-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O49yzEirP5FDddOqqxR/QgDR0aHylMV5IDLNExlgsnxIqUPpypBqlsdAKwOiN1e3 RVpO18qlbjWzFyRs303p1A== 0000889429-99-000003.txt : 19990208 0000889429-99-000003.hdr.sgml : 19990208 ACCESSION NUMBER: 0000889429-99-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990202 ITEM INFORMATION: FILED AS OF DATE: 19990205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARAGON TRADE BRANDS INC CENTRAL INDEX KEY: 0000889429 STANDARD INDUSTRIAL CLASSIFICATION: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670] IRS NUMBER: 911554663 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11368 FILM NUMBER: 99522418 BUSINESS ADDRESS: STREET 1: 180 TECHNOLOGY PARLWAY CITY: NORCROSS STATE: GA ZIP: 30092 BUSINESS PHONE: 7703004000 MAIL ADDRESS: STREET 1: 180 TECHNOLOGY PKWY CITY: NORCROSS STATE: GA ZIP: 30092 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (Date of earliest event reported): FEBRUARY 2,1999 PARAGON TRADE BRANDS, INC. (Exact name of registrant as specified in charter) DELAWARE (State or other jurisdiction of incorporation) 1-11368 (Commission File Number) 91-1554663 (IRS Employer Identification No.) 180 TECHNOLOGY PARKWAY, NORCROSS, GA 30092 (Address of principal executive offices) (Zip Code) (678) 969-5000 (Registrant's telephone number, including area code) NONE (Former name or former address, if changed since last report) Page 1 of 6 Exhibit Index is at Page 3 ITEM 5. OTHER EVENTS See attached Exhibit 99.1 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PARAGON TRADE BRANDS, INC. By: /S/ ALAN J. CYRON ---------------------------- Name: Alan J. Cyron Title: Chief Financial Officer Dated: February 5, 1999 2 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 99.1 Press Release issued by Paragon Trade Brands, Inc. on February 2, 1999. 3 EX-99.1 2 FEBRUARY 2, 1999 PRESS RELEASE Exhibit 99.1 NEWS FOR IMMEDIATE RELEASE CONTACT: Kurt P. Ross Guy B. Lawrence K.P. ROSS, INC. tel: (212) 308-3333 E-mail: kpross1@msn.com PARAGON FINALIZES AGREEMENT WITH PROCTER & GAMBLE BANKRUPTCY COURT FILING SEEKS APPROVAL OF SETTLEMENT Norcross, GA, February 2, 1999 - Paragon Trade Brands, Inc. (NYSE: PTB) today announced that it has finalized its previously announced agreement in principle with the Procter & Gamble Company and filed a motion with the United States Bankruptcy Court for the Northern District of Georgia to approve the settlement. The agreement provides for resolution of all of P&G's claims pending in Paragon's bankruptcy proceeding, including issues surrounding a patent dispute that was the subject of litigation in the Delaware District Court, and constitutes a significant step forward in Paragon's reorganization process. According to Paragon, the agreement will serve as the cornerstone for the formulation of a consensual plan of reorganization. Paragon believes the settlement provides a means for resolving P&G's claims against the Company, managing litigation risk going forward and emerging from bankruptcy positioned to produce the highest quality absorbent products and to achieve its long-range strategic goals. Under the agreement, Paragon grants P&G a prepetition unsecured claim in the amount of $158.5 million and an administrative claim in the amount of $5 million. P&G had previously filed a proof of claim in Paragon's bankruptcy proceedings listing claims totaling approximately $6 billion, including a claim for damages in the amount of approximately $178.4 million related to a finding by the Delaware District Court in December 1997 that Paragon's "ultra" diapers infringed two P&G patents. The parties have agreed that payments of the agreed-upon amounts pursuant to a plan of reorganization will be in full settlement of any and all claims P&G and Paragon have asserted against each other through the date of the settlement agreement. The parties will exchange mutual general releases to that effect. As part of the agreement, P&G is granting licenses to Paragon in the U.S. and Canada which give Paragon the freedom under P&G's patents to market dual cuff diaper and training pant products which 4 enjoy wide consumer acceptance. In exchange for this right, Paragon has agreed to pay P&G running royalties on net sales of the licensed products equal to: 2% through October 2005, .75% thereafter through October 2006 and .375% thereafter through March 2007 in the U.S.; and 2% through October 2008 and 1.25% thereafter through December 2009 in Canada. The agreement also provides that P&G will grant Paragon and/or its affiliates "most favored licensee" status with respect to patents currently owned by P&G or for which an application is pending as of the date of the settlement agreement. In addition, Paragon has agreed with P&G that prior to litigating any future patent dispute, the parties will engage in good faith negotiations and will consider arbitrating the dispute rather than immediately resorting to legal action. Once the settlement is approved by a Final Order of the Bankruptcy Court, the parties have agreed that Paragon will withdraw its appeal of the P&G judgment and P&G will withdraw its contempt motion in Delaware. Paragon further reported that it continues to pursue settlement of the claims asserted by Kimberly-Clark Corporation in Paragon's chapter 11 case and believes that considerable progress continues to be made. Commenting on the agreement with P&G, Bobby Abraham, Chief Executive Officer of Paragon, stated, "With the P&G settlement agreement in place we look forward to quickly resolving the remaining claims against the Company, finalizing our plan of reorganization, emerging from bankruptcy and capitalizing on the opportunities we have for growing Paragon's business. While we continue to believe that our products do not infringe any valid P&G patent, the P&G licenses will permit Paragon greater freedom to optimize the performance of its diaper and training pant products while paying the same royalties it believes will be paid by Paragon's store brand competitors for similar patent rights. Thanks to our scale and consistent investments in productivity, this settlement still allows Paragon to remain the most efficient store brand manufacturer dedicated to providing retail customers and the ultimate consumer with quality products at lower prices than the national brands. In addition to the licenses, our agreement regarding the handling of future patent disputes provides a foundation for Paragon to grow in the future with less risk of disruptive and costly patent litigation." Paragon Trade Brands is the leading manufacturer of store brand infant disposable diapers in the United States and Canada. Paragon manufactures a line of premium and economy diapers, training pants, and feminine care and adult incontinence products, which are distributed throughout the United States and Canada, primarily through grocery and food stores, mass merchandisers, warehouse clubs, toy stores and drug stores that market the products under their own store brand names. Paragon has also established international joint ventures in Mexico, Argentina, Brazil and China for the sale of infant disposable diapers and other absorbent personal care products. 5 Statements made in this press release, other than those concerning historical information, should be considered forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the Company's forward-looking statements. Factors which could affect the Company's financial results, including, but not limited to: the Company's Chapter 11 filing; increased raw material prices; new product and packaging introductions by competitors; increased price and promotion pressure from competitors; new competitors in the market; Year 2000 compliance issues; and patent litigation, are described in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof, and which are made by management pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. ### ALAN J. CYRON EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER PARAGON TRADE BRANDS, INC. 180 TECHNOLOGY PARKWAY NORCROSS, GA 30092 678/969-5200 6 -----END PRIVACY-ENHANCED MESSAGE-----