Exhibit 99.10
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement And Release ("the Agreement") is entered into by
and between EASTCO INDUSTRIAL SAFETY CORP. (p/k/a/ "Eastco Industrial Equipment
Inc.", "Glofane Co. Inc." and "R & R Safety Equipment Corp." and a/k/a "Charkate
Glove and Specialty Company" and "Rite Glove Corp.") with offices at 130 West
10th Street, Huntington Station, New York 11746 (hereinafter collectively
referred to as "Eastco"), and MOUNT VERNON FIRE INSURANCE COMPANY, with offices
at 1030 Continental Drive, P.O. Box 1551, King of Prussia, Pennsylvania
19406-0951 ("Mount Vernon"), as of the date of the execution of this Agreement
by Eastco and Mount Vernon, and in accordance with the terms and conditions set
forth below.
WHEREAS, Eastco has alleged that Mount Vernon issued to it insurance
policies MCL-2-3184, purportedly in effect from April 1, 1968 to April 1, 1969,
and GLA 2562, purportedly in effect from September 12, 1969 to October 25, 1969,
allegedly covering products liability, including exposure to asbestos related
products liability, including exposure to asbestos related products (all such
policies of insurance which may have been issued by Mount Vernon to Eastco being
referred to herein, collectively, as "the Policies"); and
WHEREAS, Eastco has heretofore manufactured, distributed and/or sold
asbestos products ("Asbestos Products"); and
WHEREAS, Eastco has been made a party to certain actions, and may be party
in the future to additional actions, by numerous parties in a multitude of
lawsuits in different jurisdictions alleging personal injuries, ailments or
disease of any kind, or and/or death resulting therefrom, allegedly resulting in
whole or in part from exposure to Asbestos Products allegedly manufactured,
distributed or sold by Eastco (all such lawsuits being referred to herein,
collectively, as "Asbestos Actions") and
WHEREAS, Eastco has asserted that Mount Vernon is obligated under the
Policies to defend and indemnify it in connection with the Asbestos Actions;
WHEREAS, Mount Vernon has denied any obligation under the policies to
defend or indemnify Eastco in connection with the Asbestos Actions;
WHEREAS, disputes have arisen between Eastco and Mount Vernon pertaining to
Mount Vernon's alleged obligation to defend and indemnify Eastco in connection
with the Asbestos Actions;
WHEREAS, Eastco has commenced an action against Mount Vernon, entitled
Eastco Industrial Safety Corp., et al. v. Mount Vernon Fire Insurance Company,
Index No. 19903/87, currently pending in the Supreme Court of the State of New
York, County Court of Suffolk ("the Declaratory Judgment Action"), in which
Eastco seeks a declaration of its rights under the Policies in connection with
Asbestos Actions;
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WHEREAS, Mount Vernon has denied the allegations of Eastco's complaint in
the Declaratory Judgment Action;
WHEREAS, pursuant to a certain agreement previously made March 26, 1990
between Eastco and certain other insurance carriers (the "Defense and Indemnity
Agreement"), Eastco currently is bearing 12% of the "Legal Fees", and 17% of the
"Indemnity Costs", as those terms are defined in the Defense and Indemnity
Agreement, incurred with respect to pending and future Asbestos Actions, which
sums were derived from an allocation respecting the periods of time that Eastco
could not substantiate insurance coverage with such other insurance carriers
between 1968 and 1985;
WHEREAS, with respect to the Asbestos Actions, this Agreement is intended
by Eastco to take into account periods between 1968 and 1985 that Eastco could
not substantiate coverage under the Defense and Indemnity Agreement, so as to
reduce the amount of Legal Fees and Indemnity Costs that Eastco is required to
bear under the Defense and Indemnity Agreement;
WHEREAS, without prejudice to their respective rights and positions
concerning Eastco's claims for insurance coverage from Mount Vernon in
connection with the Asbestos Actions, and to avoid expensive and protracted
litigation, Eastco and Mount Vernon now desire to enter into this Agreement in
an effort to resolve their disputes, and to establish among Eastco and Mount
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Vernon an apportionment of the costs for defense and settlement currently being
borne by Eastco relating to the Asbestos Actions; and
WHEREAS, it is the purpose of this Agreement to establish the procedures to
be followed with respect to the administration, defense, payment and disposition
of the Asbestos Actions and to do so without altering, amending or waiving any
of the terms, conditions, exclusions or provisions of any applicable policy of
insurance and without waiving any rights against non-parties; and
WHEREAS, this Agreement is a result of a compromise accord relating to the
resolution of disputed claims, is a product of arms-length negotiations, is not
intended to nor shall it be construed as the admission of the existence of any
policy, or as a policy interpretation, and shall not be used to create, prove,
or interpret any obligations under any general liability or the liability
insurance policy, and shall not be deemed a participation by Mount Vernon in the
Defense and Indemnity Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein, the parties
hereby agree, as follows:
I. Defense and Settlement Expenses Incurred by Eastco Prior to the
Date of this Agreement
1. Upon due execution of this Agreement by the parties hereto,
Mount Vernon shall pay to Eastco the total sum of SIXTEEN THOUSAND FIVE HUNDRED
SIX and 42/100 dollars ($16,506.42)
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in full and final settlement of any and all claims which have been or which
hereafter may be asserted by Eastco against Mount Vernon arising from, related
to, or as a result of any defense or settlement expenses paid by Eastco prior to
the date of this agreement in connection with the Asbestos Actions. Eastco
accepts the foregoing amount in full and complete settlement of any obligations
on the part of Mount Vernon to or on behalf of Eastco with respect thereto under
the Policies.
II. Future Defense and Settlement Expenses
A. Policy MCL 2-3184
2. For purposes of this Agreement only, and without prejudice to
its position concerning Eastco's entitlement to insurance coverage under the
Policies, reimbursement by Mount Vernon for defense and settlement expenses
incurred on behalf of Eastco in pending and future Asbestos Action shall be
provided, on the terms set forth hereinbelow, in accordance only with insurance
policy MCL 2-3184.
3. Except as otherwise provided for herein, this Agreement shall
be applicable to all Asbestos Actions presently pending against Eastco and to
all Asbestos Actions instituted against Eastco subsequent to the date of this
Agreement and prior to the termination of this Agreement. Except as otherwise
specifically set forth herein, this Agreement shall not be applicable to any
Asbestos Actions heretofore terminated and settled as to Eastco prior to the
effective date of this Agreement ("Terminated Asbestos Actions").
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4. This Agreement shall not be applicable to any Asbestos Actions
instituted against Eastco where no exposure to Asbestos Products manufactured,
distributed or sold by Eastco is alleged during the period between April 1, 1968
to April 1, 1969.
5. This Agreement shall not apply to any actions instituted
against Eastco with respect to Worker's Compensation.
6. This Agreement shall be applicable to, and limited to,
Eastco's affiliates and subsidiaries identified as named or additional insureds
in policy MCL 2-3184.
B. Participation by Mount Vernon in Legal Fees
7. Except as otherwise set forth herein, following the execution
of this Agreement by the parties hereto Mount Vernon shall reimburse Eastco for
6.25% of the reasonable and necessary costs, including all attorney's fees and
other applicable costs and disbursements (all such fees and costs being referred
to herein, collectively, as "Legal Fees") thereafter incurred by or behalf of
Eastco in its defense of all Asbestos Actions to which this Agreement is
applicable (i.e., 52.08% of Eastco's 12% share of those defense costs). Other
than as specifically set forth in Paragraph "1" of this Agreement, nothing
contained in this Agreement shall be construed to obligate Mount Vernon to
reimburse Eastco, or any of its other insurance carriers, for any Legal Fees
incurred in the defense of Eastco in any matter not encompassed in this
Agreement.
C. Reporting Requirements
8. After service of all new summonses and complaints, Eastco
shall provide to Mount Vernon a copy of the
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letter of transmittal forwarding each new summons and complaint to defense
counsel, which letter shall include the name of the court where the Asbestos
Actions was instituted, the period of alleged asbestos exposure, and the
approximate number of first party plaintiffs and defendants named in such
Asbestos Action to the best information of Eastco. Upon request by Mount Vernon,
Eastco shall promptly forward to Mount Vernon a copy of any new summons and
complaint to Mount Vernon.
9. Eastco shall provide to Mount Vernon, on a timely basis,
copies of all reports received from counsel defending Eastco in the Asbestos
Actions pursuant to Paragraph "7" of this Agreement, setting forth defense and
indemnification costs for each Asbestos Action concluded.
D. Management of Asbestos Actions
10. All of the litigation involving the Asbestos Actions shall be
managed in the best interests of Eastco as to strategy. Settlement and
disposition of any of the Asbestos Actions may be made with the consent of
Eastco and the "Lead Carrier", as that term is defined in the Defense and
Indemnity Agreement, as such settlement shall be binding upon the parties hereto
providing that, as set forth more fully in the Defense and Indemnity Agreement,
no Asbestos Action, regardless of the number of plaintiffs, shall be settled for
an amount applicable to Eastco in excess of $100,00 per Asbestos Action or
$50,000 per
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plaintiff, whichever is greater, without the consent of Eastco, the Lease
Carrier and two other Insurance Companies. A husband and wife, including a legal
representative of such person, shall collectively be deemed one plaintiff.
E. Reimbursement For Settlement Expenses
11. Mount Vernon shall reimburse Eastco for 6.25% of the costs of
settlement of any Asbestos Action or any verdict or judgment (i.e., 36.76% of
Eastco's 17% share of those costs) rendered in connection therewith ("Indemnity
Costs") of all Asbestos Actions to which this Agreement is applicable.
12. Payment of indemnification costs by Mount Vernon shall be
credited towards the exhaustion of the sum of $100,000, which solely for
purposes of this Agreement shall be deemed to be the policy limits applicable to
policy MCL 2-3184. With respect to Eastco's payment of the sum of $16,506.42
pursuant to paragraph "1" of this Agreement, the sum of $1,036 from that payment
shall be treated as Indemnity Costs, and shall be credited toward the exhaustion
of the policy limits, leaving a remaining balance of $98,964. Upon exhaustion of
the above policy limits applicable to policy MCL 2-3184 through payment of
Indemnity Costs, Mount Vernon's obligations of defense and indemnity under the
Policies, and further payments of defense costs and indemnification costs under
this Agreement, shall terminate, subject to the reservation of rights as
otherwise provided in this Agreement, including specifically Article V.A.
hereof.
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III. Release by Eastco of Mount Vernon
A. Prior Claims
13. Upon Eastco's receipt from Mount Vernon of the foregoing sum
of $16,506.42, Eastco and all persons entities identified as named or additional
insureds under any policy of insurance which may have been issued to Eastco by
Mount Vernon shall fully release and forever discharge Mount Vernon, its
parents, subsidiaries, affiliated companies, and predecessor companies, and all
of the past and present officers, directors, employees, representatives and
attorneys of and from any and all claims, actions, causes of action, rights,
liabilities, obligations and demands of every kind and nature, known and
unknown, past present and future, including but not limited to any claims by
Eastco for damages, punitive damages, equitable relief, any claims to recover
expert or legal fees or other costs, or to recover for any alleged acts or
omissions, if any, constituting unfair defense or settlement practices,
insurance or other statutory code violations, bad faith, breach of fiduciary
duty fraud, malice or oppression arising out of any claims by or on behalf of
Eastco for insurance coverage from Mount Vernon in connection with any costs or
expenses which have been paid by Eastco to date relating to the Asbestos
Actions.
B. Future Claims
14. Upon the performance by Mount Vernon of its undertakings
pursuant to this Agreement to reimburse Eastco for Legal Fees and Indemnity
Costs with respect to pending and future Asbestos Actions, the release
provisions set forth in Paragraph
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15 of this Agreement shall be deemed to have been extended to encompass any
claims by Eastco relating to those actions.
C. Policy GLA 2562
15. In consideration of the undertakings by Mount Vernon under
this Agreement, Eastco hereby forever releases and discharges Mount Vernon, to
the same extent as set forth in Paragraph 13 of this Agreement, from any and all
claims of any nature under or arising from policy GLA 2562 and any other policy
of insurance, other than policy MCL 2-3184, which may have been issued to Eastco
by Mount Vernon. Eastco represents and warrants that it will not hereafter
tender to Mount Vernon, and will not hereafter assert in litigation against
Mount Vernon, any claims for insurance coverage under policy GLA 2562 in
connection with any Asbestos Actions or any terminated Asbestos Actions. Any
claims previously tendered by Eastco to Mount Vernon are hereby deemed
withdrawn.
IV. The Declaratory Judgment Action
16. Eastco hereby represents and warrants that upon this
Agreement becoming effective, Eastco shall execute and file with the court the
stipulations attached as Exhibit "A", dismissing without prejudice the claims
asserted by Eastco against Mount Vernon in the Declaratory Judgment Action
relating to policy MCL 2-3184, and dismissing with prejudice the claims at issue
therein relating to policy GLA 2562.
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V. General Provisions
A. Reservations of Rights
17. This Agreement does not alter the rights or obligations of
the parties hereto under policy MCL 2-3184. Other than as set forth in this
Agreement, all questions respecting insurance coverage or lack of insurance
coverage thereunder for Eastco, including but not limited to establishing the
existence or meaning of or the terms, conditions, aggregates, exclusions,
provisions or obligations of said policy, or respecting the breach or
fulfillment of any term, conditions, exclusions, provision or obligation
thereof, are expressly reserved as between the parties to this Agreement.
18. Other than as set forth in this Agreement, this Agreement or
performance hereunder is not intended to and shall not be construed to operate
as a waiver or modification of any of the terms, conditions, exclusions,
provision or obligations of any insurance policy that has been or may have been
issued to Eastco by Mount Vernon. All parties reserve all previously held
positions regarding the issuance, proper interpretation, and application of
terms, conditions, exclusions, provisions or obligations of any insurance policy
or binder that has been or may have been issued to Eastco.
19. The terms and provisions of this Agreement shall not preclude
or prohibit Eastco from any claims, rights or coverage it may have against its
excess insurance carriers.
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B. Terminations of Agreement
20. This Agreement may be terminated at any time in the future by
any party upon ninety (90) days notice as herein provided, and upon such
termination, this Agreement shall be terminated as to both parties. Notice of
termination shall be deemed given upon the date same is posted by the party
giving such notice.
21. Should any party file a notice to terminate their
participation in this Agreement pursuant to Paragraph 20 of this Agreement, each
party shall be liable to any indemnity and defense expenses incurred prior to
the effective date of the termination. Notwithstanding anything to the contrary
contained in this Agreement, notice of termination shall not be effective as to
any Asbestos Action that has already been placed on a trial calendar, unless at
the time notice is given, such trial date has a then-scheduled date more than
twelve (12) months from the date notice of termination is given. Notwithstanding
anything to the contrary herein, if Eastco is required to allocate or contribute
any portion of the 6.25% reimbursement being made under this Agreement to the
insurance carriers under the Defense and Indemnity Agreement or this Agreement
otherwise results in a reduction of the 83% Indemnity Costs and 88% Legal Fees
coverage for Eastco under the Defense and Indemnity Agreement, then Eastco may
terminate this Agreement immediately, and the termination shall be effective
regardless of whether any of the Asbestos Actions may at that time be on a trial
calendar.
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22. This Agreement shall not constitute a waiver of any rights
that a party may have against the other if this Agreement is terminated and
action is instituted by any party to determine the rights and obligations of any
party under policy MCL 2-3184 regarding the defense and indemnity of Eastco
thereunder for Asbestos Actions instituted against Eastco after the termination
of this Agreement.
C. Notices
23. All notices shall be in writing and sent by certified or
registered mail, return receipt requested to the party at its address above set
forth with a copy to all other parties. A party may change its address provided
it gives notice to all other parties in accordance with the terms of this
Agreement.
D. Governing Law
24. This Agreement shall be governed in all respects by the laws
of the State of New York.
E. Entire Agreement
25. This Agreement represents the entire agreement between the
parties and may not be modified except in writing signed by the party to be
charged.
F. Binding Agreement
26. This Agreement shall be binding upon the successors and
assigns of the parties hereto.
G. Agreement Drafted By Counsel
27. This Agreement was drafted by counsel for the signatories
hereto, and shall not create a presumption, or be
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construed against any signatories hereto, each signatory expressly waiving the
doctrine of contra proferentum.
H. Rights and Benefits
28. This Agreement is intended to confer rights and benefits only
on the signatories hereto, and is not intended to confer any right or benefit
upon any other person or entity.
I. Warranties
29. The parties represent and warrant:
a. That they are corporations duly organized and validly
existing in good standing under the laws of one or more of
the states of the United States;
b. That they have taken all necessary corporate and legal
actions to duly approve the making and performance of this
Agreement and that no further corporate or other approval is
necessary;
c. That the making and performance of this Agreement will not
violate any provision of law or of their respective Articles
of Incorporation or Bylaws;
d. That they have read this Agreement and know the contents
hereof, that the terms hereof are contractual and not by way
of recital, and that they have signed this Agreement of
their own free acts; and
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e. That in making this Agreement, they have obtained the advice
of legal counsel.
30. Eastco represents and warrants that it has taken all
necessary and corporate and legal actions to bind to the terms of this Agreement
all persons and entities identified as named or additional insureds under the
Policies.
J. Confidentiality
31. The parties acknowledge and agree that the terms and
conditions of this Agreement shall remain confidential and shall not be
disclosed to any other person or other insurer of Eastco except as may be
required by law, provided, however, that either party may disclose the fact and
existence of this Agreement to any other insurer(s) which may have an interest
in the matters which are the subject of this Agreement. Additionally, nothing
contained herein shall preclude Eastco from filing a copy of this Agreement with
the Securities and Exchange Commission ("the SEC") if deemed necessary by Eastco
to comply with applicable SEC regulations. This Agreement shall not be admitted
to evidence in any proceeding except as may be required to effectuate or enforce
the terms of this Agreement.
K. Execution in Counterparts
32. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which taken together shall be
deemed to be one and the same instrument. This Agreement, however, shall not be
binding on any party hereto until signed by both parties.
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IN WITNESS WHEREOF, the parties hereto have set their hands
and seals on the day first above written.
EASTCO INDUSTRIAL SAFETY CORP.
p/k/a "Eastco Industrial Equipment
Inc.", "Glofane Co. Inc.", and "R&R
Safety Equipment Corp." and a/k/a
"Charkate Glove and Specialty
Company" and "Rite Glove Corp."
By: /s/ Alan Densen
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Date: 5/8/91
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MOUNT VERNON FIRE INSURANCE CO.
By: /s/ Bernard Quinn, Vice President
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Date: May 2, 1991
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