Exhibit 99.4
SETTLEMENT AND POLICY BUYBACK AGREEMENT AND RELEASE
This
Settlement and Policy Buyback Agreement and Release ("Settlement
and
Buyback Agreement") is made by and among Congoleum Corporation,
individually and
on behalf of all of the Congoleum Entities; upon its creation, the
Plan Trust;
American Biltrite Inc., individually and on behalf of all of the
ABI Entities;
and Travelers Casualty and Surety Co., formerly known as The Aetna
Casualty and
Surety Company ("Travelers"), and St. Paul Fire and Marine
Insurance Company
("St. Paul"), individually and on behalf of all of the St. Paul
Travelers
Entities.
RECITALS
WHEREAS,
numerous asbestos-related Claims including, but not limited to
Asbestos Personal Injury Claims and Asbestos Property Damage
Claims, have been
asserted against certain of the Congoleum Entities; and
WHEREAS,
certain of the St. Paul Travelers Entities issued or allegedly
issued one or more of the Subject Policies; and
WHEREAS,
the Congoleum Entities assert that certain of the St. Paul
Travelers Entities are obligated to provide coverage under the
Subject Policies
with respect to asbestos-related Claims including Asbestos Personal
Injury
Claims and Asbestos Property Damage Claims; and
WHEREAS,
there is a dispute among certain of the Congoleum Entities and
certain of the St. Paul Travelers Entities regarding their
respective rights and
obligations with respect to insurance coverage for Claims including
Asbestos
Claims; and
WHEREAS,
Congoleum Corporation, Travelers and St. Paul 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") in which
Congoleum
Corporation has asserted claims against Travelers and St. Paul,
among other
insurers; and
WHEREAS,
on December 31, 2003, Congoleum Corporation, Congoleum Fiscal,
Inc. and Congoleum Sales, Inc. (collectively, the "Debtors") filed
petitions
pursuant to Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy
Court for the District of New Jersey (the "Bankruptcy Court"),
jointly
administered under Case No. 03-51524 (KCF) (collectively, the
"Chapter 11
Cases"); and
WHEREAS,
the Debtors continue to operate their businesses as debtors and
debtors-in-possession; and
WHEREAS,
numerous Claims including Asbestos Claims have been asserted
against certain of the Congoleum Entities and may be asserted in
the future, and
certain of the Congoleum Entities may contend that such Claims are
covered under
the Subject Policies; and
WHEREAS,
on March 17, 2006, the Debtors filed the Eighth Modified Joint
Plan of Reorganization; and
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WHEREAS,
Travelers and St. Paul have objected and continue to object to
the plans of reorganization proposed by the Debtors in the Chapter
11 Cases; and
WHEREAS,
the Parties now wish to enter into an agreement to settle the
outstanding disputes referred to above and to release the St. Paul
Travelers
Entities as set forth herein from any further obligations under the
Subject
Policies, as well as to effect the buyback of the Subject Policies
thereby
terminating all of the St. Paul Travelers Entities' respective
obligations
under, and the Congoleum Entities' respective rights in, the
Subject Policies;
NOW,
THEREFORE, in consideration of the promises and of the mutual
covenants contained herein, and intending to be legally bound
hereby, subject to
the satisfaction of all the conditions precedent as set forth in
Section II of
this Settlement and Buyback Agreement (where and when applicable),
the Parties
do hereby agree as follows:
I.
DEFINITIONS
The
following definitions apply to the capitalized terms herein
wherever
those terms appear in this Settlement and Buyback Agreement,
including the
prefatory paragraph, recitals, the Sections below and any exhibits
attached
hereto. Capitalized terms in the prefatory paragraph, recitals, and
in the
Sections below 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 Settlement and Buyback Agreement are given the
meanings
designated in the Eighth Modified Joint Plan of Reorganization as
of March 17,
2006. Moreover, each defined term, whether stated in the singular
or the plural,
shall include both the singular and the plural, and pronouns stated
in the
masculine, feminine or neuter gender shall include the masculine,
feminine and
the neuter gender. The word "including" means "including but not
limited to."
A. "ABI"
means American Biltrite Inc.
B. "ABI
Entities" means: (i) ABI; (ii) its respective present, direct
and
indirect, parents, subsidiaries and affiliates; (iii) the
respective past and
future, direct and indirect, parents, subsidiaries and affiliates
of the Persons
described in Sections I.B(i) and/or I.B(ii) only to the extent that
any of the
Persons described in Sections I.B(i) and/or I.B(ii) have the power
to give the
releases set forth in Section VI.C on behalf of the Persons
described in this
Section I.B(iii); (iv) the respective past, present and future,
direct and
indirect, associated corporations and/or entities of the Persons
described in
Sections I.B(i) through I.B(iii), inclusive, but only in their
capacity as such
and only to the extent that any of the Persons described in
Sections I.B(i)
and/or I.B(ii) have the power to give the releases set forth in
Section VI.C on
behalf of the Persons described in this Section I.B(iv); (v) the
direct and
indirect predecessors, successors and assigns of each of the
foregoing Persons
described in Sections I.B(i) through I.B(iv), inclusive, except, in
the case of
predecessors, only to the extent that any of the Persons described
in Sections
I.B(i) through I.B(iv), inclusive, have the power to give the
releases set forth
in Section VI.C on behalf of such predecessors; and (vi) the
respective
officers, directors, employees, shareholders, agents, principals,
attorneys and
representatives of the Persons described in Sections I.B(i) through
I.B(v),
inclusive, but only when acting in their capacity as such and only
to the extent
any of the Persons described in Sections I.B(i) through I.B(v),
inclusive, have
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the power to give the releases set forth in Section VI.C on behalf
of the
Persons described in this Section I.B(vi). Any Person who meets the
definition
set forth above shall be individually referred to as an "ABI
Entity." Other than
ABI and any other ABI Entity for which no Congoleum Entity has the
power to give
the releases set forth in Section VI, any Person who meets the
definition of
both "ABI Entity" and "Congoleum Entity," as such term is defined
in Section I.H
below, shall be treated for all purposes under the Settlement and
Buyback
Agreement as a "Congoleum Entity." ABI and any other ABI Entity for
which no
Congoleum Entity has the power to give the releases set forth in
Section VI
shall be treated only as "ABI Entities" and not as "Congoleum
Entities" under
this Settlement and Buyback Agreement.
C. "ACC"
means the Asbestos Claimants' Committee in the Chapter 11
Cases.
D.
"Approval Order" means an order of the Court, in the form of
Exhibit A
hereto with such changes, if any, to which the St. Paul Travelers
Entities will
have consented in writing, or such other substantially similar form
that does
not materially or adversely affect the rights of the St. Paul
Travelers Entities
under the Settlement and Buyback Agreement, and that: (i) approves
this
Settlement and Buyback Agreement and the compromise and settlement
memorialized
herein; and (ii) provides that this Settlement and Buyback
Agreement shall be
binding upon and inure to the benefit of the Parties and their
respective
successors and assigns, including the Reorganized Debtors and the
Plan Trust;
and (iii) provides that this Settlement and Buyback Agreement is an
Asbestos
Insurance Settlement Agreement.
E.
"Business Day" means any day other than a Saturday, Sunday or
other
"legal holiday" as defined in Federal Bankruptcy Rule 9006(a).
F. "Claim"
means:
(i) "Claim" as that term is defined in the Section 101(5) of
the
Bankruptcy
Code;
(ii) "Demand" as that term is defined in the Section 524(g)(5)
of
the
Bankruptcy Code; and/or
(iii) Any past, present or future, known or unknown, asserted
or
unasserted, foreseen or unforeseen, matured or unmatured, concealed
or
disclosed,
fixed or contingent, direct or indirect claim, 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, and whether in law, equity, admiralty, or otherwise,
and
whether
for economic loss, general damages, medical monitoring,
punitive
damages,
attorneys' fees or otherwise.
G.
"Confirmation Order" means an order or orders entered by the Court
in
the Chapter 11 Cases that:
(i) Confirms the Plan;
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(ii) Has the effect of providing that the Asbestos Channeling
Injunction
applies in full to the St. Paul Travelers Entities and the ABI
Entities
with respect to Plan Trust Asbestos Claims and Demands;
Asbestos
Claims and
Demands; Derivative Actions; and any other Claims which are
channeled
pursuant to the Asbestos Channeling Injunction.
(iii) Specifies that: (a) the St. Paul Travelers Entities are
Settling
Asbestos Insurance Companies or incorporates by reference the
schedule
referred to in Section II.B below; (b) any prerequisites to
permit the
designation of the St. Paul Travelers Entities as Settling
Asbestos
Insurance Companies under the terms of the Plan have been
satisfied;
and (c) Settling Asbestos Insurance Companies are entitled to
all of the
benefits of the Asbestos Channeling Injunction as Protected
Parties;
(iv) Provides that all of the Congoleum Entities' obligations
and
rights
under this Settlement and Buyback Agreement shall be binding on
and
inure to
the benefit of the Plan Trust and the Plan Trustee, and each of
the
foregoing shall become fully bound to all of the terms and
conditions
of this
Settlement and Buyback Agreement, including the releases in
Section
VI, and of the Approval Order without the need for further act
or
documentation of any kind (which may be accomplished by a provision
that
makes all
Asbestos Insurance Settlement Agreements, including this
Settlement
and Buyback Agreement, and related approval orders, including
the
Approval Order, binding upon and inure to the benefit of the
Plan
Trust and
the Plan Trustee); and
(v)
Specifies that the Congoleum Entities, the ABI Entities, the
FCR, the
Plan Trustee, the ACC, and/or the Claimants' Representative may
not seek
to terminate, reduce or limit the scope of the Asbestos
Channeling
Injunction or any other injunction with respect to any St. Paul
Travelers
Entities and any ABI Entities.
H.
"Congoleum Entities" means: (i) the Debtors; (ii) Congoleum
Corporation
as the parent of Congoleum Fiscal, Inc. and Congoleum Sales, Inc.;
(iii) the
Debtors' respective present, direct and indirect, subsidiaries and
affiliates;
(iv) the respective past and future, direct and indirect, parents,
subsidiaries
and affiliates of the Persons described in Sections I.H(i) through
I.H(iii),
inclusive, only to the extent that any of the Persons described in
Sections
I.H(i) through I.H(iii), inclusive, have the power to give the
releases set
forth in Section VI on behalf of the Persons described in this
Section I.H(iv);
(v) the respective past, present and future, direct and indirect,
associated
corporations and/or entities of the Persons described in Sections
I.H(i) through
I.H(iv), inclusive, but only in their capacity as such and only to
the extent
that any of the Persons described in Sections I.H(i) through
I.H(iv), inclusive,
have the power to give the releases set forth in Section VI on
behalf of the
Persons described in this Section I.H(v); (vi) any other insureds
under the
Subject Policies, only to the extent that the Persons described in
Sections
I.H(i) through I.H.(v), inclusive, have the power to give the
releases set forth
in Section VI on behalf of the Persons described in this Section
I.H(vi); (vii)
the direct and indirect predecessors, successors and assigns of
each of the
foregoing Persons described in Sections I.H(i) through I.H(vi),
inclusive,
except, in the case of predecessors, only to the extent that any of
the Persons
described in Sections I.H(i) through I.H(vi), inclusive, have the
power to give
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the releases set forth in Section VI on behalf of such
predecessors; and (viii)
the respective officers, directors, employees, shareholders,
agents, principals,
attorneys and representatives of the Persons described in Sections
I.H(i)
through I.H(vii), inclusive, but only when acting in their capacity
as such and
only to the extent that any of the Persons described in Section
I.H(i) through
I.H(vii), inclusive, have the power to give the releases set forth
in Section VI
on behalf of the Persons described in this Section I.H(viii). Any
Person who
meets the definition set forth above shall be individually referred
to as a
"Congoleum Entity." Notwithstanding anything in this Settlement and
Buyback
Agreement to the contrary, the term "Congoleum Entities" does not
include ABI or
any ABI Entity for which no Congoleum Entity has the power to give
the releases
set forth in Section VI.
I. "Court"
means the Bankruptcy Court or the United States District Court
for the District of New Jersey or other court of competent
jurisdiction.
J.
"Coverage Action" means the action pending in the Superior Court of
New
Jersey, Law Division, Middlesex County, captioned, Congoleum
Corporation v. ACE
American Insurance Company, et al., Docket No. MID-L-8908-01.
K.
"Execution Date" means the earliest date on which this Settlement
and
Buyback Agreement has been signed by all of the signatories hereto
as reflected
by the last dated signature entered on the signature page.
L. "FCR"
means the Futures Representative appointed pursuant to the
Bankruptcy Court's February 18, 2004 Order in the Chapter 11 Cases,
solely in
his capacity as such, together with his successors and assigns,
solely in their
respective capacities.
M. "Final
Order" means an order as to which the time to appeal, petition
for certiorari, or move for reargument or rehearing has expired and
as to which
no appeal, petition for certiorari, or other proceedings for
reargument or
rehearing shall then be pending or as to which any right to appeal,
to petition
for certiorari, to reargue, to rehear or to reconsider shall have
been waived in
writing by the Person 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 certiorari has been denied or from which
reargument,
rehearing or reconsideration was sought, and the time to take any
further
appeal, petition for certiorari, or move for reargument, rehearing
or
reconsideration shall have expired, and no such further appeal,
petition for
certiorari, or motion for reargument, rehearing or reconsideration
shall have
been filed.
N.
"Parties" means the Congoleum Entities, the ABI Entities, and the
St.
Paul Travelers Entities.
O.
"Person" means any natural or legal entity or person, including
an
individual, a corporation, a partnership, an association, a trust,
a joint
venture, a union, 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.
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P. "Plan"
means the Eighth Modified Joint Plan of Reorganization, filed
by
the Debtors on _March 17, 2006 in the Bankruptcy Court, as such
Plan may be
modified from time to time in accordance with the terms thereof,
provided,
however, that such modifications:
(i) Are consistent with the rights and benefits provided to the
St.
Paul
Travelers Entities under this Settlement and Buyback Agreement
and
with the
duties and obligations of, and releases provided by, the
Congoleum
Entities and the ABI Entities under this Settlement and Buyback
Agreement;
and
(ii) Do not otherwise have a material adverse effect on the
interests
of the St. Paul Travelers Entities under this Settlement and
Buyback
Agreement.
Q. "Plan
Effective Date" means the earlier of: (i) the "Effective Date"
as
that term is defined in the Plan; or (ii) the first Business Day
after the date
on which all of the conditions precedent to the effectiveness of
the Plan
specified in the Plan have been satisfied or waived, or, if a stay
of the
Confirmation Order is in effect on such date, the first Business
Day after the
expiration, dissolution, or lifting of such stay.
R.
"Settlement and Buyback Amount" means the sum of Twenty-Five
Million
U.S. Dollars ($25,000,000) in cash, certified or cashiers check, or
wire
transfer, at the option of Travelers.
S. "St.
Paul" means St. Paul Fire and Marine Insurance Company.
T. "St.
Paul Travelers Entities" means: (i) The St. Paul Travelers
Companies, Inc., Travelers, St. Paul, and their respective past,
present and
future, direct and indirect, parents, subsidiaries, affiliates and
associated
corporations and/or entities; (ii) the predecessors, successors and
assigns of
each of the foregoing Persons described in Section I.T(i), no
matter the degree
of removal from the Persons described in Section I.T(i) (which
terms shall
include any Person who assumes the liabilities of any of the
foregoing Persons
described in Section I.T(i) and (ii) with the approval of the
appropriate
insurance commissioner or other official); and (iii) the respective
officers,
directors, employees, shareholders, agents, principals, attorneys,
and
representatives of the Persons described in Sections I.T(i) and
I.T(ii), but
only when acting in their capacity as such. Any Person who meets
the definition
set forth above shall be individually referred to as a "St. Paul
Travelers
Entity."
U.
"Subject Policies" means all policies of insurance, whether the
policies are primary, umbrella, excess or otherwise, and whether
called
liability, first party, third party, property, environmental
impairment,
employer liability or otherwise and whether known or unknown,
issued by any St.
Paul Travelers Entity prior to the Execution Date: (i) to any
Congoleum Entity;
and/or (ii) under which any Congoleum Entity claims to be entitled
to insurance,
rights or benefits, except for the statutory portion of any
workers'
compensation policy. Notwithstanding the above, the Parties agree
that: (a)
Policy Nos. QK09000534, QK09000747, 06 XN 22205576, 0369JM0112,
OC06900058, and
MOC 0645B63A issued by one or more of the St. Paul Travelers
Entities to ABI
shall be deemed "Subject Policies" but only with respect to Claims
arising from,
relating to or involving asbestos-related Claims, including but not
limited to
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Plan Trust Asbestos Claims (recognizing that the Parties agree that
each of the
first three above-mentioned policies contains an asbestos exclusion
and that
each of the last three above-mentioned policies does not afford
liability
insurance coverage), and only with respect to the rights of a
Congoleum Entity
thereunder; and (b) with respect to policies issued by a St. Paul
Travelers
Entity to any ABI Entities or any other Person other than one of
the Congoleum
Entities, "Subject Policies" shall include only the rights of a
Congoleum Entity
thereunder, and shall not include the rights of any other Person,
including any
ABI Entity, thereunder. For the purposes of this Settlement and
Buyback
Agreement, the Parties agree that "Subject Policies" shall not
include: (x) any
policy of insurance issued by a Person that is not a St. Paul
Travelers Entity
as of the Execution Date that acquires, is merged into, or is
acquired by a St.
Paul Travelers Entity on or after the Execution Date; (y) any
policy of
insurance issued to a Person that was not a Congoleum Entity on or
before the
Execution Date, except to the extent that a Congoleum Entity had
rights
thereunder which arose on or before the Execution Date; and/or (z)
any policy of
insurance set forth in Exhibit C hereto.
V.
"Travelers" means Travelers Casualty and Surety Company, formerly
known
as The Aetna Casualty and Surety Company.
W.
"Trigger Date" means the date on which all of the conditions
precedent
set forth in Section II of this Settlement and Buyback Agreement
have occurred.
II. CONDITIONS
PRECEDENT
The
obligations of the St. Paul Travelers Entities set forth in
Section
III and the obligations of and releases by the Parties set forth in
any other
provision in this Settlement and Buyback Agreement made subject to
this Section
II are subject to and made expressly contingent upon the
satisfaction of each of
the following conditions precedent:
A. The
Approval Order shall have become a Final Order;
B. A
schedule shall have been filed with the Bankruptcy Court prior to
the
conclusion of the Confirmation Hearing, listing the St. Paul
Travelers Entities
as Settling Asbestos Insurance Companies and such schedule shall
not have been
amended to remove the St. Paul Travelers Entities from such
schedule;
C. If and
to the extent required under the terms of the Plan, any
necessary prerequisites to permit the designation of the St. Paul
Travelers
Entities as Settling Asbestos Insurance Companies, entitled to all
of the
benefits and protections of the Asbestos Channeling Injunction as
Protected
Parties, under the terms of the Plan have been satisfied;
D.
Congoleum shall have filed a modified Plan which provides
injunctive
relief under Section 105(a) as set forth in Section IV.B for Claims
that are not
related to asbestos but that arise out of or relate to the Subject
Policies or
the insuring relationship of the relevant St. Paul Travelers
Entities with the
relevant Congoleum Entities (the "105(a) Relief") in favor of the
St. Paul
Travelers Entities in form and substance acceptable to the St. Paul
Travelers
Entities, and shall use reasonable best efforts to obtain Court
approval of said
modified Plan. The requirement of reasonable best efforts shall be
deemed to be
satisfied if:
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(i) The Debtors affirmatively support the 105(a) Relief, brief
responses
to any objections to the 105(a) Relief on all appropriate
grounds
and advocate for, and defend against objections to, the 105(a)
Relief in
all hearings and other proceedings in which such relief is in
issue, all
in reasonable consultation with the St. Paul Travelers
Entities;
(ii) After the Debtors shall have complied with their
obligations
set forth
in subparagraph (i) above, the Court, including without
limitation, any appellate court of competent jurisdiction, declines
to
confirm
the Plan solely as a result of the 105(a) Relief, in which case
the
Debtors will not be obligated to appeal denial of confirmation if
the
only basis
for such denial was the inclusion of the 105(a) Relief;
(iii) After the Debtors shall have complied with their
obligations
set forth
in subparagraph (i) above, the Court, including without
limitation, any appellate court of competent jurisdiction,
determines to
stay the
effectiveness of the Plan or the Confirmation Order solely as a
result of
the 105(a) Relief, in which case the St. Paul Travelers
Entities
will not
oppose the removal of the 105(a) Relief from the Plan; and
(iv) The Court determines to deny confirmation on grounds in
addition
to the 105(a) Relief and if the Debtors, or any other party,
determine
to appeal denial of confirmation, the Debtors will include
denial of
the 105(a) Relief as one of the issues on appeal, or in
response
to the
appeal of any other party, and shall brief, argue and prosecute
the
appeal of
the denial of the 105(a) Relief in all levels of appeal and
further
review that the Debtors or such other party elect to pursue,
all
in
reasonable consultation with the St. Paul Travelers Entities.
E. The
Confirmation Order shall: (i) be in conformity with the
definition
of Confirmation Order in Section I.G above; (ii) be in form and
substance
reasonably acceptable to the St. Paul Travelers Entities and
otherwise
consistent with the terms of this Settlement and Buyback Agreement;
and (iii)
shall have become a Final Order;
F.
Congoleum: (i) shall have filed a modified Plan which both (a)
provides
the ABI Entities with the benefits and protections of the Asbestos
Channeling
Injunction as Protected Parties identical or equivalent to those
provided under
the Eighth Modified Joint Plan of Reorganization, which benefits
and
protections, if not identical to those found in the Eighth Modified
Joint Plan
of Reorganization, are in conformity with, and no less favorable to
the ABI
Entities than, those provided under the Eighth Modified Plan of
Reorganization
and are in form and substance acceptable to the St. Paul Travelers
Entities and
also (b) provides and/or clarifies that the ABI Entities are
entitled to the
benefits and protections of the Asbestos Channeling Injunction as
Protected
Parties with respect to Congoleum Derivative Actions, as that term
is defined in
Exhibit F, or in an equivalent definition in conformity with the
definition of
Congoleum Derivative Actions and which is acceptable in form and
substance to
the St. Paul Travelers Entities (Congoleum Derivative Actions and
their
equivalents being herein collectively defined as "Derivative
Actions"); (ii)
Congoleum and the ABI Entities shall use reasonable best efforts to
obtain entry
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of an order confirming such modified Plan which provides all of the
benefits and
protections described in this Section II. F(i) under the Asbestos
Channeling
Injunction to the ABI Entities; (iii) an order confirming such
modified plan
providing all such benefits and protections under this Section
II.F(i) to the
ABI Entities under the Asbestos Channeling Injunction shall have
become a Final
Order, which Final Order, as it pertains to such benefits and
protections, is in
conformity with this Section II.F(i) and is acceptable in form and
substance to
the St. Paul Travelers Entities and which Final Order cannot be
modified,
limited or terminated without the consent of the St. Paul Travelers
Entities;
and (iv) the Effective Date of such modified Plan as described in
this Section
II.F shall have occurred. For the avoidance of doubt, Congoleum
Derivative
Actions and Derivative Actions do not include Claims for, based on,
derivative
of, arising out of, or caused or allegedly caused (x) by exposure
to asbestos or
asbestos-containing products manufactured, supplied, distributed,
handled ,
fabricated, stored, sold, installed or removed by any ABI Entity
(and not by any
Congoleum Entity) or (y) by services, actions or operations
provided, completed,
or taken by any ABI Entity (and not by any Congoleum Entity) in
connection with
asbestos or asbestos-containing products manufactured, supplied,
distributed,
handled, fabricated, stored, sold, installed or removed by any ABI
Entity (and
not by any Congoleum Entity).
G. The
Plan Effective Date shall have occurred; and
H
Congoleum Corporation or the Plan Trust shall have notified the St.
Paul
Travelers Entities that all of the conditions precedent described
in Sections
II.A through II.G, inclusive, have occurred and in fact they have
occurred.
Travelers and St. Paul, at their sole option and in their sole
discretion, shall
have the right to waive the satisfaction of any or all of the
conditions
precedent described in Sections II.B through II.H, inclusive,
including any
subsection(s) thereof, by delivery of written notice thereof to
Congoleum
Corporation and ABI pursuant to Section XVI below, and any
condition so waived
shall be deemed irrevocably waived and satisfied for all purposes
of this
Settlement and Buyback Agreement.
III. PAYMENT
A.
Travelers shall pay the Settlement and Buyback Amount, on behalf of
the
St. Paul Travelers Entities, to the Plan Trust, or as otherwise
directed by the
Court consistent with the terms of this Settlement and Buyback
Agreement, on the
following payment schedule:
(i) Within thirty (30) calendar days following the Trigger
Date,
Travelers
shall pay, on behalf of the St. Paul Travelers Entities, Twelve
Million
Five Hundred Thousand Dollars ($12,500,000) (the "First Payment
Date");
and
(ii) One year after the First Payment Date, Travelers shall pay,
on
behalf of
the St. Paul Travelers Entities, the remaining Twelve Million
Five
Hundred Thousand Dollars ($12,500,000) of the Settlement and
Buyback
Amount.
9
<PAGE>
B. The
Parties agree that the payments made pursuant to this
Settlement
and Buyback Agreement are for Claims against the Congoleum
Entities, including
Asbestos Claims.
IV. LITIGATION
AND BANKRUPTCY OBLIGATIONS
A. No
later than five (5) Business Days following the Execution Date,
the
Debtors shall:
(i) File, and take all steps to pursue granting of, a motion
pursuant
to Federal Rule of Bankruptcy Procedure 9019 and Section 363 of
the
Bankruptcy Code, in a form that is reasonably acceptable to the
St.
Paul
Travelers Entities, seeking the Bankruptcy Court's entry of the
Approval
Order;
(ii) Serve the motion and notice of a hearing on such motion in
a
form,
manner and scope that is in compliance with all applicable
Bankruptcy
Rules upon: (a) the "Core Service List" and the "Master Service
List,"
each as defined in the Order Establishing Case Management and
Administrative Procedures, dated February 25, 2004, and the "Master
E-Mail
Service
List," as defined in the Order (1) Amending The Order
Establishing
Case
Management and Administrative Procedures Entered On February 25,
2004
And The
Order Establishing Procedures For Interim Compensation And
Reimbursement Of Expenses Of Professionals Entered On February 10,
2004
And (2)
Allowing Notice By E-Mail And Establishing Procedures Therefor,
dated
September 6, 2005; (b) the Claimants' Representative; (c) the
Office
of the
United States Trustee; (d) the FCR and counsel to the FCR; (e)
the
ACC's
members and its counsel; (f) parties who have filed a notice of
appearance
in these Chapter 11 Cases; (g) the Collateral Trustee (the
"Collateral Trustee") of the Congoleum Collateral Trust (the
"Collateral
Trust")
established pursuant to a Collateral Trust Agreement dated
April
16, 2003;
(h) ABI and counsel to ABI; (i) counsel to all known holders of
Asbestos
Claims as reflected in the proofs of claim filed in these
Chapter
11 Cases,
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 these Chapter
11
Cases; (j) all
known holders of Asbestos Claims whose counsel is not
included
within the preceding clause who, as of at least ten (10)
Business
Days prior
to the Hearing, became known through filing of a proof of
claim; (k)
the members of the bondholders' committee and counsel to such
committee
and (l) any notice in addition to that described in Sections
IV.A(i)(a)
through IV.A(i)(l), inclusive, in such other manner as the St.
Paul
Travelers Entities may reasonably direct, with any such
additional
service to
be at the cost of the St. Paul Travelers Entities; and
(iii) Seek a hearing on the motion no later than thirty (30)
days
following
the Execution Date, provided that they shall not be obligated
to
seek such
hearing on shortened notice.
10
<PAGE>
The Debtors shall use their reasonable best efforts to have the
Bankruptcy Court
enter the Approval Order as soon as reasonably possible. The St.
Paul Travelers
Entities shall support the Debtors' efforts to obtain such
approval.
B.
Following the Execution Date, the Debtors shall file modifications
to
the Plan, in a form reasonably acceptable to Travelers and St.
Paul, pursuant to
Section 1127 of the Bankruptcy Code, to include an injunction
pursuant to
Section 105(a) of the Bankruptcy Code that permanently enjoins all
holders of
Claims not relating to asbestos from asserting against the St. Paul
Travelers
Entities any such Claims, provided that they arise out of or relate
to the
Subject Policies or the insuring relationship of the relevant St.
Paul Travelers
Entities with the relevant Congoleum Entities, but such injunction
shall not
affect or modify the rights of Insured Persons under policies of
insurance
except to the extent released in Section VI. The term Insured
Persons in the
preceding sentence shall mean those Persons specifically identified
as named
insureds, insureds, additional insureds, additional named insureds,
persons
insured, assureds or those Persons otherwise insured by means of a
specific
policy provision or endorsement. The Debtors shall use their
reasonable best
efforts to obtain Bankruptcy Court approval of the Plan as so
modified to
incorporate such Section 105(a) injunctive relief in favor of the
St. Paul
Travelers Entities, and the St. Paul Travelers Entities shall
support the
efforts of the Debtors to obtain approval of such Section 105(a)
injunctive
relief.
C. As of
the Execution Date, the Parties shall file no further
discovery,
motions, objections and/or Claims against each other in the Chapter
11 Cases;
provided, however, that the St. Paul Travelers Entities shall have
the right to
file their own objections and to join in objections to confirmation
filed by
other parties, and to prosecute all such objections and oppose
confirmation of
the Plan as currently filed if the Approval Order has not been
entered by the
date when such action is required by the Court. The Parties fully
reserve all of
their rights pertaining to discovery, motions, objections and
Claims made prior
to the Execution Date in the Chapter 11 Cases until such time as
the Approval
Order becomes a Final Order. Nothing within this Section IV.C shall
prevent any
Party from participating in any hearing or proceeding in the
Chapter 11 Case.
Within three (3) Business Days of the Court's entry of the Approval
Order,
Travelers and St. Paul shall withdraw any and all objections they
have made to
the Plan and any and all pending discovery, motions, objections,
Claims, and any
appeals or notices of appeal that they have made in the Chapter 11
Cases, and
the St. Paul Travelers Entities shall not pursue any Claim against
the Debtors
in the Chapter 11 Cases. Within three (3) Business Days of the
Court's entry of
the Approval Order, the Congoleum Entities and the ABI Entities
shall withdraw
any and all pending discovery, Claims, motions and any appeal or
notices of
appeal that they have made in the Chapter 11 Cases to the extent
that such
pending discovery, Claims, motions and any appeal or notices of
appeal involve
the St. Paul Travelers Entities, and the Congoleum Entities and the
ABI Entities
shall not pursue any Claim against any of the St. Paul Travelers
Entities in the
Chapter 11 Cases. Upon the Court's entry of the Approval Order, the
St. Paul
Travelers Entities shall not object to or oppose confirmation of
the Plan and
shall not appeal the Confirmation Order. Subject to Section IX,
prior to the
Trigger Date, no provisions of the Plan or the Plan Documents,
findings of fact
in the Confirmation Order, conclusions of law in the Confirmation
Order, or
other rulings of the Court in the context of the proceedings on
confirmation of
the Plan shall be used by the Plan Trust or any other Person as
evidence in any
11
<PAGE>
way in any proceeding involving a St. Paul Travelers Entity, nor
shall they have
any evidentiary, res judicata, collateral estoppel or other
preclusive or other
effect against any of the St. Paul Travelers Entities in any
proceeding (the "No
Use/No Effect Restriction"); provided, however, that this No Use/No
Effect
Restriction shall not apply after the Trigger Date, again subject
to Section IX.
D. Prior
to the conclusion of the Confirmation Hearing, (i) the Debtors
shall have designated the St. Paul Travelers Entities as Settling
Asbestos
Insurance Companies on the schedule of Settling Asbestos Insurance
Companies
filed by the Debtors; and (ii) any necessary prerequisites under
the terms of
the Plan have been satisfied so as to permit the designation of the
St. Paul
Travelers Entities as Settling Asbestos Insurance Companies,
entitled to all of
the benefits and protections of the Asbestos Channeling Injunction
as Protected
Parties.
E. The
Congoleum Entities, the ABI Entities, and the Plan Trustee
shall
not seek to terminate, or reduce or limit the scope of the Asbestos
Channeling
Injunction, with respect to the St. Paul Travelers Entities after
the
Confirmation Order becomes a Final Order.
F. The
Congoleum Entities shall use their reasonable best efforts to
obtain in the Approval Order the protection of a sale free and
clear pursuant to
Section 363(f) of the Bankruptcy Code for the buyback of all of the
Debtors'
interests in the Subject Policies.
G. The Parties agree
that no Party will seek to reject this Settlement and
Buyback Agreement as an executory contract in the Chapter 11 Cases
or any other
bankruptcy case.
H. Within
three (3) Business Days of the Execution Date, Congoleum
Corporation, Travelers and St. Paul shall submit a Consent Order to
the court in
the Coverage Action seeking a dismissal without prejudice of all of
the Claims
each has asserted against the other in the Coverage Action. The
Consent Order
shall provide that, on the Trigger Date, such dismissals shall
convert, without
any need for further act or deed, to dismissals with prejudice. The
Consent
Order shall further provide that, in the event that the Settlement
and Buyback
Agreement becomes null and void pursuant to its terms, then any
Congoleum Entity
and any St. Paul Travelers Entity, to the extent it has the right
to do so, may
re-institute litigation against each other, in accordance with
Section V.B(viii)
below, and that neither the "Entire Controversy Doctrine" nor New
Jersey Rule
4:30A nor any analogous doctrine or rule shall bar any such
Congoleum Entity and
any such St. Paul Travelers Entity from asserting, in such
litigation, the same
or substantially similar Claims and/or defenses to those asserted
in the
Coverage Action. Any such Congoleum Entity or any such St. Paul
Travelers Entity
may also file and/or assert any Claims and/or defenses which have
arisen since
the trial of the Coverage Action began on August 2, 2005. Each
Party is to bear
its own fees and costs in the Coverage Action and in the Chapter 11
Cases.
Notwithstanding the above, nothing in this Section IV.H shall
affect the rights
of the ABI Entities.
V.
TERMINATION OF SETTLEMENT AND BUYBACK AGREEMENT
A. After
the Execution Date, this Settlement and Buyback Agreement shall
become null and void upon the occurrence of any of the following
contingencies:
12
<PAGE>
(i) The failure of the Coverage Court to enter the Consent
Order
described
in Section IV.H above;
(ii) The entry by the Court of an order confirming a Chapter 11
plan
of
reorganization for the Debtors other than the Plan;
(iii) The entry by the Court of an order that states that the
St.
Paul
Travelers Entities are not Settling Asbestos Insurance
Companies;
(iv) The entry of a Final Order denying approval of the
Settlement
and
Buyback Agreement;
(v) The entry of an order by the Court converting the Chapter
11
Cases into
Chapter 7 cases or dismissing the Chapter 11 Cases;
(vi) The entry of an order by the Court appointing a trustee or
an
examiner
possessing the rights, powers and duties reasonably and
substantially equivalent to those of a trustee in the Chapter 11
Cases as
described
in Section 1106(a) of the Bankruptcy Code; or
(vii) The proposal or filing of a plan of reorganization by the
Debtors
that: (a) is inconsistent with the rights and benefits provided
to
the St.
Paul Travelers Entities under this Settlement and Buyback
Agreement
and/or with the duties and obligations of, and releases
provided
by, the
Congoleum Entities under this Settlement and Buyback Agreement;
and/or (b)
otherwise has a material adverse effect on the interests of the
St. Paul
Travelers Entities under this Settlement and Buyback Agreement.
Travelers, in its sole option and in its sole discretion, shall
have the right
to waive, in writing, any of the contingencies set forth in
Sections V.A(i)
through V.A(vii), inclusive, by notice to the Persons described in
the notice
provisions in Section XVI below within thirty (30) Business Days of
the
occurrence of any such contingency(ies), and any such
contingency(ies) so waived
shall be deemed irrevocably waived and satisfied. If all such
contingencies are
so waived or are satisfied, then this Settlement and Buyback
Agreement shall
continue in full force and effect.
B.
Notwithstanding anything in this Settlement and Buyback Agreement
to
the contrary, in the event that this Settlement and Buyback
Agreement becomes
null and void pursuant to Section V.A above:
(i) The Settlement and Buyback Agreement, except for Sections
I,
IV.H, V,
IX, XII, XVI and XVII (which Sections shall remain in full
force
and
effect), shall be vitiated and shall be a nullity;
(ii) Travelers, on behalf of the St. Paul Travelers Entities,
shall
not be
obligated to pay the Settlement and Buyback Amount pursuant to
this
Settlement
and Buyback Agreement;
13
<PAGE>
(iii) None of the St. Paul Travelers Entities, none of the ABI
Entities,
and none of the Congoleum Entities shall be bound by the terms
of any
Approval Order;
(iv) None of the St. Paul Travelers Entities shall be designated
as,
and none
of the St. Paul Travelers Entities shall receive the benefits
or
protections of, a Settling Asbestos Insurance Company, and none of
the St.
Paul
Travelers Entities shall be entitled to benefit from any
injunctive
or related
benefit provided for in the Plan, Confirmation Order, or
otherwise
in the Chapter 11 Cases, including any injunction or benefit
provided
under the authority of Sections 105, 363, or 524(g) of the
Bankruptcy
Code;
(v) The St. Paul Travelers Entities, the ABI Entities, and the
Congoleum
Entities shall have all the rights, defenses and obligations
under or
with respect to any Subject Policies that they would have had
absent
this Settlement and Buyback Agreement;
(vi) Any otherwise applicable statutes of limitations or repose,
or
other
time-related limitation, shall be deemed to have been tolled for
the
period
from the Execution Date through the thirtieth day after receipt
of
notice by
any of the Parties that any of the contingencies listed in
Sections
V.A(i) through V.A(vii), inclusive, has/have occurred so that
the
Settlement
and Buyback Agreement becomes null and void, and no Party shall
assert or
rely on any time-related defense to any Claim by any St. Paul
Travelers
Entity, ABI Entity, or Congoleum Entity related to such period;
(vii) The releases set forth in Section VI below shall become
null
and void
ab initio;
(viii) Any Party who was a party in the Coverage Action may elect
to
re-file a
coverage action against any other party in the Coverage Action.
Such a new
coverage action shall be called the "New Coverage Action." All
discovery
taken in the Coverage Action or in relationship to any of the
Plan's
previous versions, and any and all evidence admitted, testimony
taken, and
rulings of the Court entered in the trial of the Coverage
Action
between August 2, 2005 and September 6, 2005 may be used in the
New
Coverage
Action. No rulings of the court, conclusions of law, or
findings
of fact
entered in the Coverage Action after September 7, 2005, shall
be
used as
evidence in any way in any proceeding involving a St. Paul
Travelers
Entity or Congoleum Entity or have any evidentiary, res
judicata,
collateral estoppel or preclusive or other effect against any
such St.
Paul Travelers Entity or Congoleum Entity in the New Coverage
Action.
The Parties agree that neither the "Entire Controversy
Doctrine"
of New
Jersey nor New Jersey Rule 4:30A nor any analogous doctrine or
rule
shall bar any
such Congoleum Entity and any such St. Paul Travelers Entity
from
asserting, in such litigation, the same or substantially
similar
Claims
and/or defenses to those asserted in the Coverage Action.
Additionally, any such St. Paul Travelers Entity or any such
Congoleum
Entity may
file and/or assert any Claims and/or defenses which have arisen
since the
date the trial of the Coverage Action began, on August 2, 2005.
In the
event of a New Coverage Action, the St. Paul Travelers Entities
shall have
the right to examine or cross-examine any witnesses designated
14
<PAGE>
by any of
the Parties in the New Coverage Action who were not examined or
cross-examined by Travelers and St. Paul prior to the closing of
the trial
in the
Coverage Action before any such testimony or evidence adduced
from
or
introduced through such witnesses can be used in any way in the
New
Coverage
Action by any Congoleum Entity. Notwithstanding the above,
nothing in
this Section V.B(viii) shall affect the rights of the ABI
Entities;
and
(ix) The St. Paul Travelers Entities may pursue any and all
objections, whether to confirmation of a Chapter 11 plan of
reorganization
for the
Congoleum Entities, or otherwise.
VI. BUYBACK AND
TERMINATION OF POLICY RIGHTS AND RELEASE
A.
Effective immediately upon the Execution Date, but subject to
satisfaction of the conditions precedent, as set forth in Section
II above, the
Congoleum Entities remise, release, acquit and forever discharge
the St. Paul
Travelers Entities from any Claims arising from, relating to or
involving the
Subject Policies, including, but not limited to (i) any Claims
arising from,
relating to or involving asbestos-related Claims, including, but
not limited to,
Plan Trust Asbestos Claims, and (ii) any Claims that were or could
have been
brought in the Coverage Action.
B. For the
avoidance of doubt, the Parties hereby confirm that the
releases granted by the Congoleum Entities to the St. Paul
Travelers Entities as
set forth in Section VI.A are intended to include and do include
releases from
any and all Claims that any Congoleum Entity ever had, now has or
may in the
future have against any of the St. Paul Travelers Entities arising
from or
related to what is commonly referred to as bad faith or insurer
misconduct and
which includes: (i) the insurance relationship between any St. Paul
Travelers
Entity and any Congoleum Entity and any obligations of any St. Paul
Travelers
Entity under or in connection with such relationship; (ii) the
obligations of
any St. Paul Travelers Entity to any Congoleum Entity as a result
of (a)
issuance of the Subject Policies, (b) the handling of Claims
against any
Congoleum Entity, (c) the defense or trial of Claims against any
Congoleum
Entity, or (d) the settlement of Claims against any Congoleum
Entity; (iii) any
and all acts or omissions by any St. Paul Travelers Entity in
connection with
Claims made against any Congoleum Entity; (iv) any and all Claims
arising from
or relating to loss prevention or engineering acts or omissions by
any St. Paul
Travelers Entity performed in connection with the insurance
relationship between
any St. Paul Travelers Entity and any Congoleum Entity; (v) any
Claims with
respect to payments made by any St. Paul Travelers Entity to or on
behalf of any
Congoleum Entity prior to the Execution Date; and (vi) any actual
or alleged bad
faith, fraud, unfair competition, breach of contract, breach of
duty of good
faith and fair dealing, violation of insurance statute or
regulation or
extra-contractual liability of any kind, type or description,
including any and
all Claims that arise under or from the laws, whether statutory,
common or
otherwise, of one or more of the fifty (50) states or any other
jurisdiction.
15
<PAGE>
C.
Effective immediately upon the Execution Date, but subject to
satisfaction of the conditions precedent, as set forth in Section
II above, the
ABI Entities remise, release, acquit and forever discharge the St.
Paul
Travelers Entities from any Claims arising from, relating to or
involving: (i)
the Subject Policies; (ii) Plan Trust Asbestos Claims; (iii)
Asbestos Claims;
(iv) Derivative Actions; and (v) any Claims arising from or related
to what is
commonly referred to as bad faith and includes Claims for unfair
and deceptive
acts, breach or violation of statutory duties, breach of fiduciary
duties, and
breach of the covenant of good faith and fair dealing solely to the
extent such
Claims arise out of or relate to the Claims released in Sections
VI.C(i) through
VI.C(iv), inclusive and are not reserved in the following
sentence.
Notwithstanding the foregoing sentence and any other provision of
this
Settlement and Buyback Agreement to the contrary, the ABI Entities
specifically
reserve, and do not remise, release, acquit or discharge the St.
Paul Travelers
Entities from, any and all Claims and rights arising from, relating
to or
involving: (x) any policies issued to any ABI Entities, including
but not
limited to, ABI, American Biltrite Rubber Co., Inc., ABI Rubber
Co., Inc., and
American Biltrite Rubber Corporation, except to the extent that
such policies
are Subject Policies; and (y) the Settlement Agreement by and
between
Continental Casualty Company, the Travelers Insurance Company, the
Travelers
Indemnity Company, Risk Enterprise Management, Ltd., The Aetna
Casualty and
Surety Company, Employers Insurance of Wausau, and American
Biltrite Inc., dated
February 1, 1996.
D.
Effective immediately upon the Execution Date, but subject to
satisfaction of the conditions precedent, as set forth in Section
II above, the
St. Paul Travelers Entities remise, release, acquit and forever
discharge the
Congoleum Entities from any Claims arising from, relating to or
involving the
Subject Policies, including, but not limited to: (i) any Claims
arising from,
relating to or involving asbestos-related Claims, including, but
not limited to,
Plan Trust Asbestos Claims; and (ii) any Claims that were or could
have been
brought in the Coverage Action.
E. For the
avoidance of doubt, the Parties hereby confirm that the
releases granted by the St. Paul Travelers Entities to the
Congoleum Entities as
set forth in Section VI.D are intended to include and do include
releases from
any and all Claims that any St. Paul Travelers Entity ever had, now
has or may
in the future have against any of the Congoleum Entities arising
from or related
to what is commonly referred to as reverse bad faith or
policyholder misconduct
and which includes: (i) the insurance relationship between any St.
Paul
Travelers Entity and any Congoleum Entity and any obligations of
any Congoleum
Entity under or in connection with such relationship; (ii) the
obligations of
any Congoleum Entity to any St. Paul Travelers Entity as a result
of (a)
issuance of the Subject Policies, (b) the handling of Claims
against any
Congoleum Entity, (c) the defense or trial of Claims against any
Congoleum
Entity, or (d) the settlement of Claims against any Congoleum
Entity; (iii) any
and all acts or omissions by any of the Congoleum Entities in
connection with
Claims made against any St. Paul Travelers Entity; and (iv) any
actual or
alleged bad faith, fraud, unfair competition, breach of contract,
breach of duty
of good faith and fair dealing, violation of insurance statute or
regulation or
extra-contractual liability of any kind, type or description,
including any and
all Claims that arise under or from the laws, whether statutory,
common or
otherwise, of one or more of the fifty (50) states or any other
jurisdiction.
16
<PAGE>
F.
Effective immediately upon the Execution Date, but subject to
satisfaction of the conditions precedent, as set forth in Section
II above, the
St. Paul Travelers Entities remise, release, acquit and forever
discharge the
ABI Entities from any Claims arising from, relating to or
involving: (i) the
Subject Policies; (ii) Plan Trust Asbestos Claims; (iii) Asbestos
Claims; (iv)
Derivative Actions; and (v) any Claims arising from or related to
what is
commonly referred to as reverse bad faith and includes Claims for
unfair and
deceptive acts, breach or violation of statutory duties, breach of
fiduciary
duties, and breach of the covenant of good faith and fair dealing
solely to the
extent such Claims arise out of or relate to the Claims released in
Sections
VI.F(i) through VI.F(iv), inclusive. Notwithstanding the foregoing
sentence and
any other provision of this Settlement and Buyback Agreement to the
contrary,
the St. Paul Travelers Entities specifically reserve, and do not
remise,
release, acquit or discharge the ABI Entities from any and all
Claims and rights
arising from, relating to or involving: (x) any policies issued to
any ABI
Entities, including, but not limited to ABI, American Biltrite
Rubber Co., Inc.,
ABI Rubber Co, Inc. and American Biltrite Rubber Corporation,
except to the
extent that such policies are Subject Policies; and (y) the
Settlement Agreement
by and between Continental Casualty Company, the Travelers
Insurance Company,
the Travelers Indemnity Company , Risk Enterprise Management, Ltd.,
The Aetna
Casualty and Surety Company, Employers Insurance of Wausau, and
American
Biltrite, Inc., dated February 1, 1996.
G. For the
avoidance of doubt, none of the releases set forth herein shall
release: (i) any of the Congoleum Entities', any of the ABI
Entities' or any of
the St. Paul Travelers Entities' respective obligations under this
Settlement
and Buyback Agreement, and the Parties hereby reserve and retain
all rights in
connection with the enforcement of this Settlement and Buyback
Agreement; (ii)
the Parties' rights and obligations under Policy Nos. QK09000534,
QK09000747, 06
XN 22205576, 0369JM0112, OC06900058, and MOC 0645B63A issued by one
or more St.
Paul Travelers Entities to ABI for Claims other than those arising
from,
relating to or involving asbestos-related Claims, including but not
limited to
Plan Trust Asbestos Claims (recognizing that the Parties agree that
each of the
first three such policies contains an exclusion for asbestos
coverage and that
the last three such policies do not afford liability insurance
coverage); and/or
(iii) any reinsurance policy, contract or certificate issued by any
St. Paul
Travelers Entity and/or any reinsurance treaty in which any St.
Paul Travelers
Entity participates.
H. In
consideration of the promises contained in this Settlement and
Buyback Agreement and consistent with the scope of the releases
given in Section
VI, effective immediately upon the Execution Date, but subject to
the
satisfaction of the conditions precedent, as set forth in Section
II above: (i)
the limits of liability of all of the Subject Policies are hereby
deemed by the
Parties to be fully extinguished for all Claims; (ii) any and all
purported
rights, duties, responsibilities and obligations of any St. Paul
Travelers
Entity alleged to have been created or that may be created by the
Subject
Policies and that have been released pursuant to Section VI are
hereby deemed
extinguished, terminated, canceled and otherwise fully satisfied;
and (iii) any
and all rights under the Subject Policies that have been released
pursuant to
Section VI shall be and are extinguished, terminated and voided,
subject to the
terms and conditions of this Settlement and Buyback Agreement. The
Subject
Policies are to be thereafter treated as null and void, and no
Person shall have
the right hereafter to present or tender any Claim released
pursuant to Section
VI under the Subject Policies regardless of whether the Claim has
been or could
17
<PAGE>
have been presented or tendered prior to the Trigger Date. In
addition, as of
the Trigger Date, any and all rights of the Debtors under the
Subject Policies
shall be and are deemed sold, transferred and conveyed to the St.
Paul Travelers
Entities pursuant to Section 363 of the Bankruptcy Code, free and
clear of all
Claims, liens, encumbrances and/or interests of any kind and/or
nature
whatsoever, to the extent permitted under Section 363(f) of the
Bankruptcy Code.
None of the St. Paul Travelers Entities shall have a duty or
obligation to
defend, pay defense costs, indemnify or otherwise to provide
defense, indemnity,
coverage, services or benefits of any kind whatsoever released
pursuant to
Section VI under the Subject Policies. For the avoidance of doubt,
this Section
VI.H shall not apply to those insurance policies issued to any ABI
Entities
insofar as they provide coverage to any ABI Entities.
I. The
Congoleum Entities agree and jointly represent that the
promises
and consideration given by any of the St. Paul Travelers Entities
pursuant to
this Settlement and Buyback Agreement, including, but not limited
to the payment
of the Settlement and Buyback Amount by Travelers on behalf of the
St. Paul
Travelers Entities pursuant to this Settlement and Buyback
Agreement, constitute
a fair and reasonable exchange for: (i) the releases granted to St.
Paul
Travelers Entities in this Settlement and Buyback Agreement; (ii)
the sale,
transfer, conveyance and buyback of the rights and interests of the
Congoleum
Entities in the Subject Policies; and (iii) the designation of St.
Paul
Travelers Entities as Settling Asbestos Insurance Companies,
entitled to the
rights and benefits afforded to Settling Asbestos Insurance
Companies under the
Plan and as set forth in the Approval Order and the Confirmation
Order,
including the rights and benefits of the Asbestos Channeling
Injunction and any
other Section 105(a) and 524(g) injunctions that may be granted
under the Plan,
Approval Order and the Confirmation Order with respect to all
Claims, including
all Plan Trust Asbestos Claims and Indirect Asbestos Claims.
J. Based
upon the representation and warranty of the St. Paul Travelers
Entities set forth in Section XI.C and the Parties' understanding
regarding the
corporate history of the Congoleum Entities, the Congoleum Entities
do not claim
to be entitled to insurance, rights or benefits, and, in fact, to
the extent
that they had or have any interest, expressly renounce any such
interest in the
policies and alleged policies set forth in Exhibit D hereto (the
"Listed
Policies") and agree that they have no right to assert any Claims
under such
Listed Policies and that there is no coverage available to them
under such
Listed Policies. For the avoidance of doubt, the Parties agree that
they do not
deem the Listed Policies to be Subject Policies because they agree
that the
Congoleum Entities do not have any interests or rights in the
Listed Policies.
If, after the Execution Date, a court of competent jurisdiction
were to rule,
after a final order on appeal, that a Congoleum Entity has an
interest or right
in a Listed Policy as defined above, or if, after the Execution
Date, new
information were to reveal that a Congoleum Entity has an interest
or right in a
Listed Policy as defined above, then such Listed Policy will be
deemed a Subject
Policy.
K. Except
to the extent set forth in Section VI.J, the release provisions
of this Section VI are not intended to release and shall not be
construed deemed
to effect a release of any Claims arising from, relating to or
involving (i) any
policy of insurance that is not a Subject Policy, (ii) that portion
of the
coverage of any policy of insurance that is otherwise a Subject
Policy, but as
to which such portion of coverage has been carved out of the
definition of
Subject Policy, or (iii) the rights of any insured Person under a
Subject Policy
that is not a Congoleum Entity except to the extent that the
Congoleum Entities
have the right and power to release such rights.
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L. Each
Party 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. Each Party 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,
relating to or
arising from such acts, omissions, matters, causes or things; or
(ii) restricts
or prohibits releasing of such claims. Without limitation, each
Party
acknowledges that it has been advised by its attorneys concerning,
and is
familiar with, the California Civil Code Section 1542. Section 1542
of the
California Civil Code provides as follows:
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.
Each Party expressly waives any and all rights under California
Civil Code
Section 1542 and under any other federal or state statute or law of
similar
effect. 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
Settlement and Buyback Agreement or the disputes resolved pursuant
hereto.
VII. DEFENSE OF THE
ASBESTOS CHANNELING INJUNCTION
A. In the
event that any Claim is brought against any St. Paul Travelers
Entity after the Trigger Date that is subject to the Asbestos
Channeling
Injunction ("SPT Channeling Injunction Claim"), the Plan Trust and
the Plan
Trustee will exercise their reasonable best efforts and take all
reasonably
necessary and appropriate steps to oppose any such SPT Channeling
Injunction
Claim by a Person claiming a right against any of the St. Paul
Travelers
Entities under the Subject Policies or otherwise in violation of
the Asbestos
Channeling Injunction.
B. Except
as provided hereafter, the Plan Trust shall bear all of the
costs, including attorneys' fees and settlements and judgments,
associated with
its opposing such SPT Channeling Injunction Claims. The St. Paul
Travelers
Entities shall have the right to consent to the selection of the
counsel to be
paid by the Plan Trust in any such action ("Designated Counsel"),
which consent
shall not be unreasonably withheld. The Plan Trust shall have no
obligation to
pay any internal costs of any of the St. Paul Travelers Entities
(including
costs associated with time or expense of employees of any of the
St. Paul
Travelers Entities) or fees or expenses associated with the St.
Paul Travelers
Entities' employment of outside counsel (other than Designated
Counsel). The
obligation of the Plan Trust to bear all of the costs, including
attorneys' fees
and settlements and judgments, associated with its opposing such
SPT Channeling
Injunction Claims (including the portions of any such Claim that is
a SPT
Channeling Injunction Claim and that also names as defendants
insurers other
than St. Paul Travelers Entities) and its opposing any other Claims
that are
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subject to the Asbestos Channeling Injunction (which opposition is
undertaken at
the request of the St. Paul Travelers Entities) shall not exceed
the total sum
of Three Million, Six Hundred Thousand U.S. Dollars
($3,600,000.00). In the
event the Plan Trustee or the Plan Trust fails to satisfy these
defense
obligations, the Plan Trust shall be liable to the St. Paul
Travelers Entities
for any damages that result from such breach, as may be determined
by a court of
competent jurisdiction. In any action brought by any of the St.
Paul Travelers
Entities against the Plan Trust or the Plan Trustee requesting that
the Plan
Trust or Plan Trustee meet its obligations under this Section VII,
each party
shall bear its own costs.
The St.
Paul Travelers Entities may enforce any judgment that any of
the
St. Paul Travelers Entities may obtain against the Plan Trust as a
result of any
breach of the obligations of the Plan Trust or the Plan Trustee as
is
contemplated in Section VII.B above, by any applicable enforcement
procedure.
Without limitation, the St. Paul Travelers Entities may enforce any
such
judgment awarded in their favor by offsetting the amount of such
judgment
against any future payment by Travelers on behalf of the St. Paul
Travelers
Entities under the Settlement and Buyback Agreement.
VIII. REDUCTION OF JUDGMENT
In the
event that any insurer of the Debtors either: (i) obtains a
final
binding award (whether by judgment, arbitration award, or other
judicial or
quasi-judicial proceeding) against a St. Paul Travelers Entity
after a contested
proceeding; or (ii) agrees to a settlement with a St. Paul
Travelers Entity with
the consent of the Debtors prior to the Plan Effective Date or with
the consent
of the Plan Trust following said Plan Effective Date (which consent
in either
case shall not be unreasonably withheld) entitling such insurer to
obtain a sum
certain from such St. Paul Travelers Entity as a result of such
insurer's claim
for contribution, subrogation, indemnification, reimbursement or
other similar
claim against such St. Paul Travelers Entity for such St. Paul
Travelers
Entity's alleged share or equitable share of the defense and/or
indemnity of a
Congoleum Entity, the Congoleum Entity shall voluntarily reduce or
return to
such insurer an amount of any such final award (whether by
judgment, arbitration
award or other judicial or quasi-judicial proceeding) or settlement
payment that
they obtained or may obtain from such other insurer for Claims
released pursuant
to this Settlement and Buyback Agreement, which amount shall be
sufficient to
eliminate the St. Paul Travelers Entity's obligation to satisfy the
award
against it.
IX. NO
ADMISSIONS BY THE PARTIES; RIGHTS OF THIRD PARTIES
A. Nothing
contained herein is or shall be deemed to be:
(i) An admission by the St. Paul Travelers Entities that any
Congoleum
Entity, ABI Entity, or any other Person was or is entitled to
any
insurance coverage under the Subject Policies, or as to the
validity
of any of
the positions that have been or could have been asserted by any
Congoleum
Entity or ABI Entity;
(ii) An
admission by the Congoleum Entities or the ABI Entities as
to the
validity of any of the positions or defenses to coverage that
have
been or
could have been asserted by St. Paul Travelers Entities with
respect to
the Subject Policies;
20
<PAGE>
(iii) An admission by any Party of any liability whatsoever
with
respect to
asbestos-related Claims including, but not limited to Plan
Trust
Asbestos Claims, Indirect Asbestos Claims or other Claims or
Demands;
(iv) A waiver by the St. Paul Travelers Entities of any
position
that they
may adopt or already have adopted concerning the
appropriateness
of any
bankruptcy process or procedure or any other issue or matter in
any
other case
or proceeding;
(v) An admission by any St. Paul Travelers Entity as to the
validity
of
anything with respect to the Plan, including, without limitation,
any
claim
allowance process or criteria, medical criteria, exposure
criteria,
disease
matrices, claim values, or trust distribution procedures that
have
been or
will be adopted, used or applied or any aspects of the Plan
that
may
implicate the rights and duties of the St. Paul Travelers Entities;
or
(vi) An admission by any Congoleum Entity or any St. Paul
Travelers
Entity as
to the manner in which the other may allocate the Settlement
and
Buyback
Amount for its own purposes between and among the Subject
Policies.
In entering into this Settlement and Buyback Agreement, no Party
has waived, nor
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, insurance policy or Person
outside the scope
of this Settlement and Buyback Agreement.
B. Except
as expressly provided in this Settlement and Buyback Agreement,
the Parties specifically disavow any intention to create rights in
third parties
under or in relation to this Settlement and Buyback Agreement.
C. The
Parties agree that no part of this Settlement and Buyback
Agreement
may be used in any proceeding as an admission by or evidence
against or for any
other purpose as evidence of the Parties' respective rights, duties
or
obligations under and in relation to any policy of insurance,
including the
Subject Policies; provided, however, that this restriction shall
not apply to
any proceeding in connection with or related to the interpretation,
validity,
enforcement or breach of this Settlement and Buyback Agreement. The
Parties
further agree that no part of this Settlement and Buyback Agreement
or the fact
that the St. Paul Travelers Entities have entered into it may be
used in any
proceeding as an admission by, evidence against, or for any other
purpose in an
action involving any of the St. Paul Travelers Entities pertaining
to the
validity of anything with respect to the Plan, including, without
limitation,
any claim allowance process or criteria, medical criteria, exposure
criteria,
disease matrices, claim values, or trust distribution procedures
that have been
or will be adopted, used or applied or any aspects of the Plan that
may
implicate the rights and duties of the St. Paul Travelers
Entities.
D. All
actions taken and statements made by the Parties or their
representatives relating to their participation in this Settlement
and Buyback
Agreement, including its formation and implementation, shall relate
to this
matter only and shall be without prejudice or value as precedent
and shall not
be taken as a standard by which other matters may be judged or
adjudicated.
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<PAGE>
E. The St.
Paul Travelers Entities shall not seek reimbursement of any
payments that Travelers made or is obligated to make under this
Agreement or the
Subject Policies, whether by way of a claim for contribution or
subrogation, or
otherwise, from any Person other than the St. Paul Travelers
Entities'
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 they
settle shall not constitute a breach of this Agreement.
Notwithstanding the
foregoing, subject to the effect of any injunction issued pursuant
to section
524(g) and/or section 105(a) of the Bankruptcy Code, the St. Paul
Travelers
Entities 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 to Debtors, whether by way of a claim for
contribution and/or
subrogation or otherwise, against the St. Paul Travelers Entities
in connection
with any Claims released hereunder.
X.
SUCCESSORS
This
Settlement and Buyback Agreement shall be binding upon and inure
to
the benefit of the Parties and their respective successors and
assigns,
including the reorganized Debtors and the Plan Trust.
XI.
REPRESENTATIONS AND WARRANTIES
A. Each
Party represents and warrants that it has full authority to
execute this Settlement and Buyback Agreement as its binding and
legal
obligation (subject, however, in the case of the Debtors, to the
requirement
that the Approval Order be entered). The person signing this
Settlement and
Buyback Agreement on behalf of each Party represents and warrants
he or she is
authorized to execute this Settlement and Buyback Agreement
(subject, however,
in the case of the Debtors, to the requirement that the Approval
Order be
entered) on behalf of all Persons for whom he or she signs.
B. The
Congoleum Entities and the St. Paul Travelers Entities each
represent and warrant, which representation and warranty is based
solely upon an
inquiry performed by their respective employees involved in the
Coverage Action
and in the negotiation, documentation and execution of this
Settlement and
Buyback Agreement and their counsel involved in the Coverage Action
and in the
negotiation, documentation and execution of this Settlement and
Buyback
Agreement, that they are not aware of any Subject Policies other
than the
insurance policies and alleged policies identified in Exhibit E
hereto.
C. The St.
Paul Travelers Entities each represent and warrant, which
representation and warranty is based solely upon their
understanding of the
corporate history of the Congoleum Entities and a review of the
available
documentation and other information regarding the policies and
alleged policies
identified in Exhibit D hereto performed by their employees
involved in the
22
<PAGE>
Coverage Action and in the negotiation, documentation and execution
of this
Settlement and Buyback Agreement and their counsel involved in the
Coverage
Action and in the negotiation, documentation and execution of this
Settlement
and Buyback Agreement, that the documentation and other information
available to
those Persons making such representations and warranties on behalf
of the St.
Paul Travelers Entities regarding the policies and alleged policies
identified
in Exhibit D hereto indicate, to the best of their knowledge and
belief, that
the policies and alleged policies identified in Exhibit D hereto:
(i) do not
identify any of the Congoleum Entities as insureds or otherwise
insure them; and
(ii) insure only Persons who, during the effective period of the
policies and
alleged policies, were not Congoleum Entities.
D. The St.
Paul Travelers Entities each warrant and represent to the best
of their knowledge and belief, which representation and warranty is
based solely
upon an inquiry performed by their respective employees involved in
the Coverage
Action and in the negotiation, docume
