Exhibit 99.1
SETTLEMENT AGREEMENT AND RELEASE BY AND
BETWEEN CONGOLEUM CORPORATION
AND XXXXXX INSURANCE LIMITED, FORMERLY KNOWN AS TUREGUM INSURANCE COMPANY
This Settlement Agreement and Release (the "Agreement") is made by and
between (a) each of the following (each, a "Debtor" and, collectively, the
"Debtors"): Congoleum Corporation, as debtor and debtor-in-possession
("Congoleum"), Congoleum Sales, Inc., and Congoleum Fiscal, Inc., as debtors and
debtors-in-possession; and (b) Xxxxxx Insurance Limited, formerly known as
Turegum Insurance Company ("Xxxxxx"). The Debtors and Xxxxxx are referred to
herein in their individual capacity as a "Party" and collectively as the
"Parties."
RECITALS
WHEREAS, numerous "Asbestos Claims" (as defined herein) have been asserted
against Congoleum; and
WHEREAS, Turegum Insurance Company, the predecessor to Xxxxxx, subscribed
to a 10.5 percent share of Insurance Policy No. UJL0389 issued to Congoleum for
the policy period April 1, 1977, to January 1, 1980, by Turegum Insurance
Company and certain other London Market companies (Turegum Insurance Company's
share of said policy is hereinafter referred to as the "Subject Policy"); and
WHEREAS, there is a dispute between the Debtors and Xxxxxx (the successor
to Turegum Insurance Company) regarding their respective rights and obligations
with respect to insurance coverage under the Subject Policy for Asbestos Claims
(the "Coverage Dispute"); and
WHEREAS, Congoleum and Xxxxxx 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, 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 (the "Chapter 11 Case") in the United States
Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court"), 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 Xxxxxx
denies that it owes any damages as alleged and has defended against Congoleum's
claims in the Coverage Action; and
WHEREAS, the Debtors and Xxxxxx entered into settlement negotiations to
resolve the Coverage Dispute and to further define their respective rights and
obligations under the Subject Policy; and
WHEREAS, subject to the terms of this Agreement, the Debtors and Xxxxxx
now wish to enter into an agreement, as set forth below, to settle and resolve
the Coverage Dispute as between them, to provide for mutual releases of their
claims under the Subject Policy, to provide for dismissals with prejudice of the
Coverage Action as between them, to provide for a permanent withdrawal of all of
Xxxxxx'x claims, objections and appeals, if any, in the Chapter 11 Case, and to
resolve certain other matters, all as set forth below; and
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound hereby, the Parties hereby agree as follows:
2
AGREEMENT
I. DEFINITIONS
A. For purposes of this Agreement, 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 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. Moreover, each defined term stated in the singular shall include the
plural, and each defined term stated in the plural shall include the singular.
The word "include" or "including" means "including but not limited to."
B. "Approval Order" means an order of the Bankruptcy Court or the District
Court exercising its original bankruptcy jurisdiction approving this Agreement,
which order shall be in the form of Attachment A hereto or such other order that
is in a form and substance acceptable to the Debtors and Xxxxxx.
C. "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 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
3
state that contains or is alleged to contain asbestos, either alone or in
combination with any other substance. The term "Asbestos Claims" also includes
claims or suits alleging in whole or in part exposure to asbestos and/or asbes
tos-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. Notwithstanding anything to
the contrary herein, the term "Asbestos Claims" does not include any Claims (as
defined herein) for property damage brought by any governmental unit, including
the United States of America, under applicable environmental laws where such
Claims fall outside the scope of the "products" or "completed operations"
hazards of the Subject Policy (as those terms are defined in the Subject
Policy).
D. "Claim" means any of the following: (1) "claim" as that term is defined
in 11 U.S.C. ss. 101(5); (2) "demand" as that term is defined in 11 U.S.C. ss.
524(g)(5); or (3) any claim, whether past, present or future, known or unknown,
asserted or unasserted, foreseen or unforeseen, fixed or contingent, or direct
or indirect, and whether in law, equity, admiralty or otherwise, including 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
4
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 (except as
specified in Paragraph II.J); 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.
E. "Claimants' Counsel" means Xxxxx Xxxxx and Xxxxxx X. Xxxx in their
capacity as counsel to the participating asbestos claimants under that certain
settlement agreement between Congoleum Corporation and various asbestos
claimants, executed as of April 10, 2003, as amended.
F. "Confirmation Order" means an order entered by the Bankruptcy Court in
the Chapter 11 Case confirming the Plan, together with any order of the District
Court issued pursuant to section 524(g)(3)(A) of the Bankruptcy Code confirming
or affirming such order, which Plan includes a 524(g) Injunction.
G. "Official Committee" means any and all committees appointed in the
Chapter 11 Case by the Office of the United States Trustee.
H. "District Court" means the U.S. District Court for the District of New
Jersey.
I. "Execution Date" means the earliest date on which this Agreement is
signed by the Debtors and Xxxxxx.
J. "Final Order" means an order or judgment of a court, the
implementation, operation or effect of which has not been stayed and as to which
the time to appeal, seek review, petition for certiorari, or move for
reargument, reconsideration or rehearing has expired.
5
K. "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.
L. "524(g) Injunction" means an injunction in the Chapter 11 Case pursuant
to Section 524(g) of the Bankruptcy Code that permanently enjoins all Persons
from taking any legal action for the purpose of directly or indirectly
collecting, recovering, or receiving payment or recovery from the Xxxxxx
Releasees with respect to any Claim that under the Plan is to be paid in whole
or in part by the Plan Trust (including all Asbestos Claims paid or to be paid
in whole or in part by the Plan Trust) that arises out of or in connection with
the Subject Policy.
M. "Xxxxxx Releasees" means (i) Xxxxxx and its affiliates, subsidiaries,
predecessors, successors and assigns; and, (ii) each of the directors, officers,
shareholders, agents and employees of the foregoing, solely in their capacities
as such.
N. "Motion" has the meaning ascribed to such term in Paragraph III.A of
this Agreement.
O. "Person" means any natural person, corporation, limited liability
company, syndicate, trust, joint venture, association, company, partnership,
governmental authority or other entity.
P. "Plan" means a plan of reorganization proposed by the Debtors in the
Chapter 11 Case.
6
Q. "Plan Trust" means the trust created under the Plan that conforms to
the description of a "trust" as set forth in Section 524(g)(2)(B)(i) of the
Bankruptcy Code.
R. "Prior Payments" has the meaning ascribed to such term in Paragraph
II.E of this Agreement.
S. "Termination Event" means the occurrence for any reason of any of the
contingencies set forth in Paragraph III.H below and the subsequent declaration
of this Agreement as null and void in accordance with Paragraph III.H below.
T. "Trigger Date" means the earliest date upon which written notice is
received by Xxxxxx from the Debtors, pursuant to Section V below (such notice to
be sent by the Debtors within three (3) business days of the satisfaction of the
all of the following events), stating that all of the following events have
occurred: (1) the Approval Order is a Final Order; (2) the Confirmation Order is
a Final Order; and (3) the Plan, which includes the 524(g) Injunction, is
declared to be effective.
II. PAYMENT BY XXXXXX
A. Within three business days following the Trigger Date, Xxxxxx shall pay
to Congoleum, or as directed in the Plan or the Confirmation Order, the total
amount of One Million Three Hundred and Seventy-Five Thousand Dollars, in
immediately available funds ($1,375,000.00) (the "Settlement Amount").
B. 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.
C. Time is of the essence with respect to payment of the Settlement
Amount. The payment of the Settlement Amount shall be made by Xxxxxx no later
than the date when due, without any set-off, counterclaim, diminution or any
other deduction whatsoever.
7
D. In the event that the Settlement Amount is not paid in full when due,
the Settlement Amount shall bear interest from (and including) the due date in
the manner specified in Section II herein, to (but excluding) the date the
Settlement Amount plus all interest accrued thereon is actually paid in full, at
an interest rate equal to the prime rate of Citibank, N.A. in effect on the date
such payment was due plus three percent (3%), compounded daily.
E. The Settlement Amount is in addition to any and all amounts paid prior
to the Execution Date by or on behalf of Xxxxxx to or for the benefit of the
Debtors in connection with Asbestos Claims or otherwise (collectively, the
"Prior Payments"). From and after the Trigger Date, and unless this Agreement is
declared null and void pursuant to Paragraph III.H below, any and all payments
by Xxxxxx, including the Prior Payments, if any, shall be deemed final and
irrevocable payments.
F. In entering into this Agreement, Xxxxxx has relied upon the fact that
nothing in this Agreement and nothing in the Plan is intended to alter, amend or
impair the rights and duties of the Parties in connection with insurance or
other transactions that are unrelated to Asbestos Claims or the releases in
Paragraphs IV.A. and IV.X.
X. Xxxxxx shall have the right to allocate the Settlement Amount, or any
portions thereof, solely for their own purposes, in their own books and records,
to the various types and classifications of claims released by the Debtors
pursuant to Section IV.A. below; provided, however, that neither the Debtors nor
the Plan Trust shall be bound by or be deemed to agree with any such allocation
for any reason or purpose, and that Xxxxxx'x allocation shall not, in any way,
limit its obligation to pay the Settlement Amount in full when due or limit the
Debtors' or the Plan Trust's use or allocation of the Settlement Amount.
8
X. Xxxxxx shall not seek reimbursement of any payments that it has made
(including Prior Payments) or is obligated to make under this Agreement or
otherwise, whether by way of a claim for contribution or subrogation, or
otherwise, from any Person other than Xxxxxx'x reinsurers in their capacity as
such. Each of the Debtors shall use its reasonable best efforts to obtain from
all insurers with which it settles an agreement similar to that set forth in the
preceding sentence; provided, however, that notwithstanding anything to the
contrary herein, the failure of the Debtors to obtain such an agreement from any
other insurer with which it settles shall not constitute a breach of this
Agreement. Notwithstanding the foregoing, subject to the effect of the 524(g)
Injunction, Xxxxxx may file a cross-complaint or counterclaim against any Person
that has first asserted a claim seeking reimbursement for any payment that it
has paid or is required to pay, whether by way of a claim for contribution
and/or subrogation or otherwise, against Xxxxxx in connection with any Claims
released pursuant to Paragraph IV.A hereunder; provided, however, that, to the
extent Xxxxxx recovers any amount in respect of such cross-complaint or
counterclaim from such third party, the proceeds of such recovery shall be paid
by Xxxxxx pursuant to the instruction of the Debtors or the Plan Trust (as the
case may be), after Xxxxxx is reimbursed from such proceeds for its reasonable
fees, costs and expenses incurred in prosecuting and defending such claim. For
the avoidance of doubt, any payment of such proceeds pursuant to the Debtors' or
the Plan Trust's instructions shall not reduce or count towards Xxxxxx'x
obligation to pay the Settlement Amount (plus any and all interest accrued
thereon as provided for herein).
I. Each Party acknowledges and agrees that the Debtors' rights to the
Settlement Amount derive from and are coextensive with the Debtors' rights to
the proceeds of the Subject Policy. Each Party agrees that it shall not take any
action inconsistent with such acknowledgement and agreement.
9
J. In the event that any insurer of the Debtors obtains a binding
arbitration award or final judgment against or a settlement with any of the
Xxxxxx Releasees (with the consent of the Debtors prior to the effective date of
the Plan or with the consent of the Plan Trust following said effective date,
which consent in either case shall not be unreasonably withheld) entitling it to
obtain a sum certain from any of the Xxxxxx Releasees as a result of said
insurer's claim for contribution, subrogation, indemnification, reimbursement or
other similar claim against the Xxxxxx Releasees for the Xxxxxx Releasees'
alleged share or equitable share of the defense and/or indemnity of the Debtors
for any Claims released pursuant to Paragraph IV.A of this Agreement, the
Debtors or the Plan Trust (as the case may be) shall voluntarily reduce the
amount of any such final judgment or settlement payment that they obtained or
may obtain from such other insurer by the amount of such other insurer's binding
arbitration award or final judgment awarded against or settlement with the
Xxxxxx Releasees in connection with such contribution, subrogation,
indemnification or other similar claim and shall direct that the Xxxxxx
Releasees shall not be subject to liability for such judgment, arbitration award
or settlement. Such a reduction in judgment or arbitration award or settlement
will be accomplished by subtracting from the judgment, arbitration award or
settlement against the other insurers, the share of the judgment, arbitration
award or settlement attributable to the Xxxxxx Releasees.
III. BANKRUPTCY OBLIGATIONS
A. The Debtors shall file, within ten (10) business days of the Execution
Date, a motion (in a form and substance reasonably satisfactory to Xxxxxx)
pursuant to Federal Rule of Bankruptcy Procedure 9019 seeking entry of the
Approval Order (the "Motion"), and Xxxxxx shall support the Motion.
10
B. Upon the later of the Trigger Date or the payment of the Settlement
Amount pursuant to Paragraph II.A, if any Claim released under the Subject
Policy pursuant to Paragraph IV.A of this Agreement, or that is subject to the
524(g) Injunction, is brought against any of the Xxxxxx Releasees, the Plan
Trust will cooperate with Xxxxxx in establishing that the Xxxxxx Releasees are
entitled to the protections afforded by such injunction.
C. From and after the effective date of the Plan, each of the Debtors
agrees not to modify the terms of the 524(g) Injunction in a way that adversely
affects the Xxxxxx Releasees without first obtaining Xxxxxx'x consent, which
consent shall not be unreasonably withheld.
X. Xxxxxx will not assert, file, or pursue any motions, objections,
claims, proofs of claim, or appeals in the Chapter 11 Case and shall support and
not oppose entry of the Approval Order.
X. Xxxxxx will not object to or oppose confirmation of the Plan, and
Xxxxxx will not appeal the Confirmation Order, provided that the Plan does not
in any way impair, diminish or detract from the rights of the Xxxxxx Releasees
under this Agreement.
F. The Debtors will provide notice of the Motion and of the hearing on the
Motion to: (a) the members of the Official Committees and each such committee's
counsel; (b) the FCR and the counsel for the FCR; (c) the Claimants' Counsel;
(d) all other Persons, including but not limited to Congoleum's insurers, that,
as of the Execution Date, had filed a notice of appearance or other demand for
service of papers in the Chapter 11 Case; (e) the United States Trustee; (f) the
Collateral Trustee of the Congoleum Collateral Trust (the "Collateral Trust")
11
established pursuant to a Collateral Trust Agreement dated April 17, 2003; (g)
Congoleum Corporation's majority shareholder, American Biltrite, Inc.; (h) any
other presently existing Person who is actually known to Congoleum Corporation
as insureds under the Subject Policy; (i) counsel to all known holders of
Asbestos Claims as reflected in the claims filed in this case, and claims
submitted in connection with the Settlement Between Congoleum Corporation and
Various Asbestos Claimants; and (j) all known holders of Asbestos Claims whose
counsel is not included within the preceding clause who, as of at least five (5)
business days prior to the filing of the Motion, became known through the filing
of a proof of claim or otherwise.
G. Upon the Confirmation Order becoming a Final Order, this Agreement
shall be binding immediately and automatically upon the Plan Trust, and the Plan
Trust shall be deemed to be a party to this Agreement without the need for
further action.
H. Subject to Paragraph III.I below, any Party may declare this Agreement,
except for the provisions in Paragraphs III.H. and III.I, and Sections I and V,
to be null and void upon the occurrence of any of the following contingencies:
(1) the entry of an order by the Bankruptcy Court (or the District Court
exercising its original bankruptcy jurisdiction) denying approval of the Motion;
(2) the entry of an order by the Bankruptcy Court (or the District Court
exercising its original bankruptcy jurisdiction), prior to the Confirmation
Order becoming a Final Order, converting the Chapter 11 Case into a Chapter 7
case or dismissing the Chapter 11 Case; or (3) the entry of an order by the
Bankruptcy Court (or the District Court exercising its original bankruptcy
jurisdiction) confirming a plan of reorganization that does not contain the
524(g) Injunction. Any such declaration pursuant to this Paragraph III.H must be
made in writing and sent to all Parties in the manner set forth in Section V
below.
12
I. Notwithstanding anything in this Agreement to the contrary, in the
event that this Agreement is declared null and void pursuant to Paragraph III.H
above (1) this Agreement (except for Sections I and V, and Paragraphs III.H and
III.I) shall be vitiated and shall be a nullity; (2) Xxxxxx shall not be
obligated to pay the Settlement Amount; (3) no Party shall be bound by the terms
of any Approval Order; (4) the Subject Policy shall remain in the same force and
effect as if this Agreement had never existed, and the Debtors and Xxxxxx shall
have all of their respective rights and obligations under or with respect to the
Subject Policy that they would have had if this Agreement had never existed; (5)
Xxxxxx shall not receive any benefits or protections under the Plan or under any
injunctions issued in the Chapter 11 Case unless subsequently agreed to in
writing by the Parties; and (6) any and all statutes of limitation 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 is thirty (30) days
following the date on which the Agreement is declared null and void, and no
Party shall assert or rely on any time-related defense to any Claim by any other
Party related to such period.
J. The Parties shall use commercially reasonable efforts to obtain the
Approval Order and the Confirmation Order.
IV. RELEASE, DISMISSAL AND WAIVER
A. Effective upon the Trigger Date, each of Congoleum and the other
Debtors and, solely to the extent that they have the right and power to give the
releases set forth in this Paragraph IV.A on their behalf (i) their respective
affiliates, subsidiaries, predecessors, successors and assigns; and (ii) the
directors, members, officers, shareholders, agents and employees of the
foregoing, solely in their capacities as such (collectively, the "Congoleum
13
Releasees") hereby releases the Xxxxxx Releasees forever from any and all known
or unknown, suspected or unsuspected, past, present, existing, potential or
future obligations, duties, Claims, demands, penalties, costs, fees, attorneys'
fees, debts, actions, causes of action, choses in action, administrative actions
or proceedings, suits, arbitrations, mediations or other proceedings, offsets,
damages, injuries, rights, agreements, requests for relief, sums of money,
losses or liabilities of any kind, nature, character or description, whether
fixed or unliquidated, whether conditional or contingent, whether in law or
equity arising from, related to or involving the Subject Policy, including
arising from, related to or involving insurance coverage for Claims or with
respect to the applicable products/completed operations hazards limits under the
Subject Policy. Notwithstanding anything to the contrary herein, nothing in this
Paragraph IV.A shall be construed as releasing Xxxxxx from its obligation to pay
in full the Settlement Amount and its other obligations under this Agreement;
nor shall this Paragraph IV.A. be construed as releasing rights under insurance
policy UJL0389 except to the extent of Xxxxxx'x participation therein.
B. Effective upon the Trigger Date, each of the Xxxxxx Releasees hereby
releases the Congoleum Releasees and the Plan Trust forever from any and all
known or unknown, suspected or unsuspected, past, present, existing, potential
or future obligations, duties, Claims, demands, penalties, costs, fees,
attorneys' fees, debts, actions, causes of action, choses in action,
administrative actions or proceedings, suits, arbitrations, mediations or other
proceedings, offsets, damages, injuries, rights, agreements, requests for
relief, sums of money, losses or liabilities of any kind, nature, character or
description, whether fixed or unliquidated, whether conditional or contingent,
whether in law or equity arising from, related to or involving the Subject
Policy, including arising from, related to or involving insurance coverage for
14
Claims or with respect to the applicable products/completed operations hazards
limits under the Subject Policy. Notwithstanding anything to the contrary
herein, nothing in this Paragraph IV.B shall be construed as releasing the
Debtors from their obligations under this Agreement.
C. Within five (5) business days after the Execution Date: (1) Congoleum
and Xxxxxx shall file a joint notice dismissing, without prejudice and without
costs, any and all Claims against each other in the Coverage Litigation; (2)
Xxxxxx shall withdraw any motions, objections, proofs of claim, or discovery
filed or served in the Chapter 11 Case; and (3) the Debtors shall withdraw any
motions, objections, or discovery filed or served in the Chapter 11 Case solely
to the extent such motions, objections, or discovery are related to Xxxxxx.
D. After the Trigger Date, the dismissal referred to in Paragraph IV.C of
this Agreement shall be amended to reflect that the dismissal is with prejudice
and without costs.
E. The Parties acknowledge that they have been advised by their respective
legal counsel and are familiar with the provisions of Section 1542 of the
California Civil Code, which provides:
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 the
executing of the release which if known by him or her must have
materially affected his or her settlement with the debtor.
The Parties hereto expressly consent that this settlement and release shall be
given full force and effect according to each and all of its express terms and
provisions, including those dealing with unknown and unsuspected claims, and
causes of action. The Parties further agree that this reference to the
California Civil Code shall not give rise to any argument that California law
applies to this Agreement or the disputes resolved pursuant hereto.
15
F. Notwithstanding anything in this Section IV to the contrary, the
release provisions of Paragraphs IV.A and IV.B shall not be construed to apply
to any breach by a Party of any of its obligations under this Agreement or to
discharge any rights that any Party has to enforce this Agreement.
V. NOTICES
Any and all statements, communications or notices to be provided pursuant
to or in connection with this Agreement shall be in writing and sent by
facsimile, e-mail and first-class mail, postage prepaid. Such notices shall be
sent to the individuals noted below, or to such other individuals as hereafter
designated in writing:
TO THE DEBTORS:
Xx. 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
With a copy to
Pillsbury Xxxxxxxx Xxxx Xxxxxxx 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@xxxxxxxxxxxx.xxx
xxxxxxxx@xxxxxxxxxxxx.xxx
and
16
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Xxxxxxx St. Xxxxxxx Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
e-mail: xxxxxx@xxx.xxx
xxxxxxx@xxx.xxx
TO XXXXXX:
Xx. Xxxx Xxxxxx
Xx. 0 Xxxxx Xxxx
Xxxxxxxxx, Xxxxxx XX0 0XX
Xxxxxxx
Direct Dial: 000 00 0000 000 000
Fax: 000 00 0000 000 000
e-mail: xxxx.xxxxxx@xxxxxxxxxx.xx.xx
With a copy to
Xxxxx X. Xxxxx, Esq.
Xxxxx Danzig
Headquarters Plaza
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Direct Dial: (000) 000-0000
Fax: 000-000-0000
e-mail: xxxxxx@xxxxx.xxx
VI. NO ADMISSIONS BY THE PARTIES; RIGHTS OF THIRD PARTIES
A. Nothing contained herein is or shall be deemed to be: (1) an admission
by Xxxxxx that any of the Debtors or any other Person was or is entitled to any
insurance coverage under the Subject Policy, or as to the validity of any of the
positions that have been or could have been asserted by any of the Debtors; (2)
an admission by any of the Debtors as to the validity of any of the positions or
defenses to coverage that have been or could have been asserted by Xxxxxx; or
(3) an admission by any of the Debtors or Xxxxxx of any liability whatsoever
17
with respect to Asbestos Claims or other Claims. In entering into this
Agreement, no Party has waived or shall be deemed to have waived, modified, or
retracted any rights, obligations, privileges, or positions it has asserted or
might in the future assert in connection with any Claim, matter, bankruptcy
procedure or process, insurance policy, or Person outside the scope of this
Agreement.
B. Notwithstanding anything to the contrary herein, the releases in
Section IV above in no way impair any third party or direct claim or action by
any Person against Xxxxxx for any wrongful conduct allegedly committed by Xxxxxx
arising from Xxxxxx'x insurance of any manufacturer, supplier, distributor, or
user of asbestos or asbestos-containing products other than the Congoleum
Releasees' or defense or settlement of any asbestos claims against any
manufacturer, supplier, distributor, or user of asbestos or asbestos-containing
products other than the Congoleum Releasees'.
VII. CONFIDENTIALITY
The Parties agree, subject to any disclosure obligations imposed by law,
to hold confidential, and not to disclose to third parties, this Agreement or
its contents unless and until the Debtors file the Motion not under seal.
Notwithstanding anything to the contrary in this Section VII, any Party may
disclose this Agreement or its contents at any time (1) subject to an agreement
of confidentiality, to the Party's reinsurers, auditors, regulators, reinsurance
intermediaries, creditors, and lenders; (2) as required to obtain the Approval
Order or the Confirmation Order; (3) subject to an agreement of confidentiality,
by the Debtors to the Office of the United States Trustee, any Official
Committee, the FCR and their respective counsel; and/or (4) at any time after
the effective date of the Plan.
18
VIII. COOPERATION
X. Xxxxxx shall use its reasonable best efforts to comply with reasonable
requests from the Debtors or the Plan Trust for documents and other information
required by the Debtors or the Plan Trust in connection with any insurance
claims, arbitrations, or litigation related to the Settlement Amount, this
Agreement, or the Debtors' Asbestos Claims, including Xxxxxx'x claims and
underwriting files and billing and payment records with respect to the Debtors'
Asbestos Claims.
B. Each of the Debtors and the Plan Trust shall use their reasonable best
efforts to comply with reasonable requests from Xxxxxx for documents and other
information required by Xxxxxx in connection with any reinsurance claims,
arbitrations, or litigation relating to the Settlement Amount, this Agreement,
or the Debtors' Asbestos Claims.
C. For purposes of this Section VIII, "reasonable best efforts" shall not
include disclosure of information that is subject to a confidentiality agreement
or legal privilege.
IX. REPRESENTATIONS AND WARRANTIES
A. Each of the Debtors represents and warrants that it has full corporate
authority to enter this Agreement as a binding and legal obligation of such
Debtor, subject to approval by the Bankruptcy Court. The person signing this
Agreement on behalf of any of the Debtors represents and warrants that he or she
is authorized by such Debtor to execute this Agreement as a binding and legal
obligation of such Debtor, subject to approval by the Bankruptcy Court.
X. Xxxxxx represents and warrants that it has full corporate authority to
enter this Agreement as a binding and legal obligation of Xxxxxx. The person
signing this Agreement on behalf of Xxxxxx represents and warrants that he or
she is authorized by Xxxxxx to execute this Agreement as a binding and legal
obligation of Xxxxxx.
19
C. Each Party represents and warrants that, as of the Execution Date, it
is not aware of the existence of any insurance policies issued to any of the
Debtors by any of the Xxxxxx Releasees or subscribed to by any of the Xxxxxx
Releasees, other than the Subject Policy.
X. JURISDICTION
The Bankruptcy Court shall retain exclusive jurisdiction over any dispute
relating to this Agreement.
XI. NO PREJUDICE AND CONSTRUCTION OF AGREEMENT
This Agreement is the product of informed negotiations and involves
compromises of the Parties' previously stated legal positions. This Agreement is
without prejudice to positions taken by Xxxxxx with regard to other insureds or
by the Debtors with regard to other insurers. This Agreement is the jointly
drafted product of arm's-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 any other Party by reason of the identity of the
drafter.
XII. ENTIRE AGREEMENT AND TERM
A. This Agreement and the Approval Order express the entire agreement and
understanding between the Parties. Except as expressly set forth in this
Agreement, there are no representations, warranties, promises, or inducements,
whether oral, written, express or implied, that in any way affect or condition
the validity of this Agreement or alter its terms. If the facts or law related
to the subject matter of this Agreement are found hereafter to be other than is
20
now believed by any of the Parties, the Parties expressly accept and assume the
risk of such possible difference of fact or law and agree that this Agreement
nonetheless shall be and remain effective according to its terms.
B. Titles and captions contained in this Agreement are inserted only as a
matter of convenience and are for reference purposes only. Such titles and
captions are intended in no way to define, limit, expand, or describe the scope
of this Agreement or the intent of any provision hereof.
XIII. MODIFICATION
No change or modification of this Agreement shall be valid unless it is
made in writing and signed by the Parties hereto.
XIV. EXECUTION
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which, taken together, shall constitute one and
the same instrument. Each counterpart may be delivered by facsimile
transmission, and a faxed signature shall have the same force and effect as an
original signature.
XV. MISCELLANEOUS
A. Notwithstanding anything to the contrary herein, the Parties hereby
agree that no Party hereto shall have any liability to the other Parties for the
occurrence of any Termination Event or the failure of the Trigger Date to occur.
B. In the event that an asbestos reform xxxx becomes federal law by the
earlier of July 1, 2006, or the date that the Confirmation Order becomes a Final
Order, and such law (1) materially limits or controls the prosecution or payment
of Asbestos Claims in the state or federal courts or in any other forum; and (2)
permits direct assessments against insurers, Xxxxxx may, with notice to the
Debtors, seek Bankruptcy Court approval to eliminate or reduce its payment of
21
the Settlement Amount to protect Xxxxxx against making duplicative payments
under the Agreement and the aforementioned federal law. In the event that the
Bankruptcy Court finds that the above contingencies have been met, Xxxxxx shall
be entitled to entry of an order by the Bankruptcy Court eliminating or reducing
payment of the Settlement Amount, to the extent necessary to protect Xxxxxx
against making duplicative payments under the Agreement and the aforementioned
federal law. Nothing contained herein precludes or limits the right and ability
of any party in interest in the Chapter 11 Case from asserting that the
contingencies set forth in the first sentence of this Paragraph XV.B have not
been met or that any payment limitation or reduction is not necessary. The
preceding sentences are intended to address what is commonly understood to be
"asbestos reform" legislation and are not intended to encompass general tort
reform, asbestos medical criteria reform, class action reform, malpractice
reform, or tax reform legislation. Unless specifically addressed by order of the
Bankruptcy Court in furtherance of this Paragraph XV.B, nothing in this
Paragraph XV.B shall affect the obligations of the Parties under this Agreement.
C. If an asbestos reform xxxx becomes federal law, at the request of any
Party, the Parties shall meet and confer concerning the practical implementation
of this Paragraph XV.B in light of the asbestos-reform legislation.
D. The settlement negotiations leading up to this Agreement and all
related discussions and negotiations shall be deemed to fall within the
protection afforded to compromises and to offers to compromise by Rule 408 of
the Federal Rules of Evidence and any parallel state law provisions.
22
IN WITNESS WHEREOF, this Agreement, consisting of twenty-seven (27) pages,
including the signature page and one attachment, has been read and signed by the
duly authorized representatives of the Parties as of the dates set forth below.
Xxxxx 0, 0000
XXXXXXXXX CORPORATION
Debtor-in-Possession
By: /s/ Xxxxxx Xxxxx
----------------------
Name: Xxxxxx Xxxxx
Title CFO
CONGOLEUM SALES, INC.
Debtor-in-Possession
By: /s/ Xxxxxx Xxxxx
----------------------
Name: Xxxxxx Xxxxx
Title: VP
CONGOLEUM FISCAL, INC.
Debtor-in-Possession
By: /s/ Xxxxxx Xxxxx
----------------------
Name: Xxxxxx Xxxxx
Title: VP
March 8, 2006 XXXXXX INSURANCE LIMITED, FORMERLY
KNOWN AS TUREGUM INSURANCE COMPANY
By: /s/ Xxxxxxxx Xxxxxx
----------------------
Name: Xxxxxxxx Xxxxxx
Title: Director
23
EXHIBIT A
-------------------------------------------
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW JERSEY
-------------------------------------------
Caption in Compliance with D.N.J. LBR 9004-2(c)
Xxxx, Xxxxxxxxx & XxXxxx L.L.P.
Xxxxxx Plaza, 000 Xxxxxx Xxxxxx
Xxxx Xxx, XX 00000
(000) 000-0000
Xxxx X. Xxxxxxxxx (PH-2681)
Pillsbury Xxxxxxxx Xxxx Xxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Attorneys for Debtors and Debtors-In-Possession
-------------------------------------------
In re: Chapter 11
Case No. 03-51524 (KCF)
CONGOLEUM CORPORATION, et al., Jointly Administered
Debtors. Xxxxxxxxx Xxxxxxx X. Xxxxxxxx
-------------------------------------------
ORDER PURSUANT TO BANKRUPTCY RULE 9019 AUTHORIZING
AND APPROVING INSURANCE SETTLEMENT AGREEMENT
BETWEEN DEBTORS AND XXXXXX INSURANCE LIMITED
------------------------------------------------------------------
The relief set forth on the following pages, numbered two (2) through four
(4) is hereby ORDERED.
The Court has considered the "Motion for Order Pursuant to Bankruptcy Rule
9019 Authorizing and Approving Settlement Agreement Between Debtors and Xxxxxx
Insurance Limited" (the "Motion"), filed by Congoleum Corporation, Congoleum
Sales, Inc., and Congoleum Fiscal, Inc., the debtors and debtors-in-possession
herein (collectively, the "Debtors"), seeking approval, pursuant to Rules
2002(a)(3), 9014 and 9019 of the Federal Rules of Bankruptcy Procedure (the
"Bankruptcy Rules") and other applicable sections of the title 11 of the United
States Code, 11 U.S.C. xx.xx. 101 et seq. (the "Bankruptcy Code"), of that
certain Settlement Agreement and Release by and Between Congoleum Corporation
and Xxxxxx Insurance Limited, Formerly Known As Turegum Insurance Company, dated
as of _____________, 2006 (the "Settlement Agreement").(1)
The Court having found that due and proper notice of the Motion was given
to (a) the members of the Official Committees and each such committee's counsel;
(b) the FCR and the counsel for the FCR; (c) the Claimants' Counsel; (d) all
other Persons, that, as of the Execution Date, had filed a notice of appearance
or other demand for service of papers in the Chapter 11 Case; (e) the United
States Trustee; (f) the Collateral Trustee of the Congoleum Collateral Trust
established pursuant to a Collateral Trust Agreement dated April 17, 2003; (g)
American Biltrite, Inc.; (h) any other presently existing person who is actually
known to Congoleum Corporation as insureds under the Subject Policy; (i) counsel
to all known holders of Asbestos Claims as reflected in the claims filed in this
case, and claims submitted in connection with the Settlement Between Congoleum
Corporation and Various Asbestos Claimants; and (j) all known holders of
Asbestos Claims whose counsel is not included within the preceding clause who,
as of at least five (5) business days prior to the filing of the Motion, became
known through the filing of a proof of claim or otherwise.
----------
(1) Capitalized terms used in this Approval Order and not otherwise defined
herein shall have the meanings ascribed to such terms in the Settlement
Agreement.
2
Following notice and a hearing at which all interested parties were
given an opportunity to be heard, objections to the Motion, if any, have been
resolved by agreement or are overruled, and after due deliberation and
sufficient cause appearing therefore, it is hereby
ORDERED, ADJUDGED AND DECREED AS FOLLOWS:
1. The notice of the Motion constitutes due, sufficient and timely
notice of the Motion, the Hearing, and the Settlement Agreement.
2. The Motion is hereby granted and the Settlement Agreement is
hereby approved in its entirety.
3. Each of the Debtors is hereby authorized to enter into and
perform the Settlement Agreement; and to execute such documents and do such acts
as are necessary or desirable to carry out the transactions contemplated by the
Settlement Agreement.
4. This Order shall be binding upon, and the Settlement Agreement
shall inure to the benefit and constitute the valid and binding obligations of
the Plan Trust, without further order or action.
5. The Settlement Agreement and other related documents may be
modified, amended, or supplemented by the parties thereto, in a writing signed
by such parties in accordance with the terms thereof, without further order of
the Court, provided that (a) any such modification, amendment, or supplement is
not material and (b) to the extent practicable, notice of any modification,
amendment, or supplement should be delivered to (i) the Official Committees,
(ii) the FCR and (iii) the U.S. Trustee at least five (5) days prior to the
effective date of any such modification, amendment, or supplement.
3
6. The Court shall retain exclusive jurisdiction over any proceeding
that involves the validity, application, construction, modification or
termination of the Settlement Agreement and this Approval Order, and may make
such further orders with respect thereto as are proper and appropriate.
4
