof.
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(v) "TRUST AGREEMENT" shall have the meaning set forth in the preamble hereof.
(w) "TRUST ASSETS" shall mean any portion of the personal property held by the
Trustee under the terms of the Trust, including any assets added to the
Trust pursuant to the provisions of this Agreement by conveyance,
assignment, or other transfer.
(x) "TRUST EARNINGS" shall have the meaning set forth in Section 2.6 hereof.
(y) "TRUST ESTATE" shall mean all of the Trust Assets held by the Trustee under
this Agreement, including all additions to the Trust made pursuant to the
provisions of this Agreement by conveyance, assignment, or other transfer.
(z) "TRUSTEE" shall have the meaning set forth in the preamble hereof.
ARTICLE 2 - DECLARATION OF TRUST
SECTION 2.1 CREATION OF TRUST
This Trust is hereby established as the Final Chattem Settlement Trust in
accordance with the Settlement Agreement and the Trial Court Approval. As set
forth in Sections 2.3 and 2.4 below, this Trust shall replace, and succeed to
all assets currently held by, the Initial Chattem Settlement Trust on the terms
hereinafter set forth whereupon the Initial Chattem Settlement Trust shall be
deemed terminated and of no further force and effect. This Trust shall be
irrevocable and upon the termination of the Trust, the Trust Estate shall be
distributed in accordance with Section 2.9.
SECTION 2.2 BENEFICIARIES
(a) The Beneficiaries of the Trust are all Class Members in the Class Action
Litigation (the "CLASS MEMBERS") who have been determined to be entitled to
receive benefits under the Settlement Agreement ("BENEFICIARIES") pursuant to
the Trial Court Approval. Except as otherwise determined by the Court or as
expressly set forth herein, no other person shall be deemed a beneficiary of the
Trust or be entitled to exercise any right or remedy with respect to the Trust
Assets.
(b) Nothing in this Agreement is intended to acknowledge the claims of the Class
Members in the Class Action Litigation or to confer any rights or benefits on
any individual Class Member other than as specifically set forth herein. Neither
Settlor nor Trustee shall have any obligation or duty hereunder to any
individual Class Member, and no individual Class Member shall have the direct
right to exercise rights, claims or remedies against the Settlor or the Trustee
except as otherwise set forth under this Trust Agreement or the Settlement
Agreement.
(c) The Trust Assets, if any, to which a Class Member is entitled shall be
determined only in accordance with the Settlement Agreement and the Trial Court
Approval. The Trustee shall have no authority under this Trust Agreement or
otherwise to make, alter or
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otherwise influence benefit determinations with respect to, or distribute or to
withhold the distribution of, Trust Assets to, Class Members except as
specifically set forth herein.
SECTION 2.3 PURPOSES OF THE TRUST
The sole purposes of the Trust are to receive, hold and invest funds in
accordance with, and subject to, the provisions of this Trust Agreement, and to
make payments and disburse funds upon the written instructions of the Claims
Administrator, and to take all such other actions as contemplated by the
Settlement Agreement and the Trial Court Approval. In addition, the Trustee is
authorized to pay out of the Trust Estate all costs related to the
administration of the Trust or the Settlement Agreement (including the fees of
the Claims Administrator and the Special Master) as may be envisioned by the
Settlement Agreement. The Trustee hereby consents to the jurisdiction of the
Court for all purposes related to the performance under or interpretation of
this Trust Agreement. The Trustee shall have no authority or duty to exercise
discretion with respect to the performance of obligations under, or the
interpretation of, the Settlement Agreement. Any questions of performance or
interpretation under the Settlement Agreement shall be determined by the
agreement of Settlor and Class Counsel or as otherwise determined by the Court.
Except as expressly set forth herein, no creditor of the Settlor shall have any
right, lien, claim or other interest in the Trust or the assets that comprise
the corpus (whether classified as principal or income) of the Trust. The Settlor
shall have no right or authority to alienate, encumber, mortgage or otherwise
convey any interest in the corpus of the Trust. In seeking Court approval of the
Trust, the Settlor and Class Counsel shall concurrently apply for and secure
from the Court an Order of Attachment encompassing all assets that comprise the
corpus of the Trust and all after-acquired assets, thereby securing the assets
of the Trust and ensuring that such assets shall be used exclusively for the
purposes set forth herein.
SECTION 2.4 FUNDING
Within five (5) days of the establishment of this Trust, the Settlor will cause
to be delivered to the Trustee the assets currently held in the Initial Chattem
Settlement Trust as envisioned by the Settlement Agreement. The Settlor shall
cause the trustee of the Initial Chattem Settlement Trust to provide a final
accounting for the Initial Chattem Settlement Trust and furnish such final
accounting to the Settlor, Class Counsel and the Court setting forth the
principal of the Initial Chattem Settlement Trust and any earnings thereon less
fees and expenses which aggregate amount shall be the initial corpus of the
Final Chattem Settlement Trust. The Settlor shall also cause other released
parties in the Class Action Litigation to contribute additional funds to the
Trust at the time of initial funding, including specifically Sidmak
Laboratories, Inc. ("Sidmak") who shall contribute $10,000,000.00. The Trustee
hereby agrees to accept the assets and to receive, hold, invest, manage, and
distribute the assets in accordance with the Trust Agreement. The Trustee shall
also receive, hold, administer and distribute hereunder, as part of the Trust
Estate: (i) the additional assets delivered to it from time to time by, or at
the direction of, the Settlor; (ii) any recoveries with respect to amounts
previously expensed by the Trust (such as, without limitation, refunds of taxes
or administrative expenses previously paid by the Trust); and (iii) any interest
or other earnings on any of the foregoing.
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SECTION 2.5 HOLDING OF TRUST ASSETS
The Trust Assets may be placed by the Trustee in one (1) or more investment
and/or cash drawing accounts as the Trustee may deem necessary, prudent, or
useful in order to allow for the investment of the Trust Assets as set forth in
Section 4.1(b) and to provide for the timely payment of claims of Beneficiaries
and expenses of the Trust as set forth in Section 2.7. Trust Assets may be
transferred from any investment account to any cash drawing account established
by the Trustee from time to time as the Trustee may determine. Notwithstanding
the use of one or more accounts, the Trust Assets held in any such account shall
be deemed a component of the overall Trust Estate and no such account shall be
considered a separate trust or escrow fund. Notwithstanding the foregoing, the
Trustee shall establish a separate drawing account for the purpose of holding
funds withheld from payments to Beneficiaries to satisfy government liens
pursuant to Section 2.7(c) below.
SECTION 2.6 ACCOUNTING FOR TRUST ASSETS
The Trust Assets shall be classified as two (2) separate funds for purposes of
accounting for payments to Beneficiaries hereunder. The initial funding of the
Trust from the transfer of assets from the Initial Chattem Settlement Trust and
the transfer of additional assets from other released parties in the Class
Action Litigation shall comprise the Benefit Fund from which all payments to
Beneficiaries and expenses of the Trust during the period of duration of the
Trust shall be made. All cumulative interest, dividends, gains or other
investment earnings of the Trust (including interest earned in the Initial
Settlement Trust on or after November 12, 2004) received during the period of
duration of the Trust less any taxes owed on such income or investment fees
charged by third parties with respect to such income shall comprise the Trust
Earnings which shall be retained by the Trustee and ultimately distributed upon
the termination of the Trust for the benefit of the Beneficiaries as set forth
in Section 2.9 below. The Benefit Fund and the Trust Earnings shall be
bookkeeping accounts only and the Trustee shall not be required to physically
segregate or isolate the amounts comprising the two Funds provided, however,
that the amounts allocated to the Trust Earnings shall not be used to make
payments to Beneficiaries or pay expenses of the Trust during the period of
duration of the Trust. In addition, the Trustee shall establish a separate
drawing account for the purpose of holding funds withheld from payments to
Beneficiaries to satisfy government liens pursuant to Section 2.7(c) below.
SECTION 2.7 PAYMENTS FROM THE TRUST ESTATE
(a) During the pendency of the Trust, the Trustee shall pay Claims of
Beneficiaries as follows. The Trustee shall maintain an office to which Claims
may be submitted by the Claims Administrator. The Trustee shall be under no
obligation to consider Claims submitted from any person or source other than the
Claims Administrator. Claims must be submitted by the Claims Administrator on
the "Notice for Withdrawal of Funds From Final Chattem Settlement Trust" form
attached as Annex A. The Trustee shall be under no obligation to consider Claims
submitted in a manner other than pursuant to the Notice for Withdrawal Form.
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(b) Upon the receipt of a Notice for Withdrawal Form from the Claims
Administrator, the Trustee shall confirm that (1) the Notice for Withdrawal Form
has been completed with the name, taxpayer identification number and address of
one or more payees and an amount or amounts payable; and (2) the Notice for
Withdrawal Form has been executed by a duly authorized officer of the Claims
Administrator. If the Notice for Withdrawal Form fails to contain the necessary
items (1) and (2), the Trustee shall return the Notice for Withdrawal Form to
the Claims Administrator and shall be under no further obligation to act until a
completed and executed Notice for Withdrawal Form is resubmitted by the Claims
Administrator.
(c) Upon confirmation of items (1) and (2) set forth in subsection 2.7(b), the
Trustee shall issue a trust account check to the payees listed in the Notice for
Withdrawal Form and in the amounts set forth on the Notice for Withdrawal Form,
and mail the checks to the Claims Administrator at the address set forth on the
Notice for Withdrawal Form within thirty (30) days of the date of receipt of the
Notice for Withdrawal Form from the Claims Administrator. If the Notice of
Withdrawal Form provides instructions regarding the withholding of amounts
necessary to satisfy government liens, the Trustee shall segregate such funds
into a separate account for holding funds for the benefit of the lienholder or
issue and mail a check for the withheld amount to the designated lienholder in
accordance with the instructions set forth in the Notice of Withdrawal Form.
Except as specifically set forth herein, the Trustee shall be under no
obligation to investigate the circumstances of the Claim, to ascertain the bona
fides of the information submitted on the Notice for Withdrawal Form, to confirm
the amounts payable or to take other action. The Trustee shall have no
discretion to refuse to pay the designated payees upon the submission of a
duly-completed Notice for Withdrawal Form. Each payment made pursuant to a
Notice for Withdrawal Form shall be debited against the current balance in the
Benefit Fund.
(d) In addition to the payment of Claims as set forth above, the Trustee shall
also be authorized to pay out of the Benefit Fund the monthly statements for
services rendered and expenses incurred of (1) the Claims Administrator, (2) the
Special Master, and (3) other third-party costs and expenses, as may be
forwarded from time to time by the Claims Administrator to the Trustee for
payment on the Notice for Withdrawal Form, provided that such statements have
been approved and endorsed by Settlor's Counsel as required on the Notice for
Withdrawal Form.
SECTION 2.8 ADDITIONAL FUNDING OF THE TRUST BY THE SETTLOR
The Trustee shall immediately notify the Settlor (with a copy to Class Counsel
and the Claims Administrator) by written notice if the balance in the Benefit
Fund is reduced to an amount less than $5,000,000.00 due to the payment of
Claims, expenses of the Trust, compensation and expenses paid to the Claims
Administrator, Special Master and/or Trustee, any indemnification of the Trustee
as provided for in Section 3.5, or otherwise authorized and payable hereunder.
The Trustee shall specify the amount by which the Benefit Fund has been reduced
below $5,000,000.00, and the amount payable under Notice for Withdrawal Forms
which have been received by the Trustee but not yet paid
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and other current expenses payable by the Trustee. Within fifteen (15) days of
the receipt of such notice, the Settlor shall contribute, or cause to be
contributed, an amount sufficient to make the balance in the Benefit Fund at
least $5,000,000.00, after taking into account the payment of all pending Notice
for Withdrawal Forms and all other expenses currently payable by the Trustee, if
any.
SECTION 2.9 FINAL DISTRIBUTION OF THE TRUST ESTATE
The Trust shall be terminated upon delivery by the Claims Administrator of
written notice to the Trustee that all Claims of Beneficiaries have been
satisfied or otherwise provided for and all governmental liens have been
satisfied. Upon receipt of written notice of the Claims Administrator that all
Claims of Beneficiaries have been satisfied, the Trustee shall, within fifteen
(15) days of receipt, make arrangements for the payment of final expenses of the
Trust out of the Benefit Fund, including the payment of outstanding invoices
from the Claims Administrator and the Special Master, and convey an amount equal
to $5,000,000.00 of the Benefit Fund, and the full amount of the Trust Earnings,
to a successor trust or escrow account to comprise the Extraordinary Damages
Fund for the benefit of the Beneficiaries established by Class Counsel or as
otherwise directed by Class Counsel and approved by Settlor's Counsel and the
Court. In the event the balance of the Benefit Fund is less than $5,000,000.00
at the time of receipt of the final notice from the Claims Administrator, the
Trustee shall notify the Settlor of the deficit and the Settlor shall
contribute, or cause to be contributed, an amount necessary to restore the
balance of the Benefit Fund to $5,000,000.00 and thereupon the Trustee shall
convey the $5,000,000.00 balance of the Benefit Fund and the Trust Earnings to
the successor established by Class Counsel. In the event the balance of the
Benefit Fund is greater than $5,000,000.00 at the time of receipt of final
notice from the Claims Administrator, the Trustee shall convey $5,000,000.00 of
the Benefit Fund and the Trust Earnings to the successor and all remaining
amounts in the Benefit Fund that are not used to satisfy the obligations of the
Trust, including the compensation and expenses of the Trustee, shall be
distributed as directed by the Settlor and as approved by the Court. Upon final
distribution of all Trust Assets in accordance herewith, the Trust shall
terminate.
SECTION 2.10 FINAL ACCOUNTING
Upon the termination of the Trust, the Trustee shall undertake a final
accounting and furnish a final report to the Settlor, Class Counsel and the
Court within forty-five (45) days setting forth the initial principal of the
Trust Estate, all additions to the principal of the Trust Estate, any earnings
of the Trust Estate, disbursements to Beneficiaries and all ordinary and
necessary expenses incurred by the Trustee in connection with the management and
administration of the Trust Estate, and the final distributions from the Trust.
Such Final Accounting shall include an itemized statement of payments made by
the Trust to Beneficiaries of the Trust, setting forth the gross amount of each
Beneficiary's claim, the amounts deducted and paid or withheld therefrom and the
net amount paid to such Beneficiary.
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ARTICLE 3 - TRUSTEE
SECTION 3.1 QUALIFICATION TO SERVE
The Trustee hereby accepts the nomination and appointment to serve as trustee
and agrees to act in accordance with the terms of this Trust Agreement. The
Trustee is, and shall continue to be, a bank organized and doing business under
the laws of the United States of America or under the laws of any state thereof,
authorized under such laws to exercise corporate trust powers, with a combined
capital and surplus of at least $100,000,000. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 3.1, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article 3. There shall at all times only be a single trustee of the
Trust. The Trustee shall act in accordance with the terms of this Trust
Agreement and upon the direction of the Court. The Trustee may not assign its
rights or obligations hereunder without the prior written consent of the
Settlor, Class Counsel and the Court, provided, however, that the merger or
consolidation, or other assumption of assets and liabilities of, the Trustee
with or by another bank otherwise qualifying hereunder with such bank being the
legal successor to the Trustee shall not be deemed an assignment and shall not
require the consent of the Settlor or the Court.
SECTION 3.2 TERM OF SERVICE
The Trustee shall serve for the duration of the Trust, subject to its
resignation or removal as set forth herein.
SECTION 3.3 APPOINTMENT OF SUCCESSOR TRUSTEE
(a) No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article 3 shall become effective until the acceptance
of appointment by the successor Trustee under Section 3.3(c) below. The Trustee
may resign at any time by giving written notice thereof to the Settlor, Class
Counsel and the Court, and may be removed at any time with the approval of the
Court. In addition, if at any time: (i) the Trustee shall fail to comply with
the requirements contained in Section 3.1, or (ii) the Trustee shall become
incapable of acting or shall be adjudged bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation, or liquidation, then all of the
Trustee's powers and authority granted under this Trust shall be immediately
suspended pending review by the Court, which shall be sought promptly by the
Settlor and Class Counsel. In so doing, the Settlor and Class Counsel may seek
all appropriate relief from the Court including, if warranted, removal of the
Trustee. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within thirty (30) days after the giving of such
notice of resignation, the resigning Trustee may petition the Court for the
appointment of a successor Trustee. A successor Trustee must meet the
qualifications set forth in Section 3.1 of this Trust Agreement.
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(b) Upon the acceptance of office by any successor Trustee, all rights, titles,
duties, powers, and authority of the predecessor Trustee under this Trust
Agreement shall be vested in and undertaken by the successor Trustee without any
further act being required. No successor Trustee shall be liable for any act or
omission of its predecessor.
(c) Every successor Trustee appointed hereunder shall execute, acknowledge, and
deliver to the Court and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act,
deed, or conveyance, shall become vested with all the rights, powers, trusts,
and duties of the retiring Trustee; but, on request of the Court or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all of
the rights, powers, and trusts of the retiring Trustee, and shall duly assign,
transfer, and deliver to each successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Settlor shall execute any and all instruments reasonably necessary for more
fully and certainly vesting in and confirming to each such successor Trustee all
such rights, powers, and trusts. No successor Trustee shall accept its
appointment unless at the time of such acceptance such successor Trustee shall
be qualified and eligible under this Article 3, to the extent operative.
(d) Upon the resignation or removal of the Trustee, the Trustee shall within
forty-five (45) days furnish a final report to the Settlor, Class Counsel and
the Court setting forth the initial principal of the Trust Estate, all additions
to the principal of the Trust Estate, any earnings of the Trust Estate,
disbursements to Beneficiaries and all ordinary and necessary expenses incurred
by the Trustee in connection with the management and administration of the Trust
Estate during the Trustee's term of service.
SECTION 3.4 COMPENSATION AND EXPENSES OF TRUSTEE
The Trustee shall be entitled to receive a fee and also shall be reimbursed for
any reasonable out-of-pocket expenditures, and ordinary and customary expenses,
disbursements, and advancements related to performing its services during the
period of the continuation of the Trust as set forth in Annex B. The Parties
agree that this compensation represents reasonable compensation for services to
be rendered by the Trustee hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust). The fees and expenses of the Trustee shall be paid out of the Trust
Estate.
SECTION 3.5 INDEMNIFICATION / LIABILITY OF TRUSTEE
(a) So long as the Trustee (or former Trustee) and its officers, directors,
employees and agents (collectively, the "INDEMNIFIED PARTIES" or individually,
an "INDEMNIFIED PARTY") act or have acted in accordance with the terms of this
Trust Agreement, the Order and/or upon the direction of the Court, the
Indemnified Parties who were or are a party, or are threatened to be made a
party, to any threatened, pending, or completed action, suit or proceeding of
any kind, whether civil, administrative, or arbitrative, and whether brought (i)
against the Trust, or (ii) with respect to a Trustee, by reason of such Trustee
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being or having been a Trustee of the Trust, shall be indemnified and held
harmless by the Settlor and the Trust from and against all costs, damages,
judgments, attorneys' fees (whether such attorneys shall be regularly retained
or specifically employed), expenses, obligations, and liabilities of every kind
and nature which the Indemnified Party or Indemnified Parties may insure,
sustain, or be required to pay in connection with or arising out of this Trust
Agreement, and to pay to the Indemnified Party or Indemnified Parties on demand
the amount of all such costs, damages, judgments, attorneys' fees, expenses,
obligations and liabilities.
(b) The Trustee shall have no liability or obligation, nor shall any person have
a legal or equitable claim, remedy or cause of action for any act or omission by
the Trustee with respect to the Trust Estate except for Trustee's failure to
comply with the fiduciary standards for trustees as set forth in the laws of the
State of Tennessee. The Trustee's sole responsibility shall be for the receipt,
administration, investment, and disbursement of the Trust Estate in accordance
with the terms of this Trust Agreement. The Trustee shall have no implied duties
or obligations and shall not be charged with knowledge or notice of any fact or
circumstance not specifically set forth herein. The Trustee may rely upon any
instrument, not only as to its due execution, validity and effectiveness, but
also as to the truth and accuracy of any information contained therein, which
the Trustee shall in good faith believe to be genuine, to have been signed or
presented by the person or parties purporting to sign the same and to conform to
the provisions of this Trust Agreement. In no event shall the Trustee be liable
for incidental, indirect, special, consequential or punitive damages. The
Trustee shall not be obligated to take any legal action or commence any
proceeding in connection with the Trust Estate, this Trust Agreement or the
Settlement Agreement, or to appear in, prosecute or defend any such legal action
or proceeding. The Trustee may consult legal counsel selected by it in the event
of any dispute or question as to the construction of any of the provisions
hereof or of any other agreement or of its duties hereunder, and shall incur no
liability and shall be fully indemnified from any liability whatsoever in acting
in accordance with the opinion or instruction of such counsel.
ARTICLE 4 - POWERS OF THE TRUSTEE
SECTION 4.1 POWERS.
To carry out the purposes of this Agreement, subject to any limitation in this
Agreement, the Trustee is vested with the following powers, in addition to those
now or hereafter conferred by law or court order affecting the Trust Estate:
(a) To continue to hold any Assets other than cash contributed to the Trust,
whether or not of the type or quality, nor constituting a diversification,
considered proper for trust investments.
(b) To invest and reinvest the principal of the Trust Estate; provided, however,
that all investments made by the Trustee shall be in U.S. Government Treasury
bills or in other obligations guaranteed by the U.S. Government, with maturities
of no more than six (6) months or shares of a money market mutual fund
registered under the Investment Company Act of 1940, as amended, the principal
of which is invested solely in U.S.
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Government or agency obligations and repurchase agreements (including such funds
advised, managed or sponsored by the Trustee or any of its affiliates), except
for such amounts as may be necessary from time to time to be held in a bank
checking and/or interest-bearing time deposit account for purposes of paying
Claims hereunder.
(c) To initiate or defend at the expense of the Trust Estate, any litigation
relating to the Trust Estate or property of the Trust Estate, and to compromise,
arbitrate, or otherwise adjust claims in favor of or against the Trust Estate
and to carry such insurance as the Trustee may deem advisable. The Trustee shall
have the authority to initiate, defend and participate in, at the expense of the
Trust Estate, all proceedings related to or affecting the Trust, the Trustee or
Settlor's obligations under the Settlement Agreement involving the Trust, and
the Trustee shall be a party in interest entitled to notice of all such
proceedings.
(d) To have, respecting securities, all the rights, powers, and privileges of an
owner.
(e) To employ any custodian, attorney, accountant or other agent reasonably
necessary to assist the Trustee in administration of the Trust Estate, and to
rely on the advice given by such person.
SECTION 4.2 NO SEGREGATION PER BENEFICIARY
The Trustee may hold all trust property as a single segregated trust and is
under no obligation to separate or segregate or account for trust property for
the benefit of individual Beneficiaries.
SECTION 4.3 RIGHT TO NON-PERFORM IN CASE OF DISPUTE.
In the event of any disagreement between the Settlor and Beneficiaries, or
between them and any other person, resulting in adverse claims or demands being
made in connection with the assets to be administered hereunder, or in the event
that the Trustee, in good faith, be in doubt as to what action it would take
hereunder, the Trustee may, at its option, refuse to comply with any claims or
demands or it may refuse to take any other action hereunder, so long as such
disagreement continues or such doubt exists, and in any such event, the Trustee
shall not be or become liable in any way or to any person for its failure or
refusal to act, and the Trustee shall be entitled to continue so to refrain from
acting until (i) otherwise directed by the Court, or (ii) there exists an
agreement between the Settlor and Beneficiaries, and the Trustee shall have been
notified thereof in writing signed by or on behalf of all such persons. The
rights of the Trustee to non-perform under this paragraph shall be deemed to
encompass any express or implied obligation to sue, initiate action or otherwise
collect from the Settlor or other parties amounts owed to the Trust pursuant to
Section 2.8 or 2.9 above. The rights of the Trustee under this paragraph are in
addition to all other rights which it may have by law or otherwise.
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ARTICLE 5 - ADMINISTRATIVE PROVISIONS
SECTION 5.1 BOND.
No bond, or other security, shall be required of the Trustee named in this
Agreement.
SECTION 5.2 SITUS AND VENUE.
This Trust Estate has been created and accepted by the Trustee in the State of
Tennessee and its validity, construction, and interpretation, and all rights
created by this Trust Agreement shall be governed by the laws of the State of
Tennessee. Notwithstanding the foregoing, any action to enforce, interpret or
adjudicate the rights and responsibilities hereunder shall be in the first
instance commenced in the Court.
SECTION 5.3 PARTIAL INVALIDITY.
Each provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law. If any provision of this Agreement or the application
of such provision to any person or circumstance shall, to any extent, be invalid
or unenforceable, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected by such invalidity or
unenforceability, unless such provision or such application of such provision is
essential to this Agreement.
SECTION 5.4 HEADINGS.
The headings of the various Sections of this Agreement have been inserted only
for convenience, and shall not be deemed in any manner to modify or limit any of
the provisions of this Agreement, or be used in any manner in the interpretation
of this Agreement.
SECTION 5.5 INTERPRETATION.
Whenever the context so requires, all words used in the singular shall be
construed to have been used in the plural (and vice versa), and each gender
shall be construed to include the other gender.
SECTION 5.6 TAX MATTERS
The parties hereto intend that this Trust will be a "Qualified Settlement Fund"
within the meaning of Section 468B of the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations promulgated thereunder. The Trustee shall
take no action that would cause the Trust to fail to be a Qualified Settlement
Fund. In addition to all of the Trustee's other obligations under this
Agreement, the Trustee shall handle all federal and state tax matters related to
the Trust. The Trustee shall cause a Federal Employer Identification Number for
the Trust to be obtained and shall cause the annual income tax returns to be
filed on the basis of a December 31 fiscal year end. The Trustee shall take all
steps necessary to ensure that any tax obligations imposed upon the Trust are
paid. To the extent necessary to satisfy this objective, the Trust is hereby
authorized to, among other things, (i) communicate with the Internal Revenue
Service and any state agency on behalf of the Trust, (ii) make payment of taxes
on behalf of the Trust (which taxes will be paid out of the Trust assets), and
(iii) file all applicable tax returns for the Trust. All
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ordinary and necessary expenses incurred in connection with the preparation of
such tax returns shall be paid from the Trust Estate.
SECTION 5.7 REPORTS
The Trustee shall furnish a report to the Settlor, Class Counsel and the Court
on a monthly basis setting forth the principal of the Trust Estate, any earnings
of the Trust Estate, disbursements to Beneficiaries and all ordinary and
necessary expenses incurred by the Trustee in connection with the management and
administration of the Trust Estate.
SECTION 5.8 AMENDMENT
Any or all of the provisions of this Agreement may be amended at any time and
from time to time, in whole or in part, by an instrument in writing executed by
the Settlor and approved by the Court. No such amendment shall authorize or
permit any part of the Trust Estate to be used for or diverted for purposes
other than as envisioned by the Settlement Agreement and no such amendment which
affects the rights or duties of the Trustee may be made without the Trustee's
written consent.
SECTION 5.9 FINAL TERMINATION
Notwithstanding any provision in this Agreement to the contrary, neither this
Trust nor any other trust established in accordance with this Agreement shall
continue beyond the date that is twenty-one years after the death of the
survivor of all of the Beneficiaries living on the date of this Agreement.
SECTION 5.10 CONFIDENTIALITY
The Trustee agrees that any information provided by or regarding a Class Member
or otherwise obtained pursuant to this Trust Agreement shall be kept
confidential and shall not be disclosed except to appropriate persons to the
extent necessary to process Claims or provide benefits hereunder or as otherwise
expressly required hereunder or by applicable law.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Trust Agreement
as of the date first set forth above.
CHATTEM INC.:
- -------------
By:_________________________ Date:________________
Title:______________________
AMSOUTH BANK:
- -------------
By:_________________________ Date:________________
Title:______________________
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ANNEX A
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- --------------------------------------------------------------------------------
NOTICE FOR WITHDRAWAL OF FUNDS
FROM FINAL CHATTEM SETTLEMENT TRUST
IN RE PHENYLPROPANOLAMINE (PPA) PRODUCTS LIABILITY LITIGATION (MDL NO. 1407)
- --------------------------------------------------------------------------------
TO: AMSOUTH BANK
TRUSTEE, FINAL CHATTEM SETTLEMENT TRUST
BY FACSIMILE (XXX) XXX-XXXX
ATTENTION: ____________________
- --------------------------------------------------------------------------------
The undersigned representative of the Claims Administrator under that certain
Class Action Settlement Agreement dated as of April 13, 2004, provides this
Notice for Withdrawal of Funds. The undersigned confirms that the withdrawal
request listed below complies with the terms of the Settlement Agreement and
that any benefit payment has been approved by the Chattem Claims Coordinator and
the Class Counsel Claims Coordinator. The Claims Administrator hereby submits
this Notice pursuant to Section 2.7 of the Final Chattem Settlement Trust
Agreement.
- -------- ------------------------------------- ---------------------------------
1. CHATTEM FINAL SETTLEMENT TRUST
WITHDRAWAL NOTICE: Notice # ______
- -------- ------------------------------------- ---------------------------------
2. DATE OF NOTICE: ____________, 2005
- -------- ------------------------------------- ---------------------------------
3. TOTAL AMOUNT TO BE WITHDRAWN FROM
THE TRUST UNDER THIS NOTICE: $________
- -------- ------------------------------------- ---------------------------------
|_| Benefit Payment (see 5 below)
4. DESCRIPTION OF WITHDRAWAL: |_| Fee or Expense Payment (see 6
below)
- -------- ------------------------------------- ---------------------------------
Pay: $__________ to:
5A. BENEFIT PAYMENT TO BE ISSUED TO: Payee: ________ TIN: __________
Class Member and/or Designated Address: ______________________
Representative:
Pay: $__________ to:
MDL No. 1407 Fund for Litigation Payee: ________ TIN: __________
Expenses: Address: ______________________
|_|None
Provision for Government |_|Withhold: $_________
Lienholders: |_|Pay: $_________ to:
Payee: ________ TIN: __________
Address: ______________________
- -------- ------------------------------------- ---------------------------------
_________, CLAIMS ADMINISTRATOR
5B. BENEFIT PAYMENT APPROVAL:
BY: ___________________________
______________________ ,_______
for Claims Administrator
DATE: ______________
- -------- ------------------------------------- ---------------------------------
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- -------- ------------------------------------- ---------------------------------
6A. FEE OR EXPENSE PAYMENT TO BE ISSUED Pay: $__________ to:
TO: Payee: ____________ TIN: ______
Address: ______________________
- -------- ------------------------------------- ---------------------------------
6B. FEE OR EXPENSE PAYMENT APPROVAL: _________, CLAIMS ADMINISTRATOR
BY: ___________________________
________________________,______
for Claims Administrator
DATE: _____________
____________, SETTLOR'S COUNSEL
BY: ___________________________
______________________,________
- -------- ------------------------------------- ---------------------------------
ALL CHECKS ISSUED HEREUNDER SHALL BE MAILED TO:
___________________________
CLAIMS ADMINISTRATOR, FINAL CHATTEM SETTLEMENT TRUST
___________________________
___________________________
ATTENTION: ________________
- --------------------------------------------------------------------------------
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ANNEX B
SCHEDULE OF FEES
The Trustee shall be paid a fee for all Trustee, Investment Management and
Administrative Services equal to 25 basis points (0.25 of 1.00%) of the market
value of the Trust Estate on an annual basis billed monthly in arrears.
The fee is based upon the limited Trustee, Investment Management and
Administrative Services envisioned by the Trust Agreement and AmSouth Bank
reserves the right to adjust the fee upon a change in the scope of the duties
required under the Trust Agreement.
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