SCHEDULE 13D: EXHIBIT 5
SETTLEMENT AGREEMENT
This Settlement Agreement is entered into as of October 31, 2001, by and
among the United States Environmental Protection Agency (the "U.S. EPA"), the
Connecticut Department of Environmental Protection (the "Conn. DEP") and FMC
Corporation ("FMC", and together with the U.S. EPA and the Conn. DEP, the
"Environmental Creditors"), the Official Creditors' Committee of Raytech
Corporation (the "Committee") and the Legal Representative For Future Claimants
(the "Legal Representative").
WHEREAS, the Environmental Creditors have asserted claims against Raytech
Corporation ("Raytech") and Raymark Industries, Inc. and Raymark Corporation
(collectively, "Raymark") for liability under federal and state environmental
laws;
WHEREAS, the Committee and the Legal Representative together represent, in
the Chapter 11 proceedings of Raytech and Raymark, the interests of all present
and future holders (the "PI Creditors") of unsecured claims for death, bodily
injury or other personal damages caused, directly or indirectly, by exposure to
asbestos-containing products for which Raytech or Raymark have legal liability;
WHEREAS, on or about October 15, 1998, Xxxxxxx X. Xxxx (the "Trustee") was
appointed as trustee of the estates of Raymark (collectively, the "Raymark
Estates") formed in its cases under title 11 of the United States Code (as
amended from time to time, the "Bankruptcy Code");
WHEREAS, Raytech's Second Amended Plan of Reorganization, as of its
effective date of April 18, 2001 (the "Raytech Plan"), provided for, among other
things, the formation of the Raytech Corporation Asbestos Personal Injury
Settlement Trust (the "PI Trust") and the assumption by the PI Trust of all
liabilities of Raytech, and its predecessors and successors in interest, in
actions involving personal injury or death claims caused by exposure to
asbestos-containing products for which Raymark or its predecessors and
affiliates have legal liability;
WHEREAS, the Raytech Plan has been confirmed by the United States
Bankruptcy Court for the District of Connecticut (the "Bankruptcy Court");
WHEREAS, the Committee and the Legal Representative, on the one hand, and
the Environmental Creditors, on the other hand, recognizing the desirability of
avoiding disputes among them as to their respective claims against the Raymark
Estates have agreed to enter into this Settlement Agreement;
WHEREAS, the Environmental Creditors, the Legal Representative (in his
prior capacity as a Guardian Ad Litem for Future Claimants) and the Committee
previously entered into an Agreement made part of the Raytech Second Amended
Plan of Reorganization as Exhibit C, which Plan was confirmed on April 18, 2000
(the "2000 Settlement Agreement");
WHEREAS, the 2000 Settlement Agreement addressed issues relating to stock
distributed by the Raytech Corporation ("Raytech") to the Environmental
Creditors and liability insurance and proceeds;
WHERES, the parties intend to modify certain terms and conditions
respecting the Raytech stock and the disposition of liability insurance proceeds
provided for in the 2000 Settlement Agreement (see paragraphs 1(a)(ii) and 1(b)
of the 2000 Settlement Agreement);
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the parties agree as follows:
1. Except as provided in paragraphs 4 and 5 below, any amounts recovered,
net of all costs and expenses incurred with respect to such recovery (excluding
those of the costs and expenses incurred on or after November 1, 2001 as are to
be borne by the Environmental Creditors pursuant to paragraph 4 below and by the
PI Creditors pursuant to paragraphs 3 and 5 below), pursuant to the settlement
of existing claims against Raymark's former insurance carriers (other than
Allstate/Northbrook and Federal Insurance Co.), less (i) the $1,500,000 required
to fund the Xxxxxxx/Xxxxxx claimants and (ii) the aggregate amount of
administrative, and priority claims for the period up to and through the
effective date of a plan of liquidation or reorganization for Raymark, which
amount shall be determined pursuant to the negotiations referred to in paragraph
7 below, shall be divided between the PI Creditors and the Environmental
Creditors as follows:
(i) The PI Creditors shall receive sixty percent (60%) of such proceeds;
and
(ii) The Environmental Creditors shall receive forty percent (40%) of
such proceeds.
2. The Environmental Creditors hereby assign, convey and transfer to the
PI Creditors all of their rights to, or claims for, the assets and proceeds
(other than those described in paragraphs 1 and 4) of the Raymark and Universal
Friction Composites Estates, including any amounts recovered by or on behalf of
the Raymark Estates in XXXX, TRUSTEE, ET XX X. XXXXX, ET AL., Case No.
3:99CV284(DJS) (the "Xxxx x. Xxxxx Litigation") or the settlement thereof. From
time to time on or after the date of this Settlement Agreement, the
Environmental Creditors shall execute and deliver or cause to be executed and
delivered such further documents, certificates, instruments of conveyance,
assignment and transfer and shall take such further action as the PI Creditors
may reasonably request in order more effectively to assign, convey and transfer
such assets and proceeds of the Raymark Estates to the PI Creditors.
3. The PI Creditors shall bear all professional and trustee fees and other
costs incurred by or on behalf of the Raymark Estates on and after November 1,
2001 in connection with (i) the Xxxx x. Xxxxx Litigation, (ii) the actions
commenced against Raymark's former national trial team and (iii) the motion to
consolidate the bankruptcy estate of Universal Friction Composites with the
Raymark Estates.
4. The PI Creditors hereby assign, convey and transfer to the
Environmental Creditors all of their rights to recovery on the
Allstate/Northbrook insurance claim. The Environmental Creditors shall receive
one hundred percent (100%) of any amounts recovered by or on behalf on the
Raymark Estates relating to the Allstate/Northbrook insurance claim. All costs,
including litigation costs and trustee's fees, if any, relating to the
Allstate/Northbrook insurance claim accrued on or after November 1, 2001 by or
on behalf of the Raymark Estates shall be borne by the Environmental Creditors
and paid out of the Allstate/Northbrook Insurance recovery or a litigation fund
established pursuant to paragraph 6 below.
5. The Environmental Creditors hereby assign, convey and transfer to the
PI Claimants all of their rights to recovery on the Federal insurance claim. The
PI Creditors shall receive one hundred percent (100%) of any amounts recovered
by or on behalf of the Raymark Estates relating to Raymark's Federal insurance
claim. All costs, including litigation costs and trustee's fees, if any,
relating to the Federal insurance claim accrued on or after November 1, 2001 by
or on behalf of the Raymark Estates shall be borne by the PI Creditors.
6. The Environmental Creditors and the PI Creditors shall cooperate in
developing mechanisms to set aside funds otherwise payable to (i) the
Environmental Creditors to provide a source of payment for the ongoing costs
relating to the Allstate/Northbrook insurance claim and (ii) the PI Creditors to
provide a source of payment for the ongoing costs relating to the Federal
insurance claims.
7. The PI Creditors and the Environmental Creditors agree to promptly
negotiate with the Trustee to (i) minimize the administrative, professional and
trustee fees of the Trustee for the period up to and through the date that a
plan of reorganization for Raymark is confirmed by the Bankruptcy Court and (ii)
consummate a plan of reorganization for Raymark as soon as feasible in
accordance with the reasonable specifications of the PI Creditors, provided that
the terms of such plan are consistent with this agreement.
8. The Environmental Creditors hereby exercise their option pursuant to
paragraph 1(b)(i) of the 2000 Settlement Agreement to retain any amounts
separately recovered by the Environmental Creditors solely from the Raymark
Estates out of insurance proceeds, net of all costs and expenses directly
incurred by the Raymark Estates or their assignees with respect to such
recovery. In connection therewith, the Environmental Creditors shall promptly
upon receipt of the first distribution of cash under a Raymark plan of
reorganization to which the Environmental Creditors have consented, remit to the
PI Trust all of their shares of capital stock of Raytech, and deliver to the PI
Trust the certificates evidencing the shares of such capital stock of Raytech
and hereby waive any further rights or claims they may have to any of the shares
of capital stock of Raytech.
9. The Environmental Creditors and the PI Creditors agree that the
Environmental Creditors will be credited with $9,457,776 for remitting to the PI
Trust all of their shares of capital stock of Raytech against the "pro rata
share of the `enterprise value' of Reorganized Raytech" of $11,475,000 as
provided in paragraph 1(b)(i) of the 2000 Settlement Agreement and for assigning
tax benefits pursuant to paragraph 10 below. If the Environmental Creditors'
share of the proceeds referred to in paragraph 1 of this Agreement
(i) equals or exceeds $11,475,000, then the Environmental Creditors shall
pay to the PI Trust $2,017,224;
(ii) equals or exceeds $9,457,776 but is less than $11,475,000, then the
Environmental Creditors shall pay to the PI Trust an amount equal to (x) the
Environmental Creditors' share of the proceeds referred to in paragraph 1 of
this Agreement minus (y) $9,457,776; or
(iii) is less than $9,457,776, then the PI Creditors shall pay to the
Environmental Creditors an amount equal to (x) $9,457,776 minus (y) the
Environmental Creditors' share of the proceeds referred to in paragraph 1 of
this Agreement.
10. The Environmental Creditors hereby transfer and assign to the PI Trust
all of their rights to receive Tax Benefits (as defined in section 1.B of the
Tax Benefits Assignment and Assumption Agreement attached as Exhibit "F" to the
Raytech Plan (the "Tax Benefits Assignment Agreement")), past or future, derived
pursuant to the Raytech Plan and the Tax Benefits Assignment Agreement.
11. This Agreement is intended to modify paragraphs 1(a)(ii) and 1(b) of
the 2000 Settlement Agreement. To the extent this Agreement and the 2000
Settlement Agreement do not agree, the terms of this Agreement control.
12. To the extent that, under the letter proposal dated November 29, 2001,
to Xxxxxxx X. Xxxx and Xxxxx X. Xxxxxx, any amounts that the PI Creditors or
Environmental Creditors are to bear separately under paragraphs 3, 4 and 5 of
this Agreement are paid from accounts comprised of insurance proceeds referred
to in paragraph 1 of this Agreement, the PI Creditors shall repay to the
Environmental Creditors, and the Environmental Creditors shall repay to the PI
Creditors, as the case may be, the amounts that they have agreed to bear
separately. Such repayment may be made by appropriate adjustments to
distributions from the division of proceeds set forth in paragraph 1 of this
Agreement.
13. In the event that either (i) the Zurich insurance settlement is not
approved or the proceeds not received by the Raymark Trustee in accordance with
the settlement agreement with Zurich, or (ii) the International/ISLIC insurance
settlement is not approved or the proceeds are not received by the Raymark
Trustee in accordance with the settlement agreement with International/ISLIC,
then this Settlement Agreement shall be of no force and effect.
14. This Settlement Agreement shall be governed by and construed under the
laws of the State of Delaware.
15. This Settlement Agreement constitutes the entire understanding between
the parties concerning the subject matter hereof and may not be modified or
amended except by a writing signed by all parties to this Settlement Agreement.
16. This Settlement Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Settlement Agreement as
indicated below.
/S/XXXXX X. XXXXXXXX /S/ XXXXXX X. XXXXXXXXX
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Xxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxxx
Senior Attorney Assistant Attorney General
Environmental Enforcement Section Environmental Protection Department
U.S. Department of Justice Office of the Attorney General
COUNSEL TO THE UNITED STATES State of Connecticut
ENVIRONMENTAL PROTECTION COUNSEL TO THE CONNECTICUT
AGENCY DEPARTMENT OF ENVIRONMENTAL
PROTECTION
/S/ XXX X. XXXXXX /S/ XXXX X. XXXXXXX
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Xxx X. Xxxxxx Xxxx X. Xxxxxxx
Assistant United States Attorney Xxxxxx Xxxxxxx Xxxxxxx & Xxxxxx, LLP
District of Connecticut 0000 Xxxxxx Xxxxxx, 0xx Xxxxx
COUNSEL TO XXX XXXXXX XXXXXX Xxxxxxxxxxxx, XX 00000
ENVIRONMENTAL PROTECTION COUNSEL TO FMC CORPORATION
AGENCY
/S/ XXXXX XXXXXXXXX /S/ XXXX XXXXXXXX
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Xxxxx Xxxxxxxxx Xxxx Xxxxxxxx
Xxxxxx & Xxxxxxxx, Chartered Coan, Lewendon, Royston & Gulliver, P.C.
000 Xxxx Xxxxxx 000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxxx, XX 00000
COUNSEL TO THE OFFICIAL COUNSEL TO THE LEGAL
COMMITTEE OF UNSECURED REPRESENTATIVE FOR FUTURE
CREDITORS CLAIMANTS
