EXHIBIT 4.9
INDEMNIFICATION AND RELEASE AGREEMENT
WHEREAS, Sulzer Medica AG ("Medica") and ▇▇▇▇▇▇ ▇▇ ("▇▇▇▇▇▇") and certain of
their direct or indirect subsidiaries are currently defendants in the MDL
proceedings before the United States District Court for the Northern District of
Ohio, Judge ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇ (the "Court") (MDL Docket No. 1401; Case no.
1:O1-CV-9000), and in certain State Court proceedings related to what is
commonly referred to as the Sulzer Hip Prosthesis and Knee Prosthesis Liability
Litigation (the "Class Action") (together referred to as the "Insured Parties"
or individually as an "insured Party");
WHEREAS, Winterthur Swiss Insurance Company and its legal successor, XL
Winterthur International Insurance Switzerland (formerly known as Winterthur
International Insurance Switzerland), or their respective subsidiaries
(collectively "Winterthur") issued certain insurance policies for the benefit of
Sulzer, Medica and/or their respective direct or indirect subsidiaries, which
policies are identified in the Class Action Settlement Agreement dated as of
March 13, 2002 among Sulzer Orthopedics Inc., Medica, Sulzer, and Class Counsel
on behalf of Class Representatives in the Class Action (the "CASA") as the
"Initial Insurance Policies" and the "Second Year Insurance Policies"
(collectively, the "Policies"), respectively;
WHEREAS, various Insured Parties have made claim(s) for coverage under the
Policies in connection with the Affected Products (as defined in the CASA) and
Winterthur has disputed certain aspects of said claim(s) as presented;
WHEREAS, pursuant to the terms of the CASA, Winterthur is expected to make
contributions to the Sulzer Settlement Trust (as defined in the CASA);
WHEREAS, the Insured Parties and Winterthur wish to set forth their agreements
with regard to Winterthur's contributions to the Sulzer Settlement Trust
established by the CASA; and
WHEREAS, terms used herein and not otherwise defined herein shall have the
respective meaning given to such terms in the CASA;
NOW, THEREFORE, the Insured Parties and Winterthur agree as follows:
1. With respect to the Initial Insurance Policies, Winterthur shall pay to
the Sulzer Settlement Trust on the Insurance Proceeds Delivery Date
(thirty (30) Business Day after Trial Court Approval) in accordance
with the terms of the CASA the remaining balance of the Initial
Insurance Policies as of that date in their original currency (Swiss
francs) or the equivalent amount in US Dollars converted in accordance
with the terms of the Policies. Such funds shall be used by the Sulzer
Settlement Trust solely to make
INDEMNIFICATION AND RELEASE AGREEMENT -2-
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payments as specified in Section 2.5(c) of the CASA. Prior to that
date, Winterthur will continue to make payment of any claims or
expenses covered under the Initial Insurance Policies for which proof
of loss has been submitted to Winterthur. The Insured Parties
acknowledge that upon the above payment to the Sulzer Settlement Trust,
the Initial Insurance Policies will be fully and finally exhausted and
that Winterthur accordingly will have no further obligations whatsoever
in connection with the Initial Insurance Policies.
2. With respect to the Second Year Insurance Policies, Winterthur agrees
to pay the sum of $40 million US Dollars into an escrow account on the
Insurance Proceeds Delivery Date. As soon as practicable following the
execution of this Agreement, the parties shall enter into an escrow
agreement (the "Escrow Agreement"), which shall provide that the Second
Year Insurance Proceeds shall be delivered from the Escrow Account to
the Sulzer Settlement Trust on the date that is the earlier of (x) the
Funding Date and (y) the date that Class Members representing claims
for no less than 800 Affected Product Revision Surgeries have validly
elected the GPO in accordance with Article 8 of the CASA and all of the
Initial Insurance Proceeds have been paid out of the Sulzer Settlement
Trust. The Second Year Insurance Proceeds shall be used by the Sulzer
Settlement Trust solely to make payments as specified in Section 2.5(c)
of the CASA.
3. As a condition precedent to the foregoing payments by Winterthur, no
later than the Trial Court Approval Date, the Court shall enter a
consent judgment against Sulzer Orthopedics Inc. in favor of the Class
Members for an amount that is no less than the aggregate payments to be
made pursuant to Paragraphs 1 and 2 of this Agreement.
4. Nothing in this Agreement or its performance shall constitute or
otherwise be deemed to be (i) an admission or a concession by
Winterthur as to coverage for any claims falling within the scope of
the CASA or a waiver of any coverage defenses that may be available to
Winterthur, or (ii) an admission or concession by the Insured Parties
that Winterthur's obligations under the Second Year Insurance Policies
in connection with the claims that are the subject of the CASA are
limited to the amount of the Second Year Insurance Proceeds.
5. The Insured Parties, jointly and severally on behalf of themselves and
all past or present direct or indirect subsidiaries, hereby release,
relinquish, acquit and forever discharge Winterthur, its past or
present direct or indirect subsidiaries, affiliates, parent
corporations, and former or present officers, directors, shareholders,
employees, successors, predecessors, representatives, attorneys,
agents, loss adjusters and claims ad-
INDEMNIFICATION AND RELEASE AGREEMENT -3-
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ministrations, and each of them (the "Releasees"), of and from any and
all claims, actions, demands, lawsuits, damages, judgments, causes of
action whatsoever in law, contract, tort, admiralty or equity, whether
known or unknown, which they or their successors, predecessors or
assigns have heretofore have had or hereafter may have against the
Releasees, or any of them, for, upon or by reason of any loss, expense,
matter, cause or transaction arising out of or in any way connected to
the Affected Products, anywhere in the world, including but not limited
to any and all such claims under the Policies or under any other
contracts of insurance issued at any time by Winterthur or any of its
subsidiaries, affiliates, successors or predecessors to the Insured
Parties or any past or present direct or indirect subsidiaries;
provided that, nothing in this Paragraph 5 shall release Winterthur
from any obligation or duty to the Insured Parties or any of them under
any directors' and officers' liability policy, including, but not
limited to, any claim thereunder arising out of or in any way connected
to the Affected Products.
6. Effective as of the Insurance Proceeds Funding Date, Medica, jointly
and severally on behalf of itself and all past or present direct or
indirect subsidiaries, agrees to fully indemnify, save, protect and
hold forever harmless Winterthur, its past or present direct or
indirect subsidiaries, affiliates, parent corporations, and former or
present officers, directors, shareholders, employees, successors,
predecessors, representatives, attorneys, agents, loss adjusters and
claims administrators (the "Indemnitees"), from and against any and all
losses, claims, liabilities, judgments, damages, costs, and expenses,
including without limitation reasonable attorneys' fees, court costs
and/or other expenses (the "Claims), which may be asserted against
Indemnitees, or which Indemnitees may suffer, incur or sustain, or for
which Indemnitees may become legally liable or obligated under the
Initial Insurance Policies, arising out of or in connection with any
and all claims, demands, lawsuits and other actions anywhere in the
world, including but not limited to claims, demands, lawsuits and
actions of members of the Settlement Class who exercise their right to
opt-out of the CASA, claims, demands, lawsuits or actions of foreign
recipients of Affected Products not encompassed within the Settlement
Class, claims, demands, lawsuits or actions regarding the validity of
the releases of the Policies provided for in this Agreement or of any
other transactions effected in accordance with this Agreement; provided
that, the Indemnitees: (a) promptly notify Medica in writing of any
such Claim which comes to their attention; (b) share with Medics the
right to control the defense or settlement of such Claim; (c) do not
enter into any settlement or compromise of such Claim without the
express authorization of Medica; and (d) reasonably cooperate with
Medica in the defense of such Claim, subject to Medica's payment of all
reasonable out-of-pocket expenses as-
INDEMNIFICATION AND RELEASE AGREEMENT -4-
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sociated with such cooperation by the Indemnitees. In connection with
the sharing of the control of the defense or settlement of such Claim,
the parties agree that Winterthur shall have primary authority with
respect to decisions related to coverage issues, subject to the
approval of Medica, which shall not be unreasonably withheld, and
Medica shall have primary authority with respect to decisions related
to liability and damages issues, subject to the approval of Winterthur,
which shall not be unreasonably withheld.
7. Effective as of the Insurance Proceeds Funding Date, Medica, jointly
and severally on behalf of itself and all past or present direct or
indirect subsidiaries, agrees to fully indemnify, save, protect and
hold forever harmless Winterthur, its past or present direct or
indirect subsidiaries, affiliates, parent corporations, and former or
present officers, directors, shareholders, employees, successors,
predecessors, representatives, attorneys, agents, loss adjusters and
claims administrators (the "Indemnitees"), from and against any and all
losses, claims, liabilities, judgments, damages, costs, and expenses,
including without limitation reasonable attorneys' fees, court costs
and/or other expenses (the "Claims), which may be asserted against
Indemnitees, or which Indemnitees may suffer, incur or sustain, or for
which Indemnitees may become legally liable or obligated under the
Second Year Insurance Policies, arising out of or in connection with
claims, demands, lawsuits and other actions related to the Affected
Products anywhere in the world, including but not limited to claims,
demands, lawsuits and actions of members of the Settlement Class who
exercise their right to opt-out of the CASA, claims, demands, lawsuits
or actions of foreign recipients of Affected Products not encompassed
within the Settlement Class, claims, demands, lawsuits or actions
regarding the validity of the releases of the Policies provided for in
this Agreement or of any other transactions effected in accordance with
this Agreement; provided that, notwithstanding anything herein to the
contrary, under no circumstance shall Medica's indemnity obligation to
the Indemnities under this Paragraph 7 exceed the amount of the Second
Year Insurance Proceeds, and further provided that, the Indemnitees:
(a) promptly notify Medica in writing of any such Claim which comes to
their attention; (b) share with Medica the right to control the defense
or settlement of such Claim; (c) do not enter into any settlement or
compromise of such Claim without the express authorization of Medica;
and (d) reasonably cooperate with Medica in the defense of such Claim,
subject to Medica's payment of all reasonable out-of-pocket expenses
associated with such cooperation by the Indemnitees. In connection with
the sharing of the control of the defense or settlement of such Claim,
the parties agree that Winterthur shall have primary authority with
respect to decisions related to coverage issues, subject to the
approval of Medica; which shall not be unreasonably withheld, and
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Medica shall have primary authority with respect to decisions related
to liability and damages issues, subject to the approval of Winterthur,
which shall not be unreasonably withheld.
8. For the avoidance of doubt, the parties to this Agreement intend that
the foregoing release and indemnification applies with equal force and
effect to Winterthur International America Insurance Company with
respect to the Affected Products and further that to the extent not
already exhausted, the applicable local policies shall be exhausted by
virtue of the payments set forth above. As a condition precedent to the
payments set forth above, Medica will ensure, prior to such payments
being made by Winterthur, that all named insureds under the applicable
local policies will execute policy releases in a form satisfactory to
Winterthur International America Insurance Company.
9. The Insured Parties represent, warrant and agree that they have not and
shall not assign at any time in the future any of the Policies or any
of the rights, claims, duties or obligations under the Policies related
to the Affected Products to any third parties whatsoever, and that they
will oppose any such attempted assignment by any insured subsidiary
under the Policies.
10. The Insured Parties represent and warrant that they are authorized to
enter into this Agreement on behalf of themselves and all subsidiaries
insured under the Policies.
11. It is a condition precedent to this Agreement that the Trust Agreement
for the Sulzer Settlement Trust will provide that the Sulzer Settlement
Trust may be audited by Winterthur (or its designee) to monitor and
ensure the proper disbursement of the Initial Insurance Proceeds and
the Second Year Insurance Proceeds in accordance with the terms of the
CASA.
12. Unless stated expressly to the contrary in this Agreement, the terms of
this Agreement automatically cease to have effect in the event that the
CASA (i) is terminated prior to the Insurance Proceeds Delivery Date,
(ii) does not achieve Trial Court Approval, or (iii) is materially
changed prior to the Insurance Proceeds Delivery Date.
13. This Agreement shall be governed by and construed according to the laws
of Switzerland.
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14. Any dispute arising out of or in connection with this Agreement,
including its existence, validity, interpretation, performance, breach
or termination, shall be subject exclusively to the jurisdiction of the
courts of Winterthur, Switzerland.
15. The Insured Parties shall deliver to Winterthur a copy of any notice
received by an Insured Party pursuant to the terms of the CASA.
16. Any notice or other document to be given by any party to another party
shall be in writing and delivered personally or sent Federal Express or
facsimile (which such facsimile notice shall be deemed effective as of
the time of receipt of confirmation by the sending party) as follows,
or as otherwise instructed by a notice delivered to the other party
pursuant to this paragraph:
(i) If to Medica:
Sulzer Medica AG
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ (▇) ▇ ▇▇▇ ▇▇ ▇▇
with copies to:
Sulzer Medica USA Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: ▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Bar & ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇. ▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇ (▇) ▇▇ ▇▇▇ ▇▇ ▇▇
(ii) If to Sulzer:
▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇▇ (▇) ▇▇ ▇▇▇ ▇▇ ▇▇
with copies to:
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Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: ▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to Winterthur:
XL Winterthur International Insurance Switzerland
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ (▇) ▇▇ ▇▇▇ ▇▇ ▇▇
with copies to:
Sedgwick, Detert, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇ (▇) ▇ ▇▇▇ ▇▇ ▇▇
Sedgwick, Datert, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
INDEMNIFICATION AND RELEASE AGREEMENT -8-
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In witness whereof, the parties have duly executed this Agreement as
set forth below to be effective as of this 14th day of March 2002.
SULZER MEDICA AG
By: /s/ ▇▇. ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇
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Name: ▇▇. ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇
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Title: Chief RNU Officer
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By: /s/ ▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇ ▇▇▇▇▇▇
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Title: Chief Financial Officer
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INDEMNIFICATION AND RELEASE AGREEMENT -9-
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▇▇▇▇▇▇ ▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: General Counsel
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By: /s/ [ILLEGIBLE]
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Name: [ILLEGIBLE]
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Title: Head Risk Management
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INDEMNIFICATION AND RELEASE AGREEMENT -10-
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XL WINTERTHUR INTERNATIONAL INSURANCE SWITZERLAND
By: /s/ ▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇
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Title: Chief Claims Officer
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By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Claims Manager
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