Exhibit 10.11
CONFIDENTIAL SETTLEMENT AGREEMENT
AND RELEASE
AMONG
CONGOLEUM CORPORATION, THE PLAN TRUST
And
CERTAIN UNDERWRITERS AT LLOYD'S, LONDON
June 22, 2005
CONFIDENTIAL SETTLEMENT AGREEMENT AND RELEASE
This Confidential Settlement Agreement and Release (the "Agreement") is
made this 22nd day of June, 2005, by and between Congoleum Corporation, on its
own behalf and on behalf of all other "Persons" (as defined herein) within the
definition of "Congoleum" (as defined herein) and, upon its creation, the Plan
Trust, on the one part, and certain Underwriters at Lloyd's, London ("Lloyd's
Underwriters," as hereinafter defined), on the other part, (Congoleum, the Plan
Trust and Lloyd's Underwriters are each referred to herein as a "Party" and
collectively as the "Parties").
WITNESSETH THAT:
WHEREAS, Lloyd's Underwriters severally subscribed to certain policies of
insurance that provide insurance to Congoleum (the "London Policies," as more
fully described and defined herein); and
WHEREAS, Persons within the definition of Congoleum have incurred and may
incur in the future certain liabilities, expenses and losses arising out of
various "Claims" (as defined herein), including asbestos-related bodily injury
claims, other asbestos-related claims, environmental claims and/or other types
of claims; and
WHEREAS, Congoleum asserts that Lloyd's Underwriters are obligated under
the London Policies to make liability payments and pay defense costs in
connection with Claims, including Claims for asbestos-related bodily injury; and
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WHEREAS, there are disputes among the Parties regarding their respective
rights and obligations with respect to insurance coverage for asbestos-related
bodily injury claims (the "Coverage Dispute"); and
WHEREAS, Congoleum and Lloyd's Underwriters are parties to a lawsuit
styled Congoleum Corporation v. ACE American Insurance Company, et al., Docket
No. MID-L-8908-01 pending in the Superior Court of New Jersey, Law Division,
Middlesex County (the "Coverage Action"); and
WHEREAS, the "Plan Proponents" (as defined herein) distributed their Joint
Prepackaged Plan of Reorganization Under Chapter 11 of the Bankruptcy Code for
Congoleum Corporation, et al., dated October 27, 2003, as amended (the "Original
Plan"); and
WHEREAS, on or about December 31, 2003, the Debtors filed reorganization
Case No. 03-51524 (KCF) jointly administered pursuant to chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court for the
District of New Jersey (the "Chapter 11 Case"), and the Debtors continue to
operate their businesses as debtors and debtors-in-possession; and
WHEREAS, Congoleum seeks in the Coverage Action actual compensatory and
consequential damages, plus interest thereon, among other relief, and Lloyd's
Underwriters deny they owe any damages as alleged and have defended against
Congoleum's claims in the Coverage Action; and
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WHEREAS, on or about June 10, 2005, the Debtors filed with the Bankruptcy
Court the Fifth Modified Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code of Congoleum Corporation, et al. (the "Fifth Modified Plan");
and
WHEREAS, in consideration of certain monetary payments and other
considerations, as more fully set forth herein, by this Agreement, the Parties
intend to adopt, by way of compromise, and without (i) prejudice to or waiver of
their respective positions in other matters, (ii) trial or adjudication of any
issues of fact or law, and (iii) Lloyd's Underwriters' admission of liability or
responsibility under the London Policies, a full and final settlement that
releases and terminates all rights, obligations and liabilities (if any) that
Lloyd's Underwriters may owe Congoleum with respect to the London Policies, any
other agreement among or between the Parties concerning the London Policies (if
any), and/or the Coverage Action.
AGREEMENTS:
NOW, THEREFORE, in full consideration of the foregoing and of the mutual
agreements contained herein, and intending to be legally bound hereby, the
Parties agree as follows:
1. Definitions
For purposes of this Agreement and the attachments hereto, the
following definitions apply to the capitalized terms herein wherever those terms
appear in this Agreement, including the prefatory paragraph, recitals, the
sections below and any attachments hereto. Capitalized terms in the prefatory
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paragraph, recitals, the sections below and any attachments hereto have the
meanings ascribed to them therein to the extent they are not otherwise defined
in this Definitions section. Capitalized terms that are not defined in this
Agreement are given the meanings designated in the Fifth Modified Plan, as
presently constituted. Moreover, each defined term stated in the singular shall
include the plural and each defined term stated in the plural shall include the
singular, and each defined term stated in the masculine form or in the feminine
form or in the neuter form shall include all others. The word "including" means
"including but not limited to."
A. Agreement: The term "Agreement" means this Confidential
Settlement Agreement and Release, as the same may be amended from time to time
in writing in accordance with the provisions thereof.
B. Approval Order: The term "Approval Order" means an order of the
Bankruptcy Court (or the District Court exercising its original bankruptcy
jurisdiction) approving this Agreement and the compromise and settlement
memorialized herein between Congoleum and Lloyd's Underwriters, which order
shall be in the form of Attachment C hereto or such other order that is in a
form and substance acceptable to Congoleum and Lloyd's Underwriters.
C. Asbestos Claims: The term "Asbestos Claims" means any and all
past, present and future claims, demands, actions, suits, proceedings, notices
of partial or total responsibility, whether presently known or unknown, that
seek compensatory, punitive or statutory damages, declaratory judgment,
injunctive relief, medical monitoring, or any other form of relief whatsoever,
on account of alleged bodily injury, personal injury, fear of future injury,
medical monitoring, mental injury or anguish, emotional distress, shock,
sickness, disease, or any other illness or condition, death, property damage,
loss of use of property, or diminution in the value of property, arising from
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alleged, potential or actual exposure of any type or nature whatsoever to
asbestos, an asbestos-containing product, and/or any other substance, product,
matter or material in any form or state that contains or is alleged to contain
asbestos, either alone or in combination with any other substance. The term
"Asbestos Claims" also includes, without limitation, claims or suits alleging in
whole or in part exposure to asbestos and/or asbestos containing products in
addition to any other substance, chemical, pollutant, waste, or material of any
nature as well as claims that involve, in whole or in part, alleged exposure to
asbestos or asbestos containing products relating to or arising out of or from
the installation, removal, manufacture, distribution, sale, re-sale, existence
or presence (whether on premises owned or controlled by the Debtors or
otherwise) of asbestos or an asbestos-containing product, either alone or in
combination with any other substance. The term "Asbestos Claims" also includes
the definitions of the following terms, as set forth in Section 1.2 of the Plan:
ABI Asbestos Claim, Asbestos Personal Injury Claim, Asbestos Property Damage
Claim, Asbestos Property Damage Contribution Claim, Indirect Asbestos Claim, and
Unknown Asbestos Claim.
D. Business Day: The term "Business Day" means any day that is not a
Saturday, a Sunday, a federal holiday in the United States of America or a
national holiday in the United Kingdom.
E. Claim: The term "Claim" means any of the following: (1) "Claim"
as that term is defined in the United States Bankruptcy Code, 11 U.S.C. ss.
101(5); (2) "Demand" as that term is defined in the United States Bankruptcy
Code, 11 U.S.C. Sec. 524(g)(5); or (3) any claim, whether past, present or
future, known or unknown, asserted or unasserted, foreseen or unforeseen, fixed
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or contingent, or direct or indirect, and whether in law, equity, admiralty or
otherwise, including without limitation, an Asbestos Claim. The term "Claim"
further includes, without limitation any claim (a) arising out of, related to,
or involving asbestos or any other substance, product, matter or material in any
form or state, any cumulative or other injury or damage, any activity,
operation, premises, or exposure or any alleged bad faith, unfair claim
practices, unfair trade practices, deceptive trade practices, insurance code
violations, fraud, misrepresentation, non-disclosure, breach of fiduciary duty,
conspiracy, or extra-contractual or tort liability; (b) for any form of damages,
indemnity or defense obligations, insurance premiums (whether retrospectively
rated or otherwise), deductibles, self-insured retentions, costs, expenses,
contribution or subrogation; or (c) pursuant to or under a contract, other
agreement, promise, representation or warranty; or (d) pursuant to any direct
action or statutory or regulatory right of action, assertion of right,
complaint, cross-complaint, counterclaim, affirmative defense, writ, demand,
inquiry, request, suit, lawsuit, liability, action, cause of action,
administrative proceeding, governmental action, order, judgment, settlement,
lien, loss, cost or expense.
F. Confirmation Order: The term "Confirmation Order" means an order
entered by the Bankruptcy Court in the Chapter 11 Case confirming the Plan,
together with any order of the United States District Court issued pursuant to
section 524(g)(3)(A) of the Bankruptcy Code confirming or affirming such order.
G. Creditors' Committee: The term "Creditors' Committee" means the
Official Committee of Unsecured Asbestos Claimants initially appointed by the
United States Trustee in the Reorganization Cases on or about April 21, 2004.
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H. Execution Date: The term "Execution Date" means the earliest date
upon which all of the Parties (or their authorized representatives) have
executed this Agreement.
I. Equitas: The term "Equitas" shall mean (i) Equitas Limited,
Equitas Reinsurance Limited, Equitas Holdings Limited, Equitas Management
Services Limited, and Equitas Policyholders Trust Limited; (ii) all the present
and former officers, directors, employees, subsidiaries, affiliates,
representatives, attorneys and agents of the entities set forth in sub-paragraph
1.I(i) hereof, and their respective predecessors and successors, if any, solely
in such capacity; and (iii) the respective heirs, executors, administrators,
successors, assigns and reinsurers (as such) of any of the Persons identified in
sub-paragraphs 1.I(i) and 1.I(ii) hereof.
J. Escrow Account: The term "Escrow Account" means the account
established pursuant to the "Escrow Agreement" (as defined herein).
K. Escrow Agent: The term "Escrow Agent" means the Escrow Agent as
defined in the Escrow Agreement.
L. Escrow Agreement: The term "Escrow Agreement" means the agreement
entered into by Congoleum, Lloyd's Underwriters and the Escrow Agent, which
agreement shall be in the form of Attachment D hereto or such other agreement
that is in form and substance acceptable to Congoleum and Lloyd's Underwriters.
M. FCR: The term "FCR" means the Futures Representative appointed
pursuant to the Bankruptcy Court's February 18, 2004 Order in the Chapter 11
Case, solely in his capacity as such.
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N. Final Order: The term "Final Order" means an order as to which
the time to appeal, petition for certiorari, or move for reargument, rehearing
or reconsideration has expired and as to which no appeal, petition for
certiorari, or other proceedings for reargument, rehearing, or reconsideration
shall then be pending or as to which any right to appeal, petition for
certiorari, reargue, rehear or reconsider shall have been waived in writing by
the Entity possessing such right, or, in the event that an appeal, writ of
certiorari, or reargument, rehearing or reconsideration thereof has been sought,
such order shall have been affirmed by the highest court to which such order was
appealed, or from which certiorari has been denied or reargument, rehearing or
reconsideration was sought and denied, and the time to take any further appeal,
petition for certiorari, or move for further reargument, rehearing or
reconsideration shall have expired.
O. Congoleum: The term "Congoleum" shall mean:
(i) the corporation now named Congoleum Corporation that was
incorporated in the State of Delaware in 1986; its predecessors, successors and
past and present assigns; all its past and present subsidiaries and the
predecessors, successors and past and present assigns of such subsidiaries; any
Persons in which the corporation now named Congoleum Corporation that was
incorporated in the State of Delaware in 1986 has an ownership interest,
directly or indirectly, of fifty percent (50%) or more, and any Persons on whose
behalf Congoleum has the power to release claims under the London Policies;
(ii) any Persons that have been acquired by, merged into or
combined with any of the Persons identified in sub-paragraph 1.P(i) above;
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(iii) any and all Persons named as insureds, other insureds,
or otherwise insured or claimed to be insured under the London Policies;
(iv) Congoleum Sales, Inc. and Congoleum Fiscal, Inc., debtors
and debtors-in-possession; and
(iv) the directors, officers, agents, employees,
representatives and attorneys of any of the foregoing Persons, solely in their
respective capacities as such.
X. Xxxxx'x Underwriters: The term "Lloyd's Underwriters" shall mean
(i) all the underwriters, members or Names, at Lloyd's, London who, through
their participation in syndicates (including without limitation, those
identified on Attachment B hereto), severally subscribed, each in his own
proportionate share, to one or more of the London Policies, as well as all
underwriters, members or names at Lloyd's, London (whether or not they
participated in the syndicates identified in Attachment B hereto) who, through
their participation in syndicates (including without limitation, those
identified on Attachment B hereto) severally subscribed to any London Policies
the existence of which (a) has not presently been established; or (b) has been
established but as to which the identities of the Names, members or syndicates
are not presently known; (ii) all the present and former employees (if any),
representatives, attorneys and agents of the Persons set forth in sub-paragraph
1.Q(i) hereof, and their respective predecessors and successors, if any, solely
in such capacity; and (iii) the respective heirs, executors, administrators,
successors, assigns and reinsurers (as such) of any of the Persons identified in
sub-paragraphs 1.Q(i) and 1.Q(ii) hereof. For avoidance of doubt, Equitas is not
within the definition of "Lloyd's Underwriters. "
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R. London Policies: The term "London Policies" shall mean (i) all
insurance policies listed in Attachment A hereto, to the extent such policies
exist and provide insurance coverage to Congoleum; (ii) all known and unknown
contracts of insurance (whether or not listed in Attachment A hereto),
(excepting contracts of life insurance) (a) that are severally subscribed to or
participated in by Lloyd's Underwriters; (b) that provide insurance coverage to
Congoleum; (c) that were originally allocated to the 1992 year of account or any
earlier year of account (including without limitation, any liabilities under
such contracts reinsured to close into the 1993 or any later year of account,
but excluding any liabilities re-signed or reallocated pursuant to a premium
transfer into the 1993 or later year); and (d) for which the liabilities
thereunder have been reinsured by Equitas Reinsurance Limited pursuant to the
Reinsurance and Run-off Contract dated September 3, 1996 or the Lioncover
Reinsurance Contract dated December 18, 1997.
S. Person: The term "Person" shall mean an individual, a
corporation, a partnership, a joint venture, an association, a trust, any other
Entity or organization, and any federal, state or local government or any
governmental or quasi-governmental body or political subdivision or any agency,
department, board or instrumentality thereof.
T. Plan: The term "Plan" means the Fifth Modified Plan, as such
Fifth Modified Plan may be further modified from time to time in accordance with
the terms thereof; provided, however, that such modifications:
1. are consistent with the terms of this Agreement;
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2. do not materially and adversely affect the interests under
this Agreement of Lloyd's Underwriters or Congoleum;
3. continue to provide for an injunction that is at least as
broad and inclusive as the "Asbestos Channeling Injunction"
(as defined in the Fourth Modified Plan) that applies to
Settling Asbestos Insurance Companies; and
4. continue to provide that the Plan Trust shall be bound to the
provisions of this Agreement with the same force and effect as
if the Plan Trust were a party to this Agreement from the
Execution Date.
U. Plan Proponents: The term "Plan Proponents" means the Debtors in
the Chapter 11 cases jointly administered under Case No. 03-51524 (KCF) in the
United States Bankruptcy Court for the District of New Jersey.
V. Settlement Amount: The term "Settlement Amount" means the sum of
Nineteen Million Nine Hundred Fifty Thousand United States dollars. (US
$19,950,000).
W. Trigger Date: The term "Trigger Date" means the day on which
written notice is provided to Lloyd's Underwriters in the manner set forth in
Section 19 of this Agreement, stating that all of the following have occurred,
provided that all of the following have in fact occurred:
1. the Approval Order becomes a Final Order;
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2. Lloyd's Underwriters are designated as Settling Asbestos
Insurance Companies (entitled to all the rights and protections afforded
Settling Asbestos Insurance Companies under the Plan, including the
protection of an injunction under Section 524(g) of the Bankruptcy Code)
in the schedule of Settling Asbestos Insurance Companies filed by the Plan
Proponents prior to the conclusion of the confirmation hearing, and such
designation has not been deleted or modified.
3. the Confirmation Order becomes a Final Order;
4. the occurrence of the Plan Effective Date; and
5. The date is January 4, 2006 or thereafter and no Asbestos
Legislation was enacted into Law.
2. Payment of the Settlement Amount
A. Within fifteen (15) Business Days of the Execution Date, Lloyd's
Underwriters agree to pay the Settlement Amount into the Escrow Account by wire
transfer as follows:
ABA No. 000000000
D/5000000016439
CT/BRANCH 2800
Bank Name: WACHOVIA BANK, NATIONAL ASSOCIATION
CHARLOTTE, NC
Account No. 0000000000
Acct Name: Congo/Lloyds Esc
Attn. Xxxx Xxxxxx
Thereafter, within five (5) Business Days of the Trigger Date, the Parties shall
direct the Escrow Agent to release the Settlement Amount in full, along with any
and all interest or investment income accrued thereon (less (a) any expenses
that the Escrow Agent incurs; (b) any reserves required under the Approval Order
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to be held for the payment of taxes, indemnities, or otherwise; and (c) losses
incurred under any investment of the Settlement Amount permissible under the
terms of the Approval Order and the Escrow Agreement) to the Plan Trust or as
otherwise directed by the Court. Subject to the provisions of Paragraph 2.D
below, upon the release of the Settlement Amount pursuant to this Paragraph 2.A,
legal and equitable title to the Settlement Amount shall pass irrevocably to the
Plan Trust or to such other Entity as is directed by the Court.
B. Time is of the Essence.
Time is of the essence with respect to the payment of the Settlement
Amount.
C. Finality of Payment.
The Settlement Amount is in addition to any and all amounts paid prior to
the Execution Date by or on behalf of Lloyd's Underwriters to or for the benefit
of Congoleum in connection with Asbestos Claims or otherwise (the "Prior
Payments"). Subject to the provisions of Paragraph 2.D below, any and all
payments by Lloyd's Underwriters, including, without limitation, the Prior
Payments (if any) and the Settlement Amount are deemed final and irrevocable
payments upon the occurrence of the Trigger Date. Lloyd's Underwriters' payment
of the Settlement Amount is in addition to any and all payments made by Lloyd's
Underwriters to or for the benefit of Congoleum prior to the Execution Date,
including any Prior Payments.
D. Federal Asbestos Legislation
1. Definitions for this Paragraph 2.D
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a. Asbestos Legislation: The term "Asbestos Legislation" means
any legislation enacted by the United States Congress and signed by the
President of the United States by no later than January 3, 2006 or that becomes
law without the President's signature by no later than January 3, 2006, that (1)
regulates, limits or controls the prosecution of Asbestos Claims in the state or
federal courts, (2) creates or purports to create an obligation on Lloyd's
Underwriters to pay money pursuant to the legislation for the benefit of
asbestos claimants; and (3) replaces, at least in part, Lloyd's Underwriters'
obligations to policyholders under policies of insurance covering or alleged to
cover Asbestos Claims. The term "Asbestos Legislation" is intended to encompass
what is commonly understood to be "asbestos reform" legislation and is not
intended to encompass general tort reform, class action reform, malpractice
reform, or tax reform, or any other legislation that would regulate, limit or
control Claims without regard to whether such claims arise from or are
attributable to exposure to asbestos or asbestos-containing products. For the
avoidance of doubt, the fact that legislation alters or modifies the
requirements or standards for establishing liability against the Debtors and/or
the Plan Trust (including legislation that imposes medical and/or exposure
criteria, imposes strict liability on the Debtors and/or the Plan Trust, or
regulates or limits the jurisdiction or forum in which an Asbestos Claim may be
brought) does not make such legislation "Asbestos Legislation" under this
sub-paragraph 2.D.1.a.
b. Federal Fund: "Federal Fund" means the Person to which
Lloyd's Underwriters are obligated or purportedly obligated to pay money
pursuant to Asbestos Legislation.
c. Repayment Amount: "Repayment Amount" means (A + B) - (Y +
Z) where:
A = the Settlement Amount;
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B = all interest or other investment return on the Settlement
Amount balance from the date that the Settlement Amount is deposited into the
Escrow Account to the date the Settlement Amount balance is disbursed pursuant
to this Paragraph 2.D;
Y = any actual monetary decrease in Lloyd's Underwriters'
payment or contribution or liability to pay or contribute under any Asbestos
Legislation that is attributable to their payment of the Settlement Amount under
this Agreement; and
Z = the reasonable and proper charges, fees and expenses of
the Plan Trustee and the Escrow Agent.
2. Subject to the provisions of this Paragraph 2.D, the
Parties intend that, if Asbestos Legislation is enacted into law, Lloyd's
Underwriters will not be required to pay under this Agreement any portion of the
Settlement Amount that Lloyd's Underwriters will be required to pay (or do in
fact pay) to the Federal Fund with respect to the London Policies.
3. Solely in the event that Asbestos Legislation (if any) is
enacted into law, then, notwithstanding any other provision in this Agreement to
the contrary, the Plan Trustee or the Escrow Agent (as the case may be) shall
hold the Repayment Amount until one of the following events has occurred:
a. Pursuant to the Asbestos Legislation, a date is set on
which Lloyd's Underwriters are legally obligated to pay money to the Federal
Fund. In that event, Lloyd's Underwriters shall have the right, in their sole
discretion, to direct the Plan Trustee or the Escrow Agent (as the case may be)
to pay the Repayment Amount to the Federal Fund on the date and in the manner
that Lloyd's Underwriters are legally obligated to pay money pursuant to the
Asbestos Legislation. The Plan Trustee or the Escrow Agent (as the case may be)
shall be required under the Trust Agreement or the Escrow Agreement (as the case
may be) to pay the Repayment Amount as directed by Lloyd's Underwriters pursuant
to this sub-paragraph 2.D.3.a.
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b. If the Plan Trustee or the Escrow Agent (as the case may
be) has not disbursed money pursuant to Lloyd's Underwriters' direction as
authorized by sub-paragraph 2.D.3.a above, and there is a legal challenge
relating to the Asbestos Legislation that results in a Final Order pursuant to
which Lloyd's Underwriters have no legal obligation to pay money pursuant to the
Asbestos Legislation, then the Plan Trustee or the Escrow Agent (as the case may
be) shall retain the Repayment Amount and shall disburse such amounts in the
case of the Plan Trustee, pursuant to the Plan and the TDPs, or in the case of
the Escrow Agent, pursuant to the Escrow Agreement.
c. If the Plan Trustee or the Escrow Agent (as the case may
be) have disbursed money pursuant to Lloyd's Underwriters' direction as
authorized by sub-paragraph 2.D.3.a above, and there is a legal challenge
relating to the Asbestos Legislation that results in a Final Order pursuant to
which the Repayment Amount disbursed under sub-paragraph 2.D.3.a above is repaid
to Lloyd's Underwriters and such repayment is attributable to a disbursement
under sub-paragraph 2.D.3.a above, then Lloyd's Underwriters shall, within ten
(10) Business Days of receipt of the Repayment Amount, pay the Repayment Amount
to the Plan Trust or deposit the Repayment Amount into the Escrow Account, as
applicable.
4. Congoleum, the Plan Trust and Lloyd's Underwriters agree that
they shall take such action as is necessary to facilitate payment of the
Repayment Amount as authorized by this Paragraph 2.D and expressly agree that
they will not take (and shall not be permitted to take, support or sponsor) an
action that might directly or indirectly delay such payment.
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5. If Asbestos Legislation is enacted into law, at the request of
any Party, the Parties shall meet and confer concerning the practical
implementation of this Paragraph 2.D in light of the Asbestos Legislation.
6. Any Dispute among the Parties arising out of or relating to this
Paragraph 2.D, including the breach, termination or validity thereof, shall be
finally resolved by binding arbitration in accordance with the CPR Rules for
Non-Administered Arbitration then currently in effect by a sole arbitrator. Such
arbitration must be resolved on an expedited basis, and must be completed with
an award by the arbitrator entered no more than ninety (90) days from the date
any Party demands arbitration pursuant to this sub-paragraph 2.D.6. The
arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C.
ss.ss.1-16, and judgment upon the award rendered by the arbitrator(s) may be
entered by any court having jurisdiction thereof. Each Party shall bear its own
fees and costs incurred in connection with the arbitration.
3. Several Liability
Congoleum acknowledges that the obligations of Lloyd's Underwriters
are several, and not joint. Congoleum agrees that no Lloyd's Underwriter shall
be liable for any portion of the Settlement Amount allocated to any other
Lloyd's Underwriter.
4. Release
A. Releases By Congoleum
1. Upon Lloyd's Underwriters' payment in full of the
Settlement Amount as provided by the terms of this Agreement, and except for the
obligations created by this Agreement, Congoleum and the future assigns of all
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Persons within the definition of Congoleum, in their capacity as such, and the
Plan Trust, upon its creation, shall be deemed to release, remise, covenant not
to xxx and forever discharge Lloyd's Underwriters from and against all manner of
action, causes of action, suits, debts, accounts, promises, warranties, damages
(consequential or punitive), agreements, costs, expenses, Claims or Demands
whatsoever, in law or in equity, whether presently known or unknown, asserted or
unasserted, whether sounding in tort or contract, or arising under the statutes
or administrative regulations of any jurisdiction, with respect to any and all
past, present or future claims, of any type whatsoever, that Congoleum ever had,
now has, or hereafter may have (a) for insurance coverage, including both
defense costs and indemnification claims, under the Subject Insurance Policies;
(b) arising out of or relating to any act, omission, representation, or conduct
of any sort in connection with any of the London Policies, including but not
limited to the placement of and/or subscription to the London Policies and the
handling of any claim thereunder; (c) arising out of or in connection with any
agreements between or among the Parties relating to the London Policies and/or
the Coverage Action, other than this Agreement; and (d) arising under or
relating in any way to the London Policies.
2. Solely with respect to the Lloyd's Underwriters'
subscription in and to the London Policies, it is the intention of Congoleum to
reserve no rights or benefits whatsoever under the London Policies or in
connection with any past, present or future claims under the London Policies,
and to assure Lloyd's Underwriters their peace and freedom from such claims and
from all assertions of rights in connection with such claims.
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3. Upon Lloyd's Underwriters' payment in full of the
Settlement Amount, any and all rights, duties, responsibilities and obligations
of Lloyd's Underwriters created by or in connection with the London Policies are
hereby terminated. As of the date of such payment in full, Congoleum shall no
longer have any insurance coverage from Lloyd's Underwriters under the London
Policies. The various releases contained in this Paragraph 4.A are intended to
operate as though Lloyd's Underwriters had never subscribed to or reinsured the
London Policies.
4. All releases contained in this Paragraph 4.A shall also
extend to Equitas, which is an intended third-party beneficiary of the terms of
the releases. Notwithstanding the foregoing, all such releases shall become null
and void as to Equitas if Equitas seeks to assert any claim against Congoleum
relating in any way to the London Policies, except as to enforcement of any
provision of this Agreement. Similarly, the releases provided by this Paragraph
4.A in favor of presently unknown Lloyd's Underwriters shall become null and
void as to any such Lloyd's Underwriter if he seeks to assert any claim against
Congoleum relating in any way to the London Policies, except as to enforcement
of any provision of this Agreement.
5. CONGOLEUM ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS
ATTORNEYS CONCERNING, AND IS FAMILIAR WITH, THE CALIFORNIA CIVIL CODE SECTION
1542 AND EXPRESSLY WAIVES ANY AND ALL RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION
1542, WHICH PROVIDES THAT "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," AND UNDER ANY OTHER FEDERAL OR
STATE STATUTE OR LAW OF SIMILAR EFFECT.
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6. Congoleum expressly assumes the risk that acts, omissions,
matters, causes or things may have occurred that they do not know or do not
suspect to exist. Congoleum hereby waives the terms and provisions of any
statute, rule or doctrine of common law that either: (i) narrowly construes
releases purporting by their terms to release claims in whole or in part based
upon, arising from, or related to such acts, omissions, matters, causes or
things; or, (ii) restricts or prohibits the releasing of such claims.
B. Release By Lloyd's Underwriters
1. At the same time the releases described in Paragraph 4.A
above become effective, each Lloyd's Underwriter so released, and any
subsequently appointed trustee or representative acting for such Lloyd's
Underwriter, shall remise, release, covenant not to xxx and forever discharge
Congoleum from and against all manner of action, causes of action, suits, debts,
accounts, promises, warranties, damages (consequential or punitive), agreements,
costs, expenses, Claims or Demands whatsoever, in law or in equity, whether
presently known or unknown, asserted or unasserted, whether sounding in tort or
in contract, or arising under the statutes or administrative regulations of any
jurisdiction, with respect to any and all past, present or future claims, of any
type whatsoever, that each such Lloyd's Underwriter ever had, now has, or
hereinafter may have arising under or in any way relating to the London
Policies.
21
2. LLOYD'S UNDERWRITERS ACKNOWLEDGE THAT THEY HAVE BEEN
ADVISED BY THEIR ATTORNEYS CONCERNING, AND ARE FAMILIAR WITH, THE CALIFORNIA
CIVIL CODE SECTION 1542 AND EXPRESSLY WAIVE ANY AND ALL RIGHTS UNDER CALIFORNIA
CIVIL CODE SECTION 1542, WHICH PROVIDES THAT "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," AND UNDER ANY
OTHER FEDERAL OR STATE STATUTE OR LAW OF SIMILAR EFFECT.
3. Lloyd's Underwriters expressly assume the risk that acts,
omissions, matters, causes or things may have occurred that they do not know or
do not suspect to exist. Lloyd's Underwriters hereby waive the terms and
provisions of any statute, rule or doctrine of common law that either: (i)
narrowly construes releases purporting by their terms to release claims in whole
or in part based upon, arising from, or related to such acts, omissions,
matters, causes or things; or, (ii) restricts or prohibits the releasing of such
claims.
4. It is the intention of Lloyd's Underwriters to reserve no
rights or benefits whatsoever under or in connection with the London Policies,
with respect to any past, present or future claims, and to assure Congoleum its
peace and freedom from all such claims and from all assertions of rights in
connection with such claims.
22
5. Defense Of The Asbestos Channeling Injunction
A. Subject to the provisions of Paragraph 5.E below, in the event that any
Claim is brought against Lloyd's Underwriters and/or Equitas that is subject to
the Asbestos Channeling Injunction, the Plan Trust will exercise its reasonable
best efforts (at the expense of the Plan Trust) to establish that such Claim is
enjoined as to Lloyd's Underwriters and/or Equitas by operation of the Asbestos
Channeling Injunction. To that end, subject to the provisions of Paragraph 5.E
below, the Plan Trust will, at its expense, defend the application of the
Asbestos Channeling Injunction as to any Claim asserted against Lloyd's
Underwriters and/or Equitas that is subject to the Asbestos Channeling
Injunction.
B. In the event that the Plan Trust is precluded by an order of any court
of competent jurisdiction from defending the application of the Asbestos
Channeling Injunction as to any Claim asserted against Lloyd's Underwriters
and/or Equitas that is subject to the Asbestos Channeling Injunction, the Plan
Trust shall reimburse Lloyd's Underwriters and/or Equitas, subject to the
provisions of Paragraph 5.E below, for the reasonable costs they incur in
defending the Asbestos Channeling Injunction; provided, however, that the Plan
Trust shall have no obligation to pay any internal costs of Lloyd's Underwriters
or Equitas (including costs associated with time or expenses of Lloyd's
Underwriters' employees). For the avoidance of doubt, other than the
reimbursement obligation provided in this Paragraph 5.B, the Plan Trust has no
obligation:
1. to defend any Claim against Lloyd's Underwriters and/or
Equitas with respect to any issue, including the application
of any defense to insurance coverage or defense to any tort
liability; or
23
2. to indemnify Lloyd's Underwriters and/or Equitas to any extent
for any Claims, whether for defense costs, expenses,
judgments, settlements, or otherwise.
C. Within fifteen (15) Business Days of receipt of any demand, notice,
summons or other process received by Lloyd's Underwriters and/or Equitas in
connection with any Claim that Lloyd's Underwriters and/or Equitas believe is
subject to the Asbestos Channeling Injunction, Lloyd's Underwriters and/or
Equitas (as the case may be) shall forward such demand, notice, summons or other
process to the Plan Trust. The Plan Trust shall notify Lloyd's Underwriters
and/or Equitas in writing within fifteen (15) Business Days of receipt of notice
of such Claim from Lloyd's Underwriters and/or Equitas whether the Plan Trust
agrees that such Claim triggers the Plan Trust's obligations pursuant to
Paragraph 5.A above. In the event that there is a dispute whether a Claim
triggers the Plan Trust's obligations pursuant to Paragraph 5.A above, the Plan
Trust and Lloyd's Underwriters and/or Equitas shall meet and confer to attempt
to resolve any such dispute. If they are unable to resolve such dispute by
meeting and conferring, they may litigate before the Court (or, if the Court
refuses to exercise jurisdiction, before any court of competent jurisdiction)
whether the Claim at issue triggers the Plan Trust's obligations pursuant to
Paragraph 5.A above. While such dispute remains unresolved, Lloyd's Underwriters
and/or Equitas have the right to defend the Asbestos Channeling Injunction as
they deem appropriate. Lloyd's Underwriters and Equitas shall cooperate
reasonably with the Plan Trust with respect to the obligations provided in this
Section 5.
24
D. The obligations set forth in this Section 5 shall also extend to the
benefit of Equitas, which is an intended third-party beneficiary of the terms of
this Section 5. However, if Equitas fails to perform the obligations required of
it or Lloyd's Underwriters under Paragraph 5.C above with respect to any Claim,
and such failure materially prejudices the Plan Trust, the Plan Trust shall have
no obligation to defend the Asbestos Channeling Injunction pursuant to this
Section 5 as to Equitas with respect to that Claim. Such obligations shall be
deemed to have been met if Lloyd's Underwriters perform such obligations with
respect to such Claim, so long as any agreement Lloyd's Underwriters reach
pursuant to Paragraph 5.C above binds Equitas.
E. Notwithstanding anything in this Section 5 to the contrary, in no event
shall the Plan Trust's obligation pursuant to this Section 5 exceed $500,000 in
the aggregate in the defense of Claims brought against the Protected Parties,
which Claims are subject to the Asbestos Channeling Injunction.
6. Dismissal of Coverage Action
No later than fourteen (14) days after the date that the Court enters the
Approval Order:
A. Congoleum will dismiss without prejudice its Claims, counterclaims or
cross-claims (if any) against Lloyd's Underwriters in the Coverage Action;
X. Xxxxx'x Underwriters shall dismiss without prejudice their Claims,
counterclaims or cross-claims (if any) against Congoleum in the Coverage Action.
C. Upon the occurrence of the Trigger Date, the dismissals provided for in
Paragraphs 6.A and B above shall be deemed to be dismissals with prejudice. The
Parties shall bear their own costs, expenses, and counsel fees in the Coverage
Action. Nothing herein shall prevent Congoleum from recovering its costs,
expenses and counsel fees in the Coverage Action from any Entity other than
Lloyd's Underwriters or Equitas; and
25
D. The Parties' stipulation of dismissal shall state that, in the event
that this Agreement becomes null and void pursuant to Section 9 below, Congoleum
may re-join Lloyd's Underwriters to the Coverage Action and re-assert all claims
against Lloyd's Underwriters in the Coverage Action, other than the bad faith
claims that have been asserted in the Coverage Action, which bad faith claims
shall not be re-asserted against Lloyd's Underwriters in the Coverage Action or
in any new action. In such event, the Parties agree that each of Congoleum and
Lloyd's Underwriters will be bound by all issues adjudicated or rulings in the
Coverage Action after the date of the stipulation of dismissal despite the fact
that Lloyd's Underwriters did not actually participate in the litigation of such
issues.
7. Bankruptcy Obligations
A. Pursuant to the Plan, prior to the conclusion of the Confirmation
Hearing, the Plan Proponents shall designate Lloyd's Underwriters and Equitas
(solely in its capacity as Lloyd's Underwriters' reinsurer and run-off agent) as
Settling Asbestos Insurance Companies in the schedule of Settling Asbestos
Insurance Companies filed by the Plan Proponents.
B. Congoleum shall file, no later than ten (10) Business Days after the
Execution Date, a motion pursuant to Federal Rule of Bankruptcy Procedure 9019
seeking entry of the Approval Order, which motion shall be in a form and in
substance reasonably satisfactory to Lloyd's Underwriters, and Lloyd's
Underwriters will reasonably support and Lloyd's Underwriters and Equitas will
not oppose the Plan Proponents' efforts to obtain such approval.
26
C. Promptly following the Execution Date, Lloyd's Underwriters and the
Debtors shall advise the Bankruptcy Court that the Parties have entered into a
settlement agreement. Provided that the Approval Order includes the findings set
forth in Paragraph 7.D below, promptly following the date on which the Approval
Order becomes a Final Order, unless and until this Agreement becomes null and
void pursuant to its terms (if ever), Lloyd's Underwriters shall:
1. not cooperate with any other defendant in the Coverage Action;
2. withdraw their participation in any and all objections they
have made to the Plan and/or to any findings or conclusions of
law issued by or recommended by the Bankruptcy Court, and any
and all motions, Claims, and any appeals or notices of appeal
that they have filed or made in the Chapter 11 Reorganization
Cases;
3. not file any new objections to the Plan or appeal the
Confirmation Order (for the avoidance of doubt, this provision
does not apply to a plan of reorganization other than the
Plan)
4. not pursue any Claims against the Debtors;
5. withdraw their participation in any and all outstanding
discovery requests; and
6. serve no new discovery requests in the Debtors' confirmation
proceeding; in either the case of (4) or (5), directed by
Congoleum to Lloyd's Underwriters or by Lloyd's Underwriters
to Congoleum.
27
The Parties recognize and agree that subscribers to the London Policies other
than Lloyd's Underwriters have joined in various motions, Claims, appeals,
notices of appeal and discovery requests of Lloyd's Underwriters and that this
Agreement shall not affect in any way the rights of such other subscribers to
continue to prosecute such motions, Claims, appeals, notices of appeal and
discovery requests. Such withdrawals by Lloyd's Underwriters shall be without
prejudice until the occurrence of the Trigger Date, at which time such
withdrawals shall be deemed to be with prejudice. Notwithstanding the foregoing,
sub-paragraph 7.C.1 above shall not be construed to preclude or limit in any way
the representation of subscribers to the London Policies other than Lloyd's
Underwriters by any counsel of record in the Coverage Action or the Chapter 11
Case that previously represented Lloyd's Underwriters and/or Equitas in the
Coverage Action or the Chapter 11 Case.
D. As a condition precedent to the obligations of Lloyd's Underwriters
under Paragraph 7.C above, the Approval Order must include findings that:
1. Lloyd's Underwriters' payment in full of the Settlement Amount
shall satisfy and extinguish in full their obligations under
the London Policies.
2. The Settlement Amount shall be used only to pay Asbestos
Claims and/or to pay other amounts payable by the Plan Trust
pursuant to the Plan and the Trust Distribution Procedures for
the Congoleum Plan Trust, as may be amended.
3. Adequate notice of the Debtors' Motion for Approval of the
Settlement Agreement Between the Debtors and Lloyd's
Underwriters (the "Motion") and of the hearing on the Motion
was given by mailing a copy of the Motion and notice of the
28
hearing on the Motion to: (a) the members of the Official
Committee of Asbestos Claimants (the "Committee") and the
Committee's counsel; (b) the FCR and the counsel for the FCR;
(c) the Claimants' Counsel; (d) all other Persons or Entities
that, as of the date the Motion was filed, had filed a notice
of appearance or other demand for service of papers in the
Debtors' Chapter 11 Case; (e) the United States Trustee; (f)
the Collateral Trustee (the "Collateral Trustee") of the
Congoleum Collateral Trust (the "Collateral Trust")
established pursuant to a Collateral Trust Agreement dated
April 17, 2003; (g) Congoleum Corporation's majority
shareholder, American Builtrite, Inc.; (h) any other presently
existing Entities that are insureds under the London Policies;
(i) counsel to all known holders of Asbestos Claims as
reflected in the claims filed in this case, claims submitted
in connection with the Settlement Between Congoleum
Corporation and Various Asbestos Claimants attached as Exhibit
E to the Disclosure Statement with respect to the Plan (the
"Claimant Agreement"), or ballots submitted in connection with
this case; and (j) to all known holders of Asbestos Claims
whose counsel is not included within the preceding clause who,
as of at least five (5) days prior to the Hearing, became
known through filing of a proof of claim or otherwise.
29
4. Notice to an attorney for the holder of an Asbestos Claim
constitutes notice to the claimant for purposes of the
Agreement and the Motion.
5. Notice of the Agreement, the Motion and the Hearing is
sufficient to bind the Creditors' Committee and its members,
all known creditors and claimants, the FCR and all future
claimants and demand holders whose interests are represented
by the FCR, and all other Persons, including but not limited
to the Debtors' insurers, that, as of the date the Motion was
filed, had filed a notice of appearance and demand for service
of papers in the Debtors' Chapter 11 case.
6. The Approval Order and each of its Findings and Conclusions
are binding upon the Creditors' Committee and its members, all
known creditors and claimants, the FCR and all future
claimants and demand holders whose interests are represented
by the FCR, and all other Persons or Entities, including but
not limited to the Debtors' insurers, that, as of the date the
Motion was filed, had filed a notice of appearance or other
demand for service of papers in the Debtors' Chapter 11 Case.
7. The Approval Order includes a provision acknowledging that the
Plan, as amended, states that any right, claim or cause of
action that an Asbestos Insurance Company may have been
entitled to assert against a Settling Asbestos Insurance
Company based on or relating to Asbestos Claims shall be
30
channeled to and become a right, claim or cause of action
against the Plan Trust and not against the Settling Asbestos
Insurance Company in question and that all persons, including
any Asbestos Insurance Company, shall be enjoined from
asserting any such right, claim or cause of action against a
Settling Asbestos Insurance Company which shall be protected
by injunction from assertion against it, by an Asbestos
Insurance Company, of any Asbestos Claims.
D. Upon the occurrence of the Plan Effective Date, all of Congoleum's
Asbestos Insurance Rights under this Agreement shall be assigned to the Plan
Trust pursuant to the Plan, automatically and without need of further action by
any Party or Entity, provided that this Agreement has not then and does not
thereafter become null and void pursuant to its terms.
E. Upon its creation, the Plan Trust (1) automatically and without need
for further action shall become a Party to this Agreement; and (2) promptly
shall execute this Agreement. Upon the Trigger Date, and without limiting the
obligations of Congoleum under this Agreement, the Plan Trust automatically
shall succeed to all the rights and be bound by all of the obligations of the
Debtors under this Agreement without necessity of further action. Congoleum
shall include in the Plan Trust Agreement as an obligation of the Plan Trust,
effective from its creation, that such trust shall be subject to and bound by
this Agreement and the Approval Order.
F. Congoleum and the Plan Trust shall not seek to terminate, reduce, or
limit the scope of the Asbestos Channeling Injunction with respect to Lloyd's
Underwriters and/or Equitas after the Confirmation Order becomes a Final Order.
31
8. Effectiveness Of Agreement And Voidability
A. This Agreement is subject to the contingencies set forth in
sub-paragraphs 8.A.1 - 8.A.5 below. If any of the following events occurs, any
Party may declare this Agreement null and void by providing written notice to
the other Parties in the manner provided in Section 19 below, in which case,
this Agreement shall terminate, subject to the provisions of Paragraph 8.C
below:
1. The Court or a court of competent jurisdiction enters an order
confirming a Chapter 11 plan of reorganization for Congoleum
or one or more of the other Debtors other than the Plan;
2. The Court or a court of competent jurisdiction enters an order
that provides that Lloyd's Underwriters and/or Equitas are not
Settling Asbestos Insurance Companies or otherwise contravenes
the designation of Lloyd's Underwriters and/or Equitas as
Settling Asbestos Insurance Companies;
3. The Court, or any other court of competent jurisdiction enters
an order denying approval of the Agreement;
4. The Court or a court of competent jurisdiction enters an order
converting the Chapter 11 Case into a Chapter 7 case or
dismissing the Chapter 11 Case;
5. The Court or a court of competent jurisdiction enters an order
appointing a trustee or examiner substantially possessing the
rights, powers and duties of a trustee in the Chapter 11 Case;
or
32
6. The Confirmation Order does not become a Final Order within
two years of the Execution Date.
B. In the event that the Court or a court of competent jurisdiction enters
an order approving the Agreement, which order is other than an Approval Order
that includes the findings set forth in Paragraph 7.D above, then any Party may
declare the Agreement to be null and void within sixty (60) days following the
entry of such order approving the Agreement. The Parties shall meet and confer
at some point during said sixty (60) day period to determine whether the order
so entered is satisfactory to each of them and/or to explore whether a proposed
order can be fashioned and jointly submitted to the Court for approval.
C. Notwithstanding anything in this Agreement to the contrary, in the
event this Agreement is declared by any Party to be null and void pursuant to
this Section 8:
1. this Agreement, other than Sections 1, 8 and 19 (which
sections shall remain in full force and effect), shall be
vitiated and shall be a nullity and shall be void ab initio;
2. The Parties shall direct the Escrow Agent to return to or at
the direction of Lloyd's Underwriters or Equitas, with thirty
(30) days prior written notice to the Congoleum and the Plan
Trust, if it exists, the Settlement Amount plus any interest
or investment income accrued on the Settlement Amount minus:
(i) any reasonable and proper costs incurred by the Escrow
Agent; (ii) any reserves required under the Escrow Agreement
to be held for the payment of taxes, indemnities, or
otherwise; or (iii) losses incurred under any investment of
the Settlement Amount permissible under the terms of the
Approval Order;
33
3. None of the Parties shall be bound by the terms of any
Approval Order;
4. Lloyd's Underwriters and Equitas shall not be designated as
Settling Asbestos Insurance Companies, and neither Lloyd's
Underwriters nor Equitas shall seek or receive any benefit or
protection of a Settling Asbestos Insurance Company;
5. the Parties shall have the rights, defenses and obligations
under or with respect to the London Policies that they would
have had absent this Agreement,
6. the releases provided in Section 4 above shall become null and
void ab initio;
7. Lloyd's Underwriters shall be free to pursue their objections
to the Plan and to appeal from the Confirmation Order and
Congoleum shall be free to oppose any such objections or
appeals and the Parties shall be free to pursue their claims
against one another in the Coverage Action; and
8. any otherwise applicable statutes of limitations or repose, or
other time-related limitations, shall be deemed to have been
tolled for the period from the Execution Date through the date
that this Agreement is declared null and void, and no Party
shall assert, plead, raise or otherwise rely on or take
advantage, whether actively or passively, of any time-related
34
defense to any Claim by any other Party related to such
period, and if any Party breaches this obligation, it shall be
deemed to have created a new cause of action against it at the
time of such breach for which it shall be liable in damages
equal to the amount of damages it avoided by reason of the
breach.
9. Assignment of Subrogation, Contribution and Reimbursement
Rights Against Other Insurers
Other than claims against Lloyd's Underwriters' reinsurers or
retrocessionaires, Lloyd's Underwriters agree that they shall not pursue
subrogation, equitable indemnity, contribution, or reimbursement of the
Settlement Amount or any part thereof from any third party, including without
limitation any other primary or excess insurer of Congoleum or any other
subscriber to any of the London Policies. To the extent permitted by law,
Lloyd's Underwriters hereby transfer and assign to Congoleum all such rights,
claims, and causes of action relating to subrogation, reimbursement, or
contribution that Lloyd's Underwriters may have, arising out of the Settlement
Amount paid hereunder, provided always that if any third-party Person asserts
any claim against Lloyd's Underwriters, Lloyd's Underwriters shall be permitted
to pursue subrogation, equitable indemnity, contribution, or reimbursement of
the Settlement Amount or any part thereof from any such third-party Person in
any cross-claim, counter-claim or similar procedure. The Parties expressly agree
that nothing in this Section 9 or in this Agreement shall limit the rights of
Lloyd's Underwriters to make reinsurance claims and pursue their reinsurance
recoveries (if any).
35
10. Cooperation
Congoleum will undertake all reasonable actions to cooperate with Lloyd's
Underwriters in connection with their reinsurers, including (at Lloyd's
Underwriters' sole expense with respect to services and/or assistance provided
by external Congoleum vendors, and out-of-pocket expenses incurred by Congoleum)
responding to reasonable requests for information and meeting with
representatives of reinsurers. Such cooperation shall include providing Lloyd's
Underwriters' representative, upon reasonable request, access to all claim files
maintained by Congoleum, including but not limited to, all product exposure,
medical, claim status, and payment records contained in such files.
11. Claim Reporting
A. As of the Trigger Date, Lloyd's Underwriters shall have the right (upon
reasonable notice and in a manner convenient to the Plan Trust, as applicable)
to review and obtain from the Plan Trust all files, information and documents:
1. concerning Claims subject to payment or potential payment with
the proceeds of this Agreement, and
2. required of or necessary to Lloyd's Underwriters in connection
with any Claims, arbitrations, or litigations relating to
reinsurance of the Settlement Amount or in connection with
this Agreement.
B. For the avoidance of doubt, the relevant files, information and
documents referenced in Paragraph 11.A above shall include, without limitation:
1. information from any database maintained by the Plan Trust,
any information that the Plan Trust collects pursuant to the
TDP, and any information included on any claim form used by
the Plan Trust with respect to Asbestos Personal Injury Claims
and Indirect Asbestos Claims; and
36
2. for each Asbestos Personal Injury Claim and Indirect Asbestos
Claim resolved:
a. the Claimant's name;
b. a claim number if the Plan Trust uses such a number to
identify claims;
c. status (open or closed);
d. date of first exposure, if the Plan Trust collects such
information;
e. alleged disease and date of diagnosis, if the Plan Trust
collects such information; and
f. the amount of indemnity paid.
C. The Plan Trust shall reasonably cooperate in obtaining and providing
the files, information and documents referred to in Paragraphs 11.A and 11.B
above at Lloyd's Underwriters' reasonable request and sole expense (provided
that Lloyd's Underwriters shall have no obligation to pay any internal costs of
the Plan Trust, including costs associated with time or expenses of the Plan
Trust's employees). For the avoidance of doubt and without limitation of the
foregoing, the Plan Trust will undertake all reasonable actions to cooperate
with Lloyd's Underwriters in connection with their reinsurers, including (upon
reasonable notice, at Lloyd's the Plan Trust, and in a manner convenient to the
Plan Trust as applicable) responding to reasonable requests for information and
37
meeting with representatives of reinsurers. Such cooperation shall include
providing Lloyd's Underwriters' representative access to all claim files related
to Asbestos Personal Injury Claims and Indirect Asbestos Claims maintained by
the Plan Trust, including all product exposure, medical, claim status, and
payment records contained in such files.
D. For the avoidance of doubt, this Section 11, and any results of such a
review contemplated hereby:
1. shall not affect Lloyd's Underwriters' payment obligations
under this Agreement;
2. shall not obligate the Plan Trust to collect any information
from any Claimant that it is not otherwise obligated to
collect; and
3. shall not give Underwriters and/or Equitas any right to
challenge the allowance or payment of any Claim by the Plan
Trust.
X. Xxxxx'x Underwriters shall not provide any "Report" (as defined in
Paragraph 11.G below), results, files, information, or documents obtained by
Lloyd's Underwriters pursuant to this Section 11 (the "Materials") to any other
Entity and shall keep the Materials confidential, except that Lloyd's
Underwriters may:
1. provide the Materials to Entities identified in Paragraph 13.C
below; and
2. use the Materials in any proceeding to obtain reinsurance with
respect to the Settlement Amount or this Agreement or in
connection with its compliance with applicable laws or
regulations.
38
X. Xxxxx'x Underwriters shall exercise their reasonable best efforts to
maintain the confidentiality of the Materials, including seeking a
confidentiality pledge from any Entity with which they share the Materials and
seeking a protective order in any proceeding in which they use the Materials,
but Lloyd's Underwriters' right to disclose any portion of the Materials to any
of the Entities identified in Paragraph 13.C below, shall not be affected if
their reasonable best efforts do not result in a confidentiality pledge being
given or a confidentiality order being entered. Nothing in this Section 11 shall
prevent Lloyd's Underwriters or Equitas from using the Materials for their own
internal purposes.
G. In the Plan Trust's sole discretion, the Plan Trust may, in response to
a request from Lloyd's Underwriters pursuant to Paragraphs 11.A through 11.C,
provide Lloyd's Underwriters (or their representatives) with a report concerning
asbestos-related bodily injury claims activity with respect to the time period
that is the subject of Lloyd's Underwriters' request for relevant files,
information and documents (the "Report"). Notwithstanding anything to the
contrary in this Section 11, the Plan Trust shall not be required to include in
any Report any information that such the Plan Trust is not required to collect
under the Plan or the TDP or that the Plan Trust in fact collects. If the Plan
Trust (as applicable) is required to collect under the Plan or the TDP (or in
fact collects) the following information, such Reports shall include:
1. the number of total claims filed, pending, settled, dismissed
or that went to judgment, the total indemnity paid, and total
expense paid; and
2. with respect to each claim resolved during the relevant
period:
39
a. the claimant's name;
b. the claim number;
c. jurisdiction, if any;
d. status (open or closed);
e. the date of first exposure as set forth in the complaint
or as reflected by information reasonably available to
the Plan Trust (as applicable);
f. the asbestos product(s) or premises for which Congoleum
is responsible to which the claimant alleges exposure;
g. the Entity(ies) within Congoleum that the claimant
alleges caused his injury;
h. the alleged disease and the date of diagnosis;
i. whether there is a medical diagnosis of the alleged
disease;
j. date of death if applicable; and
k. the amount of indemnity paid.
If the Plan Trust exercises its discretion to provide Reports to Lloyd's
Underwriters pursuant to this Paragraph 11.G, the Plan Trust shall still be
obligated, at the request of Lloyd's Underwriters (upon reasonable notice, at
Lloyd's Underwriters' sole expense, and in a manner convenient to the Plan
Trust) to make available to Lloyd's Underwriters files, information and
documents described in Paragraphs 11.A and B that relate to the asbestos bodily
injury claims that are the subject of the Report subject to Paragraphs 11.D
through 11.F above.
40
H. If the Plan Trust does not exist, or for whatever reason fails to
provide any of the documents or other information set forth above after request
by Lloyd's Underwriters, and Congoleum has, or has the right to obtain, access
to such documents or information, Congoleum shall be obligated to provide such
documents or information to Lloyd's Underwriters to the same extent, and subject
to the same conditions and limitations, as the Plan Trust.
12. Reasonably Equivalent Value
The Parties acknowledge and agree that: (i) the Agreement was bargained
for and entered into in good faith and as the result of arms'-length
negotiations; and (ii) was based on their respective independent assessments,
with the assistance and advice of counsel, the payments and other benefits to be
received by the Parties pursuant to this Agreement constitute a fair and
reasonable settlement of the Parties' claims against each other and constitute
reasonably equivalent value for the releases, indemnity, and other benefits
conveyed under this Agreement.
13. Confidentiality
A. The Parties agree that all matters relating to the negotiation of this
Agreement shall be confidential and are not to be disclosed except by order of a
court of competent jurisdiction or by written agreement of the Parties except to
the extent that disclosure of matters relating to the negotiation of this matter
is necessary in connection with seeking approval of this Agreement by the Court.
B. In the event that a private litigant, by way of document request,
interrogatory, subpoena, or questioning at deposition, trial, or other
proceeding attempts to compel disclosure of anything protected by this Section
13, the Party from whom disclosure is sought shall decline to provide the
requested information on the ground that this Agreement prevents such
41
disclosure. In the event that such private litigant seeks an order from any
court or governmental body to compel such disclosure, or in the event that a
court, government official, or governmental body (other than the Inland Revenue,
Internal Revenue Service, Securities and Exchange Commission or Financial
Services Authority) requests or requires disclosure of anything protected by
this Section 13, the Party from whom disclosure is sought shall immediately give
written notice by facsimile or hand-delivery to the other Parties, and shall
immediately provide copies of all notice papers, orders, requests or other
documents in order to allow each Party to take such protective steps as may be
appropriate. Notice under this Section 13 shall be made to the Persons
identified in Section 19 of this Agreement.
C. Material protected by this Section 13 shall be deemed to fall within
the protection afforded to compromises and offers to compromise by Rule 408 of
the Federal Rules of Evidence and similar provisions of state law or state rules
of court.
Notwithstanding anything in this Section 13, nothing in this Agreement
shall prevent any Party from disclosing or releasing information regarding the
negotiation of this Agreement in any form and at any time after the Execution
Date to:
1. reinsurers or retrocessionaires of any Lloyd's Underwriter
directly or through intermediaries;
2. outside auditors, attorneys or accountants of any Party;
3. to the extent required by law, including, to the extent
applicable, to the Inland Revenue, the Internal Revenue
Service, the Securities and Exchange Commission, the Financial
Services Authority or other U.S., U.K., or other governmental
authority that properly requires disclosure by a Party hereto;
42
4. to the extent and in any form that such information is
required to be disclosed or released to satisfy reporting
requirements imposed by law, including any Federal securities
laws; and
5. as necessary in connection with the approval of this Agreement
by any Court.
D. Notwithstanding the foregoing, Lloyd's Underwriters may issue a press
release at any time following the Execution Date stating in substance that
Lloyd's Underwriters have reached comprehensive agreements to settle insurance
coverage claims brought by multiple policyholders for an aggregate amount that
identifies some or all of the policyholders that reached such settlements,
including Congoleum, but does not disclose the amounts or other terms of
individual settlements. Congoleum may also issue a press release at any time
following the filing of a motion with the Bankruptcy Court seeking approval or
this Agreement; provided that Congoleum first provides Lloyd's Underwriters with
a copy of the press release and permits Lloyd's Underwriters adequate time to
provide any comments thereon.
14. Non-Prejudice and Construction of Agreement
A. This Agreement is not a contract of insurance. This Agreement is not
subject to rules or construction governing contracts of insurance, including
without limitation, the doctrine of contra proferentum. This Agreement is a
compromise between the Parties and shall not be construed as an admission of
coverage under the London Policies, nor shall this Agreement or any provision
43
hereof be construed as a waiver, modification or retraction of the positions of
the Parties with respect to the interpretation and application of the London
Policies.
B. This Agreement is the product of informed negotiations and involves
compromises of the Parties' previously stated legal positions. Accordingly, this
Agreement does not reflect upon the Parties' views as to rights and obligations
with respect to matters or Persons outside the scope of this Agreement. This
Agreement is without prejudice to positions taken by the Lloyd's Underwriters
with regard to other insureds, and without prejudice to positions taken by
Congoleum with regard to other insurers. Except for the express references
herein to Equitas and currently unknown Lloyd's Underwriters, the Parties
specifically disavow any intention to create rights in third-parties under or in
relation to this Agreement.
C. This Agreement is the jointly-drafted product of arms'-length
negotiations between the Parties with the benefit of advice from counsel, and
the Parties agree that it shall be so construed. As such, no Party will claim
that any ambiguity in this Agreement shall be construed against the other Party.
15. No Modification
No change or modification of this Agreement shall be valid unless made in
writing and signed by the Parties (or their attorney-in-fact) whose interests
are affected by such change or modification.
16. Integration
This Agreement, including the Attachments hereto, constitutes the entire
agreement among the Parties with respect to the subject matter hereof, and
supersedes all discussions, agreements and understandings, both written and
oral, among the Parties with respect hereto.
44
17. Governing Law
This Agreement shall be governed by, and shall be construed in accordance
with, the laws of New Jersey without regard to its choice of law rules.
18. Execution
There will be two signed originals of this Agreement, which may be
executed in duplicate counterparts. Facsimiles or scanned versions of signatures
by the Parties shall be treated as originals.
19. Notices
Unless another person is designated, in writing, for receipt of notices
hereunder, notices to the respective Parties shall be sent to the following
Persons, provided that notices to the Plan Trust, upon its creation, shall be
sent to such Person(s) as the Plan Trust then designates in writing..
If to Congoleum: Pillsbury Winthrop LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
e-mail: xxxxxxx@xxxxxxxxxxxxxxxxx.xxx
xxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
and
Xxxxxxx Xxxxxx & Xxxxxxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx Xxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
e-mail: xxxx@xxxxx.xxx
45
With a copy to: Xxxxxx X. Xxxxx III
Congoleum Corporation
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
e-mail: xxxxxx@xxxxxx.xxxxxxxxx.xxx
If to Underwriters or Equitas: Equitas Limited
Claims Division
00 Xx. Xxxx Xxx
Xxxxxx XX0X 0XX XXXXXXX
Attn: Head of Direct Claims
With a copy to: Xxxxxxxxx Xxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, XX [after July
1, 2005, 0000 X Xxxxxx, XX]
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx, XX, Esq.
[The remainder of this page is left blank intentionally]
46
IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly
authorized representatives.
Lloyd's Underwriters participating in the syndicates identified in
Attachment B have each respectively designated Xxxxxxxxx Xxxxxxx LLP as their
attorneys-in-fact for the limited purpose of executing this Agreement on their
behalf with express authority to do so.
FOR CONGOLEUM
By: /s/ Xxxxxx X. Xxxxx III
----------------------------------------
Name: Xxxxxx X. Xxxxx III
----------------------------------------
Title: Chief Financial Officer
----------------------------------------
Date: June 22, 2005
----------------------------------------
FOR LLOYD'S UNDERWRITERS
By: Xxxxx Xxxxxxx, Esq., attorney,-in-fact
----------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------------
Title: Attorney-in-fact
----------------------------------------
Date: June 22, 2005
----------------------------------------
47
FOR THE PLAN TRUST
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
Date:___________________________________________
48
Attachment A
Known Congoleum and/or Bath Iron Works London Policies
Policy Number Inception Termination
------------- --------- -----------
356999 -WCA 01-Jan-1953 01-Jan-1954
357003 -WCA 01-Jan-1953 01-Jan-1954
K21782 12-Nov-1953 12-Nov-1954
K21783 12-Nov-1953 12-Nov-1954
K21784 12-Nov-1953 12-Nov-1954
K28288 12-Nov-1954 01-Jan-1956
K28289 12-Nov-1954 01-Jan-1956
K28290 12-Nov-1954 01-Jan-1956
K28291 12-Nov-1954 01-Jan-1956
U43702-WCA/CON 4628 01-Jan-1954 01-Jan-1955
U43781-WCA/CON 54/4282 01-Jan-1954 01-Jan-1955
U45129-WCA (CONT 54/4628) 01-Jan-1955 01-Jan-1956
U46187-WCA (CON 55/4282) 01-Jan-1955 01-Jan-1956
K28288 01-Jan-1956 01-Jan-1957
K28289 01-Jan-1956 01-Jan-1957
K28290 01-Jan-1956 01-Jan-1957
K28291 01-Jan-1956 01-Jan-1957
U53889-WCA (CONT 55/4628) 01-Jan-1956 01-Jan-1957
U55135-WCA (CON 56/4282) 01-Jan-1956 01-Jan-1957
K28288 01-Jan-1957 01-Jan-1958
K28289 01-Jan-1957 01-Jan-1958
K28290 01-Jan-1957 01-Jan-1958
K28291 01-Jan-1957 01-Jan-1958
U61306-WCA (CONT 56/4628) 01-Jan-1957 01-Jan-1958
U61820-WCA (CONT 57/4282) 01-Jan-1957 01-Jan-1958
CK2458/K47201/A/57/460 01-Jan-1958 01-Jan-1959
CK2459/K47202/A/58/460 01-Jan-1958 01-Jan-1959
U66779-WCA (CON 57/4628) 01-Jan-1958 01-Jan-1959
U67387-WCA (CONT 58/4282) 01-Jan-1958 01-Jan-1959
CK2458/K47201/A/58/460 01-Jan-1959 01-Jan-1960
CK2459/K47202/A/58/460 01-Jan-1959 01-Jan-1960
U72524-WCA (CONT 58/4628) 01-Jan-1959 01-Jan-1960
U72809-WCA (CONT 59/4282) 01-Jan-1959 01-Jan-1960
CK2458/K47201/A/58/460 01-Jan-1960 01-Feb-1961
CK2459/K47202/A/58/460 01-Jan-1960 01-Feb-1961
U77419-WCA (CONT59/4628) 01-Jan-1960 01-Jan-1961
U78535-WCA (CONT 60/4282) 01-Jan-1960 01-Jan-1961
U82967-WCA (CONT 61/4282) 01-Jan-1961 01-Jan-1962
U85412-WCA (CONT 62/4282) 01-Jan-1962 01-Jan-1963
Attachment A
Known Congoleum and/or Bath Iron Works London Policies (continued)
881/WHL551 01-Apr-1976 01-Apr-1977
UHL0036 12-Jan-1976 01-Jan-1977
881/WJ0741 01-Apr-1977 01-Jan-1978
881/WJU551 01-Apr-1977 01-Jan-1978
UJL0056 01-Jan-1977 01-Jan-1978
UJL0057 01-Jan-1977 01-Jan-1978
UJL0389 01-Jan-1977 01-Jan-1978
881/WK0091 01-Jan-1978 01-Jan-1979
881/WK0151 01-Jan-1978 01-Jan-1979
881/WK0161 01-Jan-1978 01-Jan-1979
881/WKT051 01-Jan-1978 01-Jan-1979
UJL0389 01-Jan-1978 01-Jan-1979
UJL0389 01-Jan-1979 01-Jan-1980
WLT121 01-Jan-1979 01-Jan-1980
FUL08367 01-Jan-1980 01-Jan-1981
XXX000000 01-Jan-1981 01-Jan-1982
FUL084656 01-Jan-1982 01-Jan-1983
FUL085565 01-Jan-1983 01-Jan-1984
CON M800855/LCX-6-01453 01-Jan-1986 01-Jan-1987
CON M800855/LCX-6-01454 01-Jan-1986 01-Jan-1987
M80312/LCX-10035 01-Jan-1987 01-Jan-1988
M803127/LCX-10012 01-Jan-1987 01-Jan-1988
M803127/LCX-10013 01-Jan-1987 01-Jan-1988
OMP-10036 01-Jan-1987 01-Jan-1988
CON M804036/LCX10737 01-Jan-1988 01-Jan-1989
CON M804036/LCX10738 01-Jan-1988 01-Jan-1989
M804041/LCX-10739 01-Jan-1988 01-Jan-1989
CON M806376/LCX11480 01-Jan-1989 01-Jan-1990
CON M806376/LCX11481 01-Jan-1989 01-Jan-1990
CON M806379/LCX11482 01-Jan-1989 01-Jan-1990
CON M806376/LCX11480 01-Jan-1990 01-Jan-1991
CON M807846/LCX-11481 01-Jan-1990 01-Jan-1991
CON M807847/LCX-11482 01-Jan-1990 01-Jan-1991
TA0011B01/CON XX0000X00 01-Jul-1991 31-Dec-1992
LCX-13308 01-Jul-1991 01-Jan-1992
CON MA8026H00/LCX-13387 01-Jan-1992 01-Jan-1993
CON MA8026H00/LCX-13388 01-Jan-1992 01-Jan-1993
LCX-13389 01-Jan-1992 01-Jan-1993
ATTACHMENT B
Known Syndicate Subscribers to Known London Policies
010 114 311 531 744 943
018 1215 317 535 745 947
033 122 329 535 748 964
034 123 334 540 761 970
035 123 335 540 764 971
036 127 347 552 772 972
040 130 358 573 773 972
042 164 365 573 782 975
052 169 367 583 790 990
052 174 368 584 795 998
056 178 371 588 796
057 185 372 596 803
059 187 401 601 803
062 190 404 604 812
064 194 406 615 819
065 199 406 616 829
067 203 407 617 833
069 204 417 620 836
079 206 418 625 838
079 207 428 625 842
079 208 433 629 845
086 209 440 632 849
088 209 446 633 857
090 210 448 650 860
092 212 457 653 861
098 219 470 662 867
1009 223 475 672 868
1009 231 479 672 869
1014 235 483 677 870
102 250 483 687 872
1023 264 484 687 872
1023 273 488 697 875
108 275 490 700 900
1081 277 499 707 900
1084 282 500 724 901
1084 282 502 725 904
109 284 505 729 905
110 288 507 735 924
112 299 507 735 926
1125 301 517 741 933
114 309 522 741 937
