Exhibit 99.1
SETTLEMENT AGREEMENT AND RELEASE
This settlement agreement and release ("the Agreement") is entered into
as of this 1st day of May 2007, by and between MagneTek, Inc., a Delaware
corporation ("MagneTek"), on the one hand, and Samsung Electro-Mechanics Co.,
Ltd., a Korean corporation ("SEMCO"), on the other hand. MagneTek and SEMCO are
sometimes collectively referred to as the "Parties."
RECITALS
A. On or about December 5, 2001, MagneTek and SEMCO entered into a
"Development, License and Royalty Agreement" for PDP Power Supplies (such
agreement, together with subsequent amendments to its terms is collectively
referred to as the "Development Agreement.") On or about November 6, 2002,
MagneTek and SEMCO entered into a "Development, License and Royalty Agreement"
for Adaptor (such agreement, together with subsequent amendments to its terms is
collectively referred to as the "Development Agreement for Adaptor.")
B. On or about March 25, 2005, MagneTek filed a lawsuit against SEMCO
in the United States District Court, Central District of California, as case
number CV05 2222 FMC(PLAx) ("the Action"). MagneTek later filed a First Amended
Complaint in the Action containing causes of action for breach of contract,
declaratory relief, fraud and rescission based upon disagreements and claims
arising out of the Development Agreement.
C. SEMCO filed an answer in which it denied the material allegations
made by MagneTek in the Action and raised various affirmative defenses.
D. In reliance upon the promises and representations made by the
Parties in this Agreement and in exchange for good and valuable consideration
the receipt of which is hereby acknowledged, the Parties wish to settle the
disputes in the Action, to avoid the expense, delay and uncertainty attendant to
further litigation and to settle and forever resolve any and all claims which
may arise between the Parties in connection with the Development Agreement, the
Development Agreement for Adaptor and the Action.
WHEREFORE, the Parties agree as follows:
1. DISMISSAL OF ACTION.
The Parties agree to perform such acts and execute such documents,
including but not limited to a stipulation for dismissal, to obtain the
dismissal with prejudice of the Action, with each side bearing its own
attorneys' fees and costs, in the form attached hereto as Exhibit A.
2. PAYMENT BY SEMCO
As a compromise payment of general damages sought by MagneTek
including, but not limited to, the royalties or other payments under the
Development Agreement, SEMCO agrees to pay to MagneTek the total sum of
$2,120,000.00, without deduction or offset, as follows:
(a) $500,000 payable on or before June 1, 2007;
(b) $520,000 payable on or before December 1, 2007;
(c) $540,000 payable on or before June 1, 2008; and
(d) $560,000 payable on or before December 1, 2008, at which
time any remaining balance of the $2,120,000.00 owing by SEMCO to
MagneTek will be paid in full.
Providing each of the foregoing payments are made as and when they are
due, no interest shall accrue or be payable by SEMCO. In the event any payment
is not made within 10 days of the due date thereof, MagneTek may, at its option,
declare the remaining balance of the $2,120,000.00 that is then owed to be
immediately due and payable. Any amounts owing by SEMCO to MagneTek that are not
paid within 10 days of the date they are due and payable shall thereafter bear
interest at the rate of 10% per year.
All payments required to be made by SEMCO under this Agreement shall be
delivered to MagneTek, Inc., N49 W 13650 Campbell Drive, Menomonee Falls,
Wisconsin 53051, attention: Jolene L. Shellman, Vice President Legal Affairs and
Corporate Secretary, or to such other person or address as MagneTek may
reasonably designate from time to time, or wire transferred to the banks and
account of MagneTek that MagneTek may reasonably designate in writing from time
to time.
Any tax and/or charge incurred for the payment hereunder in Korea shall
be born by SEMCO.
3. NONADMISSION OF MERITS OF CLAIMS OR DEFENSES
Nothing in this Agreement is intended to or shall be construed as an
admission by any party on the merits of the claims and defenses asserted in the
Action, or that any party violated any law, committed any wrongdoing, breached
any obligation, or otherwise engaged in any improper, unmerited, or illegal
conduct.
4. RELEASES
(a) Except for the obligations arising under this Agreement, MagneTek,
on behalf of itself, its present and former officers, directors, partners,
employees, shareholders, subsidiaries, related or affiliated corporations or
entities, agents, representatives, attorneys, assigns, predecessors and
successors-in-interest, and all others claiming by or through MagneTek, does
hereby release, discharge and covenant not to sue SEMCO, as well as any of
SEMCO's present or former officers, directors, employees, subsidiaries, related
or affiliated corporations or entities, agents, representatives, attorneys,
assigns, predecessors and successors-in-interest, from and for all actions,
claims, charges, liabilities, obligations, benefits, compensation, damages, fees
or suits of any kind whatsoever, known or unknown, which MagneTek now has, or
may ever have had, arising out of or relating to:
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(i) the Action,
(ii) any claims or defenses that were or could have been asserted
in the Action, and
(iii) the Development Agreement and/or the Development Agreement for
Adaptor.
(b) Except for the obligations arising under this Agreement, SEMCO, on
behalf of itself, its present and former officers, directors, partners,
employees, shareholders, subsidiaries, related or affiliated corporations or
entities, agents, representatives, attorneys, assigns, predecessors and
successors-in-interest, and all others claiming by or through SEMCO, does hereby
release, discharge and covenant not to sue MagneTek, as well as any of
MagneTek's present and former officers, directors, employees, subsidiaries,
related or affiliated corporations or entities, agents, representatives,
attorneys, assigns, predecessors and successors-in-interest, from and for all
actions, claims, charges, liabilities, obligations, benefits, compensation,
damages, fees or suits of any kind whatsoever, known or unknown, which SEMCO now
has, or may ever have had, arising out of or relating to:
(i) the Action,
(ii) any claims or defenses that were or could have been asserted
in the Action, and
(iii) the Development Agreement and/or the Development Agreement for
Adaptor.
(c) The provisions of this Agreement may be pleaded as a full and
complete defense to, and may be used as the basis for an injunction against, any
action, suit, or other proceeding that may be instituted, prosecuted, or
attempted in breach of this Agreement.
(d) As to these releases, the Parties hereby acknowledge that they have
been advised of the contents of section 1542 of the California Civil Code, which
reads as follows:
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR
HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED
HIS OR HER SETTLEMENT WITH THE DEBTOR.
The Parties hereby expressly waive and relinquish all rights and
benefits under California Civil Code section 1542 and under any law or legal
principal of similar effect in any jurisdiction with respect to the releases
granted in this Agreement.
5. MODIFICATION
No modifications, amendments, or waiver of any of the provisions of
this Agreement shall be effective unless signed in writing by all Parties. Any
party's failure at any time to enforce any of the provisions of this Agreement
shall in no way be construed as a waiver of such provisions and shall not affect
such party's right thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
6. WARRANTY
The Parties hereby warrant and represent that they have not transferred
or assigned or attempted to transfer or assign any of the claims released
hereunder. The persons signing this Agreement hereby warrant and represent that
they have the power and authority to bind any party on whose behalf this
Agreement is signed. Each party agrees to indemnify the other party for any loss
resulting from any breach of this paragraph 6.
7. CONTROLLING LAW
This Agreement shall be interpreted, construed and enforced in
accordance with the applicable federal law of the United States and the law of
the State of California, without giving regard to principles of choice of law.
8. CHOICE OF VENUE
The Parties agree that venue for all disputes relating to or arising
out of this Agreement shall be in the United States District Court for the
Central District of California or, if that court does not have jurisdiction of
such dispute, then in the Superior Court for the State of California, for the
County of Orange.
9. ATTORNEYS' FEES
The Parties acknowledge and agree that in any litigation or other
proceeding that is brought that arises out of or relates to the terms of this
Agreement or the interpretation or enforcement thereof, the prevailing party
shall be entitled to recover costs and attorneys' fees incurred in such action
or proceeding. The Parties shall otherwise bear their own attorneys' fees and
costs incurred in connection with the Action and the preparation of this
Agreement.
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10. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement of the Parties
pertaining to the settlement of this Action, and supersedes and cancels any
prior agreements or understandings, oral or written, relating to the subject
matter of this Agreement, including but not limited to the Development Agreement
and the Development Agreement for Adaptor.
11. COUNTERPARTS
This Agreement may be executed in counterparts, and each counterpart
shall be deemed to be an original. The acceptance of any party to the terms of
this Agreement may be evidence by the fax or electronic transmission of a
party's signature.
12. NOTICES
Any notice required or permitted under the terms of this Agreement,
shall be given by overnight delivery or such other expedited delivery as may
reasonably be available through generally recognized delivery services such as
Federal Express, DHL, and Airborne, as follows:
TO MAGNETEK:
Jolene L. Shellman
Vice President Legal Affairs and Corporate Secretary
MagneTek, Inc.
N49 W 13650 Campbell Drive
Menomonee Falls, Wisconsin 53051
With a copy to:
William S. O'Hare, Esq.
Snell & Wilmer L.L.P.
600 Anton Boulevard, Suite 1400
Costa Mesa, California 92626-7689
TO SEMCO:
Byung Mun Lee, Esq.
Manager of Legal Affairs Group
Samsung Electro-Mechanics Co., Ltd.
314, Maetan3 - Dong, Yeongtong - Gu, Suwon
Gyunggi - Do, Korea 443-743
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With a copy to:
Finley L. Taylor, Esq.
Sheppard, Mullin, Richter & Hampton LLP
650 Town Center Drive, 4th Floor
Costa Mesa, California 92626-1925
Alternatively, any notice required or permitted under this Agreement
may be sent to the foregoing addresses by hand-delivery to the above stated
addresses, without the necessity of personal delivery on the specified
addresses.
The Parties may from time to time notify each other of reasonable
changes in the names and addresses of persons to whom notices must be given.
13. TIME IS OF THE ESSENCE
Time is of the essence for the completion of the acts described in and
required by this Agreement.
14. MUTUAL COOPERATION
The Parties agree to execute such documents and to perform such acts as
may be reasonably necessary to carry out the terms of this Agreement.
15. ADVICE OF COUNSEL
The Parties to this Agreement represent to each other that they have
obtained the advice of legal counsel concerning the settlement of this Action
and the terms of this Agreement, and have read and fully understand the terms
hereof. The terms and meaning of this Agreement shall be construed and
interpreted as a mutually prepared contract and shall not be presumptively
interpreted for or against any party.
MagneTek, Inc.
By: /s/ David P. Reiland
-------------------------------
David P. Reiland
-------------------------------
(Name)
Its: President and CEO
(Title)
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Samsung Electro-Mechanics Co., Ltd.
By: /s/ Byung Mun Lee
-------------------------------
Byung Mun Lee
-------------------------------
(Name)
Its: Manager of Legal Affairs Group.
(Title)
Approved as to form:
SNELL & WILMER L.L.P.
By: Elizabeth M. Weldon for William S. O'Hare
-------------------------------------------------
William S. O'Hare
Attorneys for MagneTek, Inc.
SHEPPARD, MULLIN, RICHTER
& HAMPTON L.L.P.
By: /s/ Isabelle L. Ord for Finley L. Taylor
--------------------------------------------
Finley L. Taylor
Attorneys for SEMCO
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EXHIBIT A
William S. O'Hare (#082562)
Deborah S. Mallgrave (#198603)
Elizabeth M. Weldon (#223452)
SNELL & WILMER L.L.P.
600 Anton Boulevard, Suite 1400
Costa Mesa, California 92626-7689
Telephone: (714) 427-7000
Facsimile: (714) 427-7799
Mark J. Patterson (admitted PRO HAC VICE)
WADDEY & PATTERSON
414 Union Street, Suite 2020
Nashville, Tennessee 37219
Telephone: (615) 242-2400
Facsimile: (615) 242-2221
Attorneys for Plaintiff MAGNETEK, INC.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
MAGNETEK, INC., a Delaware Corporation, CASE NO. CV05 2222 FMC (PLAx)
Hon. Florence-Marie Cooper, Ctrm. 750
Plaintiff, Mag. Judge Paul L. Abrams, Dept. G
vs. STIPULATION FOR DISMISSAL
SAMSUNG ELECTRO-MECHANICS CO., LTD,
a Korean Corporation,
Defendant. Complaint Filed: March 25, 2005
Discovery Cutoff: Feb. 27, 2007
Pre-Trial Conference: May 7, 2007
Trial Date: June 5, 2007
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The parties, through their counsel, hereby stipulate with reference to
the following facts:
A. Concurrently with the execution of this stipulation, the parties
have entered into a Settlement Agreement and Release to settle and resolve all
of the claims made in this action;
B. Under the terms of the parties' settlement, the parties agree to
stipulate to the dismissal of this action with prejudice, with each side bearing
its own attorneys' fees and costs.
THEREFORE, the parties hereby stipulate and request as follows:
1. That the above-captioned action shall be and hereby is dismissed
with prejudice in its entirety pursuant to Federal Rule of Civil Procedure
41(a)(1); and
2. Each party shall bear its own costs and attorneys' fees.
Dated: April 27, 2007
SNELL & WILMER L.L.P.
By: /s/ Elizabeth M. Weldon
-------------------------------------------
William S. O'Hare
Deborah S. Mallgrave
Elizabeth M. Weldon
Attorneys for Plaintiff MagneTek, Inc.
Dated: April 27, 2007
SHEPPARD, MULLIN, RICHTER & HAMPTON L.L.P.
By: /s/ Isabelle L. Ord
--------------------------------------------
Finley L. Taylor
Isabelle L. Ord
Attorneys for Defendant Samsung Electro-Mechanics Co., Ltd.