SETTLEMENT AGREEMENT
This Settlement Agreement is made this 15th day of May 1998, by and
between Nationwide Mutual Insurance Company ("Nationwide"), Alaska National
Insurance Company ("Alaska National"), Providence Washington Insurance Company
("Providence Washington") and Admiral Insurance Company ("Admiral")
(collectively the "Insurers"), and Chugach Electric
Association, Inc. ("Chugach").
DEFINITIONS
AGREEMENT means this Settlement Agreement.
CLAIMS means claims, obligations, demands, suits, proceedings, causes
of action, government orders, costs, or liabilities, whether known, unknown,
foreseeable, unforeseeable, legal, equitable, fixed, contingent, matured,
unmatured, liquidated, or unliquidated and without regard to when such claims,
etc., accrue or accrued.
ENVIRONMENTAL CLAIMS means any and all past, present, and future CLAIMS
that are asserted or brought at any time against, or imposed at any time upon,
Chugach arising out of or relating to actual, alleged, threatened, or potential
bodily injury and/or property damage and/or personal injury and/or advertising
injury caused by ENVIRONMENTAL CONTAMINATION.
ENVIRONMENTAL CONTAMINATION means the actual, alleged, or threatened
presence, movement, migration, discharge, dispersal, seepage, emission, release,
disposal, dumping, landfilling, or escape of contaminants, pollutants,
irritants, thermal contamination, trash, smoke, vapors, soot, acids, alkyds,
gases, chemicals, petroleum derivatives, waste materials, or any other
substances alleged by any person or entity in the past, now, or in the future to
be toxic, hazardous, damaging, or harmful to the environment and/or human health
or safety.
POLICIES means:
Policies issued by Nationwide to Chugach numbered
85GA-953-672-0002 (5/1/84 to 5/1/85, renewed to 5/1/86, and
again to 5/1/87;
Policies issued by Alaska National to Chugach numbered A 82 LD
00361 (1/1/82 to 1/1/83), A 83 CD 00361 (1/1/83 to 1/1/84),
and 84A LD 00361 (1/1/84 to 5/1/84);
Policies issued by Providence Washington to Chugach numbered
GLA4 52 36 (1/1/77 to 1/1/78), GLA4 71 15 (1/1/78 to 1/1/79,
GLA5 06 65 (1/1/80 to 1/1/81), and GLA5 20 86 (1/1/81 to
1/1/82); and
The policy issued by Admiral to Chugach numbered 9 CG 2769
(1/1/79 to 1/1/80).
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SITE means the Standard Steel & Metals Salvage Yard Superfund Site in
Anchorage, Alaska.
RECITALS
WHEREAS, the Insurers issued the POLICIES to Chugach;
WHEREAS, the United States has asserted claims against Chugach under the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq. ("CERCLA Claims") relating to the release of hazardous
substances at the SITE;
WHEREAS, in partial settlement of costs incurred in connection with the
CERCLA Claims Chugach entered into a Partial Consent Decree with the United
States dated December 1996 (the "Partial Consent Decree"). Pursuant to the
Partial Consent Decree, Chugach paid United States' past response costs, EPA
oversight costs, and remedial investigation and feasibility study costs
(collectively, "Partial Consent Decree Costs") and costs of removing scrap metal
and debris from the SITE ("Scrap Removal Costs");
WHEREAS, in further settlement, Chugach executed a second Consent
Decree with the United States which was entered by the court in January 1998
pursuant to which Chugach and other potentially responsible parties ("PRPs") are
performing remedial design and remedial action ("RD/RA") at the SITE. This
second Consent Decree requires performance of RD/RA work and operations and
maintenance ("O&M") activities at the SITE and payment of United States EPA
oversight costs relating to the same ("Oversight Costs");
WHEREAS, Chugach has requested coverage from the Insurers under the
POLICIES for costs arising out of the CERCLA Claims against Chugach relating to
the SITE;
WHEREAS, the Insurers dispute that they have any obligations to defend
or indemnify Chugach in connection with any CERCLA Claims or other ENVIRONMENTAL
CLAIMS under their POLICIES; and
WHEREAS, the parties now seek a full and final resolution of all
ENVIRONMENTAL CLAIMS relating to the SITE, except with respect to possible
natural resource damage assessment claims arising under 42 U.S.C. ss. 9607(f)
("NRDA Claims");
NOW, THEREFORE, in consideration of the mutual agreements by and
between the parties, the parties hereby agree as follows:
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AGREEMENT
The parties hereby settle all ENVIRONMENTAL CLAIMS, except with respect
to NRDA Claims, that Chugach could assert as arising under the POLICIES relating
to the SITE. The terms of this settlement are as follows:
1. PAYMENTS BY THE INSURERS.
a. The Insurers shall pay 100% of Chugach's attorneys' fees
incurred in defending CERCLA Claims through February 28, 1998. Subject to the
Insurers' right to audit and dispute such fees, payment of such fees for January
and February 1998 shall be due within thirty (30) days of the date of invoice.
On or before March 16, 1998, the Insurers will bring current the past invoices
of Chugach's defense counsel Xxxxxx Xxxxxx, with interest running at 10 1/2%
simple interest from January 1, 1998. These bills include $8,750.71 owed on
1990- 91 xxxxxxxx and current xxxxxxxx in the amount of $7,496.40.
b. On March 16, 1998, or thirty (30) days after Chugach
provides the Insurers with documentation supporting its claim for payment,
whichever is later, the Insurers shall pay 100% of the following: 50% of the
Partial Consent Decree Costs. This amount totals approximately $433,611 and will
be allocated to defense costs. The Insurers shall also pay 77.5% of the
following: the remaining 50% of Partial Consent Decree Costs, the total Scrap
Removal Costs, and the total RD/RA costs paid by Chugach prior to March 15,
1998. This 77.5% payment will be allocated to indemnity. Interest will run at
the rate of 8% simple interest from the date this payment is due.
c. On December 1, 1998, and December 1, 1999, or thirty (30)
days after Chugach provides the Insurers with documentation supporting its claim
for payment, whichever is later, the Insurers shall pay 77.5% of the RD/RA and
Oversight Costs paid by Chugach since the last payment. These progress payments
will be allocated to indemnity. Interest will run at the rate of 8% simple
interest from the date a payment is due.
d. On the earlier of EPA certification of completion of
remedial action or January 1, 2001, Chugach shall provide documentation of the
RD/RA and Oversight Costs paid by Chugach since the last payment and, within
thirty (30) days thereafter, the Insurers shall pay 77.5% of the same. Within
such 30-day period the Insurers shall also pay 90% of the present value of
Chugach's share of estimated future costs for O & M, Oversight and defense
("Future Costs"). These amounts will be allocated to indemnity. The present
value estimate of Future Costs will be determined by the PRPs' consultant, Xxxx
Xxxx. If Xxxx Xxxx is no longer serving as the PRPs' consultant, his successor
shall make the determination, provided that the Insurers consent. If Chugach's
share of the present value estimate of Future Costs is determined to be less
than $100,000, the Insurers shall be bound by this determination. If (1)
Chugach's share of the present value estimate of Future Costs is determined to
be equal to or more than $100,000 and the parties cannot agree on the estimated
amount within a reasonable
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time frame or (2) Xxxx Xxxx is no longer serving as the PRPs' consultant and the
Insurers do not consent to his successor's making the determination, the parties
will attempt to agree on a single mutually acceptable consultant to determine
the present value estimate of Future Costs. If the parties cannot agree on a
consultant within a reasonable time period, each party will select a consultant,
those two consultants will select a third consultant and all three consultants
will attempt to agree upon the present value estimate of Future Costs. The
decision of two of the three consultants will be binding on all parties. The
cost of a single mutually agreeable consultant, or, if three consultants are
used, the cost of the consultant selected by the other two consultants will be
paid on a 50-50 basis by Chugach and the Insurers. If three consultants are
used, each party will pay the full cost of the consultant it selected. Interest
on Future Costs will run at the rate of 8% simple interest from the date payment
is due.
e. The Insurers shall pay 90% of Chugach's attorneys' fees
incurred in defending CERCLA Claims from March 1, 1998, through EPA
certification of completion of remedial action or January 1, 2001, whichever is
earlier. Subject to the Insurers' right to audit and dispute such fees, payment
of such fees shall be made within thirty (30) days after the date of invoice.
2. MUTUAL RELEASE OF ALL CLAIMS.
In consideration of the payment set forth in the preceding paragraph
and the mutual release set forth in this paragraph, Chugach and the Insurers
jointly release and discharge each other from any and all liability under the
POLICIES for all CLAIMS for both defense and indemnity payment involving
ENVIRONMENTAL CLAIMS, except for NRDA Claims, against Chugach relating to the
SITE.
3. KNOWN POLICIES.
Chugach and the Insurers agree that the only policies of insurance
covered by this AGREEMENT are the POLICIES, as defined above.
4. TERMS AND CONDITIONS OF POLICIES.
Except as specifically provided by the AGREEMENT, the parties'
respective rights and duties shall be determined by the terms and conditions of
the POLICIES and applicable law. For example, and without limitation, issues
regarding applicable policy limits and the exhaustion of policy limits will be
determined by the language of the POLICIES and applicable law unless and except
as expressly addressed in this AGREEMENT.
5. POLICY LIMITS OF 1978 PROVIDENCE WASHINGTON POLICY.
Chugach and Providence Washington only agree for purposes of this
settlement that the 1978 Providence Washington policy (GLA4 71 15, 1/1/78 to
1/1/79)
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will be treated as if it has limits of $50,000 for liability on account
of property damage, but Chugach and Providence Washington agree that nothing in
this AGREEMENT shall waive Chugach's right to argue that this policy had higher
limits in connection with any CLAIMS other than those settled hereunder.
6. ALLOCATION OF PAYMENTS.
The Insurers agree that, as to their respective POLICIES, they will
allocate payments made under this settlement on a pro rata horizontal basis. The
Insurers do not agree to allocate on a pro rata basis as among themselves.
Providence Washington agrees it will not allocate horizontally to policies in
effect before January 1, 1977.
7. EXCLUSION OF NRDA CLAIMS.
All NRDA Claims, whether related to defense or indemnification
obligations, are excluded from this AGREEMENT.
8. CONFIDENTIALITY.
The parties acknowledge that Chugach is a publicly traded, member-owned
utility and that Chugach may be required to disclose information about this
AGREEMENT to regulatory agencies and others. The parties agree to work
cooperatively together to retain as much confidentiality as possible of this
settlement while acknowledging that Chugach has substantial disclosure
obligations including, without limitation, those relating to SEC, APUC and
wholesale customers. The terms of this AGREEMENT may also be disclosed by the
parties to their respective counsel, reinsurers, and accountants. This AGREEMENT
is made pursuant to and in reliance on Evidence Rule 408.
9. PARTIES BOUND.
This AGREEMENT is binding on and for the benefit of the parties and
their respective officers, directors, shareholders, agents, servants, employees,
attorneys, representatives, divisions, parent and subsidiary corporations,
affiliates, heirs, executors, administrators, successors, and assigns. The
AGREEMENT is not intended to, and does not, give or create rights to or for any
other person or entity.
10. DISPUTES REGARDING AGREEMENT.
The laws of the state of Alaska shall apply to construction of this
AGREEMENT, and any proceeding to enforce the AGREEMENT shall be brought in the
state of Alaska, unless all parties agree otherwise. The prevailing party or
parties in any such proceedings shall be entitled to their reasonable costs and
attorneys' fees incurred in prosecuting or defending such proceeding. This
AGREEMENT was reviewed and accepted by legal counsel for CHUGACH
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and the INSURERS. In the event any ambiguity is found to exist in any provision
of this AGREEMENT, such ambiguity is not to be construed against any party as
drafter of the document.
11. COMPLETE AGREEMENT.
This AGREEMENT contains all of the terms and conditions agreed upon by
the parties relating to its subject matter and supersedes any and all prior or
contemporaneous agreements, negotiations, correspondence, understandings, and
communications of the parties, whether oral or written, respecting this
settlement.
12. EXECUTION OF AGREEMENT.
There shall be only one original AGREEMENT, to be retained by Chugach,
consisting of 11 pages with an original signature on behalf of each party. This
AGREEMENT may be executed by the parties in counterpart originals with the same
force and effect as if fully and simultaneously executed as a single original
document.
13. AUTHORITY.
Each of the following undersigned represents that he or she has the
authority to enter into, and does enter into, this AGREEMENT on behalf of the
party he or she represents.
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Chugach Electric Association, Inc.
May 19, 1998 /s/ Xxxxxx X. Xxxxxxxxx
------------------------
DATE Authorized Representative
General Manager
Title
SUBSCRIBED AND SWORN to before me this 19 day of March, 1998.
/s/ Xxxxxx X. Xxxxxxx
NOTARY PUBLIC in and for the State
of Alaska, residing at
Anchorage, Alaska.
My Commission Expires: 4/8/99.
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Nationwide Mutual Insurance Company
6/2/98 /s/ Xxxxxxx Xxxx
DATE Authorized Representative
Environmental Claim Supervisor
Title
SUBSCRIBED AND SWORN to before me this 2 day of June, 1998.
/s/ Xxxx Xxxxxxx
NOTARY PUBLIC in and for the State
of Illinois, residing at
Oupage County.
My Commission Expires: 2-18-2001.
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Alaska National Insurance Company
May 26, 1998 /s/ Xxxx X. Xxxxxx
-------------------
DATE Authorized Representative
Senior Vice President
Title
SUBSCRIBED AND SWORN to before me this 26 day of May, 1998.
/s/ Xxxxxxxx X. Xxxxxxxxxx
NOTARY PUBLIC in and for the State
of Washington, residing at
Seattle, WA.
My Commission Expires: 11-1-01.
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Providence Washington Insurance Company
August 31, 1998 /s/ Xxxxxx Xxxxxx
DATE Authorized Representative
General Claim Specialist
Title
SUBSCRIBED AND SWORN to before me this 31st day of August, 1998.
/s/ Xxxxxxx X. Xxxxxx
NOTARY PUBLIC in and for the State
of Rhode Island, residing at
E. Providence.
My Commission Expires: 5/2/02.
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Admiral Insurance Company
6/11/98 /s/ Xxxx Xxxxxxxx
DATE Authorized Representative
Claims Superintendent
Title
SUBSCRIBED AND SWORN to before me this 11th day of June, 1998.
/s/ Xxxxxxx Xxxxxxxxx
NOTARY PUBLIC in and for the State
of New Jersey, residing at
000 Xxxxxxxx Xx, Xxxxxx Xxxx, XX, Camden Co.
My Commission Expires: June 13, 2000.
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