1
GLOBAL SETTLEMENT AGREEMENT
AMONG
FIBREBOARD CORPORATION,
CONTINENTAL CASUALTY COMPANY,
CNA CASUALTY COMPANY OF CALIFORNIA,
COLUMBIA CASUALTY COMPANY,
PACIFIC INDEMNITY COMPANY,
AND
THE SETTLEMENT CLASS
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TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 1.1 Certain Defined Terms . . . . . . . . . . . . . . . . 8
ARTICLE 2 SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.1 Settlement . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2 Exclusive Rights Against the Trust . . . . . . . . . 8
SECTION 2.3 Payments . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.4 Additional Fibreboard Obligations . . . . . . . . . . 11
SECTION 2.5 Releases . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.6 Final Settlement of the Insurance Policies . . . . . 16
SECTION 2.7 Indemnity Obligation of the Trust after Global
Approval Judgment . . . . . . . . . . . . . . . . . . 17
SECTION 2.8 Fibreboard Corporation's Indemnity and Related
Obligations . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 3 ACTIONS TO BE TAKEN TO IMPLEMENT THIS AGREEMENT . . . . . . . . . 19
SECTION 3.1 Applications for Initial Court Orders, Settlement Class
Order, Defendant Class Order and Global Approval
Judgment . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.2 Effect of Class Certification . . . . . . . . . . . . 19
SECTION 3.3 Execution and Delivery of Escrow Instructions . . . . 20
ARTICLE 4 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.1 Termination . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 5 SETTLEMENT TRUST . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.1 Trust Agreement . . . . . . . . . . . . . . . . . . . 24
SECTION 5.2 Continuing Jurisdiction of the Court . . . . . . . . 24
SECTION 5.3 Preservation of Funds . . . . . . . . . . . . . . . . 25
ARTICLE 6 THIRD PARTY CLAIMS . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.1 Bar Orders . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.2 Judgment Reduction and Subrogation Rights . . . . . . 25
SECTION 6.3 Actions Necessary to Obtain Discharges and
Bar Orders . . . . . . . . . . . . . . . . . . . . . 26
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ARTICLE 7 INTERIM CLAIM LIQUIDATION PROCEDURES . . . . . . . . . . . . . . 28
SECTION 7.1 Interim Claims . . . . . . . . . . . . . . . . . . . 28
SECTION 7.2 Processing Interim Claims . . . . . . . . . . . . . . 29
SECTION 7.3 Payment of Exigent and Extreme Hardship Claims . . . 32
SECTION 7.4 Payment of Interim Claims Other Than Exigent Health
Claims and Extreme Hardship Claims . . . . . . . . . 32
SECTION 7.5 Sources of Payment of Liquidated Amounts for Interim
Claims . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.6 Miscellaneous Interim Claim Provisions . . . . . . . 35
ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.1 Designated or Qualified Settlement Fund . . . . . . . 36
SECTION 8.2 Counsel . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.3 No Oral Representations . . . . . . . . . . . . . . . 38
SECTION 8.4 Payment of Costs . . . . . . . . . . . . . . . . . . 38
SECTION 8.5 Modification and Waiver . . . . . . . . . . . . . . . 39
SECTION 8.6 Further Actions . . . . . . . . . . . . . . . . . . . 39
SECTION 8.7 Effectiveness of Agreement Notwithstanding
Developments . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.8 No Admission or Use . . . . . . . . . . . . . . . . . 40
SECTION 8.9 No Breach of Other Obligations . . . . . . . . . . . 41
SECTION 8.10 Third Party Beneficiaries . . . . . . . . . . . . . . 41
SECTION 8.11 Rights and Obligations of Fibreboard Corporation and
the Insurers Under the Settlement Agreement and
Related Agreements . . . . . . . . . . . . . . . . . 42
SECTION 8.12 Headings . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.13 Notices . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.14 Counterparts . . . . . . . . . . . . . . . . . . . . 47
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TEXAS
TYLER DIVISION
GERALD AHEARN, JAMES DENNIS and )
CHARLES W. JEEP, On Behalf of )
Themselves and Others Similarly Situated, )
)
Plaintiffs, )
)
vs. )
) Civil Action No. 6:93 cv 526
FIBREBOARD CORPORATION, )
)
Defendant, )
)
CONTINENTAL CASUALTY COMPANY )
)
and )
)
PACIFIC INDEMNITY COMPANY, )
)
Intervenors. )
)
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GLOBAL SETTLEMENT AGREEMENT
This Agreement is made and entered into as of August 27, 1993, by
and among the Representative plaintiffs as representatives of the Settlement
Class, acting by and through Class Counsel; Fibreboard Corporation, a Delaware
corporation; Continental Casualty Company, an Illinois corporation; CNA
Casualty Company of California, a California corporation; Columbia Casualty
Company, an Illinois corporation; and Pacific Indemnity Company, a California
corporation, together the "Parties."
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RECITALS
A. The Representative Plaintiffs have filed a class action
complaint in the Class Action on behalf of the Settlement Class against
Fibreboard Corporation in the Global Court, and the Court has provisionally
certified that class under Rule 23(b)(1)(B) of the Federal Rules of Civil
Procedure for settlement purposes only. Continental and Pacific have been
allowed to intervene as parties to the Class Action.
B. For more than fifteen years, thousands of individuals exposed
to asbestos or asbestos-containing products have filed lawsuits alleging
personal injury and damage in the state and federal courts against Fibreboard
Corporation and against many other defendants.
C. These lawsuits have resulted in extensive discovery concerning
the potential liability of Fibreboard Corporation and other defendants, as well
as full consideration of the legal and factual bases, including medical issues,
underlying each individual asbestos plaintiff's personal injury lawsuit.
D. The vast majority of the asbestos personal injury lawsuits
brought against Fibreboard Corporation and others in the past fifteen years
have been settled without trial, although a small percentage have been tried to
verdict, with plaintiffs prevailing in some cases and Fibreboard Corporation
and other defendants prevailing in other cases.
E. Despite significant success in reducing litigation costs
through a variety of mechanisms, plaintiffs and defendants have spent, and
continue to spend,
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enormous resources contesting both liability and damages, allocating
responsibility among the parties, and litigating issues of insurance coverage.
F. Continental, CNA Casualty, Columbia and Pacific issued certain
Insurance Policies to Fibreboard.
G. Fibreboard Corporation and certain of the Insurers have been
and are engaged in litigation in several actions involving disputed questions
of insurance coverage, the first of which was filed in 1979 in the Superior
Court of the State of California in and for the City and County of San
Francisco entitled Fireman's Fund Insurance Company v. Fibreboard Corporation
et al., No. 753885, and is an included action in the Coverage Case.
H. In the Coverage Case, Fibreboard Corporation contends that
certain of the Insurers are obligated to defend and indemnify Fibreboard
Corporation against certain of Fibreboard Corporation's liabilities for claims
for asbestos personal injury or death and for related claims. These Insurers
contend that they have no further obligation to defend or indemnify Fibreboard
Corporation for any such claims. A judgment in favor of Fibreboard Corporation
was rendered by Judge Ira Brown in the Coverage Case on January 24, 1990, and
that judgment is currently on appeal. The Parties' contentions are, inter alia,
set forth in the pleadings in the Coverage Case and in the briefs before the
Court of Appeal.
I. In addition to the tens of thousands of claims for asbestos
personal injury or death that have been filed and resolved against Fibreboard
Corporation and other defendants in jurisdictions throughout the United States,
tens of thousands of filed claims remain pending and thousands more are
expected to be
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filed in the future. Litigating the asbestos-related personal injury lawsuits
is depleting Fibreboard Corporation's resources, including insurance resources,
available to compensate claimants. Absent substantial insurance resources,
Fibreboard Corporation could not satisfy the claims for asbestos personal
injury pending against it.
J. The expenditures necessary to process and resolve asbestos
lawsuits have contributed to more than ten major asbestos defendants filing for
bankruptcy reorganization. Because some of these defendants represent a
significant portion of the traditional liability share for asbestos personal
injury cases, and many jurisdictions apply the principle of joint and several
liability, these bankruptcy filings have increased costs substantially, caused
significant delays to plaintiffs and created financial pressures on the
remaining defendants.
K. Continental and Fibreboard Corporation entered into an
agreement, dated April 9, 1993, pursuant to which Continental and Fibreboard
Corporation agreed, among other things, upon terms and conditions set forth
therein, to use their best efforts jointly to negotiate and finalize a global
class action settlement with personal injury claimants, and Continental agreed,
whether or not a global settlement was reached, to pay certain defense and
other costs of certain asbestos-related claims on an interim basis.
L. On or about August 22, 1993 and August 29, 1993, Continental
and Pacific entered into agreements, which agreements have been superseded by
the Continental-Pacific Agreement, dated as of October 12, 1993, whereby
Continental
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and Pacific settled the dispute between them and agreed upon terms for the
sharing of liabilities of each of them with respect to certain asbestos-related
claims.
M. Fibreboard Corporation, Continental, CNA Casualty, Columbia
and Pacific entered into the Settlement Agreement, dated October 12, 1993,
pursuant to which they agreed, among other things, to settle and compromise all
claims and potential claims against the Insurers under the Insurance Policies.
N. Fibreboard Corporation has invested substantial sums in
pursuing its insurance coverage for certain asbestos-related personal injury
claims asserted against Fibreboard Corporation. Although Fibreboard Corporation
has been successful in this litigation to date, it is still subject to risks
and uncertainties. These include the risks associated with the Coverage Case
and the continuing effect on Fibreboard Corporation's corporate operations
created by asbestos-related personal injury claims and Fibreboard Corporation's
unresolved insurance coverage with respect thereto. The Settlement Class
Members are also subject to the risks associated with the Coverage Case since
their ability to collect upon any judgments they may obtain against Fibreboard
Corporation is largely dependent upon the existence and extent of Fibreboard
Corporation's insurance coverage. Continental and Pacific are similarly
subjected to the risks and uncertainties presented by the Coverage Case and the
potential liabilities Continental and Pacific may have with respect to
asbestos-related personal injury claims. Absent this Agreement, the results in
the Coverage Case likely would be severely prejudicial to either Continental
and Pacific, on the one hand, or Fibreboard Corporation and the Settlement
Class Members, on the other hand.
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O. Counsel for the Representative Plaintiffs each has a decade or
more of experience in the litigation of asbestos-related personal injury
cases. They have conducted a thorough investigation into the law and facts
relating to matters set forth in the class action complaint.
P. In light of the uncertainties associated with the pending,
unresolved issues enumerated above, there are substantial risks that
adjudications with respect to certain asbestos-related personal injury claims
by Settlement Class Members will, as a practical matter, be dispositive of the
claims and interests of certain other Settlement Class Members not yet
adjudicated or will substantially impair or impede the ability of such other
Settlement Class Members to protect their interests.
Q. The primary purpose of this Agreement is to create a fund to
compensate the Settlement Class Members, free of the risks of the pending
Coverage Case litigation between Fibreboard Corporation and the Insurers, and
to apply the fund thus created to an equitable settlement of the claims of the
Settlement Class Members. The mechanism for accomplishing this purpose is
creation of the Trust, to which the claims of all Settlement Class Members
against Fibreboard Corporation or the Insurers shall be directed.
R. The settlement contemplated by this Agreement would provide a
fair, flexible, speedy, cost-effective and assured method of compensating
claimants who have been exposed to asbestos or asbestos-containing products for
which Fibreboard Corporation may bear legal liability and who have contracted
or will in the future contract an asbestos-related conditions. Thus, this
Agreement provides
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considerable benefit to the Settlement Class, while avoiding costly litigation
of difficult and contentious issues.
S. Based on extensive analysis of the law and facts at issue in
the Class Action, the other factors and considerations enumerated above
concerning asbestos litigation, and the fair, flexible, speedy, cost-effective
and assured procedures set forth in this Agreement and its exhibits for
compensating the Settlement Class, each Party has determined that settlement on
the terms set forth below would be fair, adequate and reasonable, and thus in
its best interests.
T. Third Party Claims are litigated infrequently in asbestos
litigation. The vast majority of asbestos personal injury, death and related
cases are settled before trial. In those cases where trials result in judgments
against nonsettling defendants, the law in most jurisdictions protects settling
defendants against claims for contribution by judgement debtors. Nevertheless,
because the potential for Third Party Claims would remain, absent provision for
them, this Agreement sets forth a fair, flexible, speedy, cost-effective and
assured procedure for resolving Third Party Claims.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the Parties hereby agree as follows:
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ARTICLE 1
DEFINITIONS
SECTION 1.1 Certain Defined Terms.
Capitalized terms used herein and not defined herein shall have
the definitions for such terms set forth in the Glossary annexed as Exhibit A
hereto and incorporated herein.
ARTICLE 2
SETTLEMENT
SECTION 2.1 Settlement.
Effective upon Global Approval Judgment, Representative
Plaintiffs, on their own behalf and on behalf of all Settlement Class Members,
hereby compromise and settle, finally and fully, all of the Class Member Claims
with Fibreboard Corporation, Continental, CNA Casualty, Columbia and Pacific
on the terms and conditions set forth herein; provided, however, that nothing
in this Agreement or in any exhibit hereto shall discharge the Insurers from
liability predicated on policies other than the Insurance Policies.
SECTION 2.2 Exclusive Rights Against the Trust.
A. Effective upon Global Approval Judgment, all Class Member
Claims are finally and fully settled by this Agreement, and none of such claims
or any Third Party Claim shall be prosecuted in any way against any of the
Fibreboard, Continental or Pacific Releasees. All Class Member Claims, except
claims for punitive or exemplary damages (which are dismissed and shall not be
enforceable), are hereby directed to the Trust for disposition pursuant to the
Trust Agreement and
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Trust Distribution Process. Third Party Claims shall be treated as provided in
Article 6 of this Agreement. The Court shall retain jurisdiction over this
Agreement and shall use its equitable powers to enforce this Section.
B. The claims of Persons providing workers compensation
benefits to Settlement Class Members shall be directed to the Trust, instead of
Fibreboard Corporation or the Insurers, and disposed of pursuant to the Trust
Agreement and the Trust Distribution Process. Such Persons providing workers
compensation benefits shall have existing remedies, whether by way of lien
rights against a Settlement Class Member's Claim against the Trust,
subrogation, direct action, or otherwise, against the Trust (instead of
Fibreboard Corporation or the Insurers), subject only to the provisions of the
Trust Agreement and Trust Distribution Process. Only payment of funds pursuant
to a Settlement Class Member's individual settlement with the Trust, and not
this Agreement (or the resulting Global Approval Judgment, dismissal and
release), shall trigger the notice, approval and forfeiture provisions of the
Longshore and Harbor Workers Compensation Act (33 USC Section 933) and other
similar state and federal workers compensation provisions.
SECTION 2.3 Payments.
A. After execution of this Agreement, Continental and Pacific
shall (1) pay, on December 30, 1993, an aggregate amount of $1,525,000,000
into an escrow account (the "Escrow Fund") and (2) pay the class notice costs,
court costs and other incidental expenses associated with obtaining Global
Approval Judgment and Settlement Agreement Approval Judgment. Of the foregoing
amounts, Continental shall pay 64.71% and Pacific shall pay 35.29%. Such
payment
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obligations of Continental and Pacific shall be several and not joint. The
Escrow Fund shall be held in the manner provided in the Escrow Agreement that
is substantially in the form of Exhibit D to this Agreement.
B. Upon Global Approval Judgment:
(1) The amount in the Escrow Fund shall be transferred to the
Trust.
(2) Fibreboard Corporation shall pay $10,000,000 into the
Trust, plus simple interest at the rate of 3.085% from
August 27, 1993; provided that, with respect to interest
owed on the sum of $9,892,223 (of the $10,000,000 referred
to above) from September 23, 1993, Fibreboard
Corporation's obligation shall be fully discharged and
satisfied by delivery of an assignment (in the form
attached hereto as Exhibit E) from Fibreboard Corporation
to the Trust of Fibreboard Corporation's rights against
Home Insurance Company to payment of such interest and to
damages arising from bad faith or other tortious conduct
for failure to pay the $9,892,223 in a timely fashion and
to pay such interest. Before Global Approval Judgment
Fibreboard Corporation will pay the costs of its exercise
of reasonable diligence in cooperation with Class Counsel
in pursuing such assigned claims on its own behalf and on
behalf of the Settlement Class. After Global Approval
Judgment Fibreboard will pay the reasonable costs of
pursuing such assigned claims.
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(3) Continental shall pay 64.71% and Pacific shall pay 35.29%
of (i) the fees of Class Counsel as determined and
approved by the Court up to a maximum of 3% of the sum
set forth in Section 2.3(A) and (ii) the reasonable
expenses of Class Counsel as determined and approved by
the Court. The payment obligations of Continental and
Pacific under this subsection (B)(3) shall be several
and not joint.
SECTION 2.4 Additional Fibreboard Obligations.
A. Fibreboard Corporation shall provide for intake,
maintenance and processing (but not evaluation) of Class Member Claims for a
period of five years from August 27, 1993 or one year from Global Approval
Judgment, whichever occurs later (unless the obligation is earlier terminated,
at the election of the Trustees). The Parties anticipate that Fibreboard
Corporation and the Trust will subsequently refine the scope of Fibreboard
Corporation's obligation under this paragraph.
B. At the end of the period referred to in subsection (A)
above, Fibreboard Corporation shall transfer without charge the data and (to
the extent transferrable) software with respect to its case management system
(including a perpetual, non-exclusive license to use the case management system
software exclusively for the purpose of processing Class Member Claims and
Third Party Claims), but not including equipment or other hard assets
associated therewith, to the Trust. Thereafter, Fibreboard Corporation shall
have no further responsibility with respect to Class Member and Third Party
Claims. The Trust shall allow
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Trustors access to and use of the case management system thereafter for use in
connection with Settled Claims and Unsettled Claims. The Trust shall establish
any necessary procedures to be followed by the Trustors to facilitate this
arrangement and shall be reimbursed for the actual cost of providing
information or data to the Trustors. The Trust shall not disclose any
information it may obtain relating to Settled Claims or Unsettled Claims except
as required by court order. The Trust shall promptly advise the Trustors of any
request for such information and afford them an opportunity to object to
disclosure of any such information.
C. Fibreboard Corporation shall cooperate by providing
existing information and evidence to the Trust as is reasonably necessary to
evaluate, defend and resolve Class Member Claims and Third Party Claims,
including, but not limited to, information and evidence concerning Fibreboard's
products and their distribution, the history of the conduct of Fibreboard's
business, Fibreboard's defenses and the history of Fibreboard's settlements in
asbestos-related personal injury lawsuits. All such information and evidence
shall be used only for such purposes. Fibreboard Corporation shall not withhold
such information or evidence from the Trust on any grounds, including attorney-
client, work product or any other privilege; provided, however, that Fibreboard
Corporation shall provide information and evidence which is subject to an
express claim of privilege to the Trust only on the basis that such information
and evidence remain privileged and confidential, and that the Trust shall keep
all such information and evidence privileged and confidential and shall not
waive the privileged and confidential status of such information and evidence
without Fibreboard Corporation's written consent. With respect to Trust requests
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for information or evidence possessed by Fibreboard Corporation which is
subject to a shared ownership, shared work product or shared attorney-client
privilege with a Defendant Class Member, the Trust shall be deemed the
successor-in-interest to Fibreboard Corporation, but any such Defendant Class
Member affected by the proposed transfer of information shall receive
reasonable notice of, and may object to, any proposed transfer of such shared
information or evidence.
D. Effective upon Global Approval Judgment, Fibreboard
Corporation, except as provided in Section H of the Trust Distribution Process,
transfers to the Trust its rights, if any, to all claims for contribution or
indemnity against other joint tortfeasors arising from (i) Class Member Claims,
(ii) Personal Injury Asbestos Claims that were settled against Fibreboard
Corporation before August 27, 1993 and remain settled thereafter and (iii)
judgments against Fibreboard Corporation that became final before August 27,
1993. Effective upon Global Approval Judgment, to the extent that Continental,
CNA Casualty, Columbia or Pacific has been subrogated to the foregoing rights
of Fibreboard to contribution or indemnity claims, each such subrogee transfers
these rights to the Trust; provided, however, that such transfer shall not
include the rights of any of the Insurers to any contribution, indemnity or
reinsurance claims against other insurance, reinsurance or indemnity entities
or syndicates.
E. Fibreboard Corporation agrees that to the extent
Fibreboard obtains insurance proceeds from companies other than the Insurers
for asbestos-related personal injury claims that are not applied to
asbestos-related
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indemnity or defense costs and are no longer needed by Fibreboard for such
purposes, such residual proceeds shall be made available to the Trust.
SECTION 2.5 Releases.
Effective upon Global Approval Judgment:
A. The Representative Plaintiffs, on behalf of themselves and
as representatives of the Settlement Class, release each of the Fibreboard,
Continental and Pacific Releasees from each and every Class Member Claim.
B. Fibreboard Corporation, on behalf of itself and its
Subsidiaries, releases Continental, CNA Casualty and Columbia, their parents,
Subsidiaries, Affiliates, directors, employees, officers, agents and attorneys
(the "Continental Releases") from any and all claims of whatsoever description
by Fibreboard Corporation and its Subsidiaries, including bad faith claims,
except that such release shall not include any claims arising out of this
Agreement, the Settlement Agreement (or the related agreements referred to
therein) or any obligation of a Party pursuant to an agreement or agreements
entered into after this Agreement is executed. Notwithstanding the foregoing
exceptions, such release shall include any and all claims arising from
paragraphs 1 and 2 of the April 9 Agreement. Nothing herein shall affect the
validity or effectiveness of the releases provided for in the April 9
Agreement, all of which are hereby ratified by Fibreboard Corporation,
Continental, CNA Casualty and Columbia.
C. Fibreboard Corporation, on behalf of itself and its
Subsidiaries, releases Pacific, its parents, Subsidiaries, Affiliates,
directors, employees, officers, agents and attorneys (the "Pacific Releasees")
from any and all claims of whatsoever
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description by Fibreboard Corporation and its Subsidiaries, including bad faith
claims, except that such release shall not include any claims arising out of
this Agreement, the Settlement Agreement (or the related agreements referred to
therein) or any obligation of a Party pursuant to an agreement or agreements
entered into after this Agreement is executed. Nothing herein shall affect the
validity or effectiveness of the releases provided for in the Pacific Indemnity
Agreement, all of which are hereby ratified by Fibreboard Corporation and
Pacific.
D. Continental, CNA Casualty and Columbia, on behalf of
themselves and their Subsidiaries, release Fibreboard Corporation, its parents,
Subsidiaries, Affiliates, directors, employees, officers, agents and attorneys
from any and all claims of whatsoever description by Continental, CNA Casualty
and Columbia and their Subsidiaries, except that such release (i) shall not
include any claims arising out of this Agreement, the Settlement Agreement (or
the related agreements referred to therein) or any obligation of a Party
pursuant to an agreement or agreements entered into after this Agreement is
executed, and (ii) shall not prevent Continental, CNA Casualty or Columbia from
raising any defenses to claims brought against them by any person or entity
claiming an interest in the Insurance Policies, including, without limitation,
defenses against the validity or enforceability of assignments or settlements
to which Continental, CNA Casualty or Columbia is not a party. Notwithstanding
the foregoing exceptions, such release shall include any and all claims arising
from paragraphs 1 and 2 of the April 9 Agreement. Nothing herein shall affect
the validity or effectiveness of the releases
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provided for in the April 9 Agreement, all of which are hereby ratified by
Fibreboard Corporation, Continental, CNA Casualty and Columbia.
E. Pacific, on behalf of itself and its Subsidiaries,
releases Fibreboard Corporation, its parents, Subsidiaries, Affiliates,
directors, employees, officers, agents and attorneys from any and all claims of
whatsoever description by Pacific and its Subsidiaries, except that such
release (i) shall not include any claims arising out this Agreement, the
Settlement Agreement (or the related agreements referred to therein) or any
obligation of a Party pursuant to an agreement or agreements entered into after
this Agreement is executed, and (ii) shall not prevent Pacific from raising any
defenses to claims brought against Pacific by any person or entity claiming an
interest in the Insurance Policies. Nothing herein shall affect the validity
or effectiveness of the releases provided for in the Pacific Indemnity
Agreement, all of which are hereby ratified by Fibreboard Corporation and
Pacific.
F. The releases required by Sections 2.5(A)-(E) above shall
be effective as a bar to each and every claim, demand and cause of action
encompassed thereby and shall include, as necessary to effectuate that purpose,
waivers by the Parties of any and all benefits conferred on any of them by
Section 1542 of the California Civil Code or similar provisions in other
jurisdictions.
SECTION 2.6 Final Settlement of the Insurance Policies.
Fibreboard Corporation and the Insurers agree that upon Global
Approval Judgment, except for obligations that an Insurer has specifically
assumed or preserved under this Agreement, or under the Settlement Agreement
(or the related agreements referred to therein), the Insurers shall be
discharged from any
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and all of their obligations (whether direct or indirect) under or in
connection with the Insurance Policies, including any obligations imposed by
judgment, decree, statute, regulation or common law. Upon Global Approval
Judgment, Fibreboard Corporation shall execute and deliver a stipulation for
the dismissal with prejudice of the Coverage Case as to Continental, CNA
Casualty, Columbia and Pacific.
SECTION 2.7 Indemnity Obligation of the Trust after Global
Approval Judgment.
A. Except as provided in Section 2.4(A) as to Fibreboard
Corporation, the Trust shall defend and indemnify the Fibreboard, Continental
and Pacific Releasees against, and hold them harmless from, any costs, fees,
claims, liabilities, settlements or judgments incurred or occurring after
Global Approval Judgment and resulting, directly or indirectly, from the
assertion against any of them of any Class Member Claim or Third Party Claim.
This obligation shall include, without limitation, any such claim to the extent
that, after Global Approval Judgment, that claim attacks the validity or
enforceability of the Global Approval Judgment. Fibreboard Corporation and the
Insurers may, at their own expense, elect to participate with the Trust in the
defense of any such action or claim.
B. The Trust shall reimburse any Person entitled to
reimbursement out of the Escrow Fund pursuant to Section 3.3(A) to the extent
that such Person did not receive reimbursement from the Escrow Fund.
SECTION 2.8 Fibreboard Corporation's Indemnity and Related
Obligations.
Upon Global Approval Judgment, the Continental and Pacific
Releasees shall not have any liability for, and Fibreboard Corporation shall
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indemnify the Continental and Pacific Releasees against, and hold them harmless
from, any and all costs, fees, claims or liabilities relating to Personal
Injury Asbestos Claims and Additional Policy Claims of whatsoever kind,
including those attacking the validity or enforceability of the Global Approval
Judgment, (a) except for costs, claims or liabilities that the Insurers have
specifically undertaken to pay under this Agreement, the Settlement Agreement
(or the related agreements referred to therein), and (b) except for Defense
Costs directly attributable to an actual or threatened attack on the validity
or enforceability of the Global Approval Judgment ("Collateral Attack"). As to
claims asserted against Fibreboard Corporation that (a) would not be covered by
the foregoing indemnity (e.g., claims unrelated to asbestos) and (b) could be
claimed to give rise to a direct action against any of the Insurers, Fibreboard
Corporation agrees to reasonably and diligently defend and promptly pay or bond
judgments so as to preclude any such direct action claims. In the event of a
Collateral Attack, Continental and Pacific shall pay Fibreboard Corporation the
reasonable costs incurred by Fibreboard Corporation in defending against a
Collateral Attack to the extent not paid by the Trust (provided that
Continental's and Pacific's obligation shall extend only to those costs
directly attributable to litigation with respect to the validity and
enforceability of the Global Approval Judgment, not to those attributable to
litigation with respect to any underlying claims). Continental, Pacific and
Fibreboard Corporation shall jointly defend against a Collateral Attack and
will cooperate reasonably with one another in this regard.
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ARTICLE 3
ACTIONS TO BE TAKEN TO IMPLEMENT THIS AGREEMENT
SECTION 3.1 Applications for Initial Court Orders,
Settlement Class Order, Defendant Class Order
and Global Approval Judgment.
Promptly upon the execution of this Agreement, the Parties
shall, by joint motions, in form and substance satisfactory to counsel for each
of the Parties:
A. request entry of an order (i) preliminarily approving
this Agreement and the settlement contemplated by this Agreement for the
purpose of the Rule 23 Notice and settlement hearing contemplated therein, (ii)
preliminarily approving the Defendant Class Settlement Agreement and the
settlement contemplated by that agreement, and (iii) approving the contents and
methods for the dissemination of the Rule 23 Notice (which notice shall be in
form and substance satisfactory to the above counsel; and
B. request (i) entry of the Settlement Class Order and
the Defendant Class Order and (ii) entry of Global Approval Judgment.
SECTION 3.2 Effect of Class Certification.
The certification of the Settlement Class pursuant to this
Agreement shall be binding if Global Approval Judgment is entered. In the
event this Agreement is terminated prior to Global Approval Judgment,
Fibreboard Corporation and the Insurers shall retain their right to object to
the continued prosecution of the Class Action as a class action under Rule 23.
Neither this
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Agreement, nor its exhibits, nor the settlement negotiations, nor the
proceedings seeking approval of the settlement, may be used (i) in support of
any application for a determination that the Class Action or any other action
shall proceed as a class action except for the purposes of the settlement in
accordance with this Agreement or (ii) as evidence in any litigation (other
than an action to enforce the terms of this Agreement or any of its exhibits)
or proceeding against Fibreboard Corporation, Continental, CNA Casualty,
Columbia or Pacific in any court at any time.
SECTION 3.3 Execution and Delivery of Escrow Instructions.
A. Class Counsel (or, after appointment of the Trustees,
the Trustees), Fibreboard Corporation, Continental and Pacific shall each
execute and deliver from time to time to the Escrow Agent instructions
sufficient to order the disbursement from the Escrow Fund of funds needed to
pay the following obligations:
(1) To pay sums payable out of the Escrow Fund pursuant
to Article 7 of this Agreement.
(2) To reimburse monthly to any of the Fibreboard,
Continental or Pacific Releasees amounts, if any,
paid by any of them for costs, fees, claims,
liabilities, settlements, arbitration awards or
judgments with respect to (i) Class Member Claims or
Third Party Claims which receive approval from the
Court during the Interim Period to proceed to trial
or (ii) Interim Claims.
(3) To reimburse monthly any cost or expenses of the
Trust incurred during the Interim Period, including
the fees and expenses of the Interim Trustee, the
Trustees or Class Counsel's
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designee to the Interim Committee and other
reasonable expenditures.
(4) To reimburse monthly any cost or expense of the SCB
(in their capacity as such, and not in their capacity
as Class Counsel) incurred during the Interim Period
and determined by the Court or agreed by the Trustees
to be reasonable.
B. Notwithstanding the provisions of Section 3.3(A)(2),
(i) the cost of compliance with Fibreboard Corporation's obligations under
Section 2.4(A), the cost of any in-house employees of Fibreboard or the
Insurers, and the use of more outside personnel than are reasonably necessary
in connection with the economical defense or settlement of a claim shall not be
reimbursed, and (ii) any non-indemnity fees or costs subject to reimbursement
shall be reasonably necessary for the resolution of an Interim Claim, Class
Member Claim or Third Party Claim as determined by the Court or agreed by the
Trustees or their designee. Until the third anniversary after Global Approval
Judgment, the Trust may seek reimbursement from any Person to whom amounts were
disbursed from the Escrow Fund pursuant to Section 3.3(A)(2) which the Trust
alleges, based on the actual experience of the Trust in processing and
resolving claims, were in fact unreasonable and thus improperly paid from the
Escrow Fund. After a hearing on notice to all of the Parties, the Court shall
finally determine the eligibility of any contested expenditure for
reimbursement under Section 3.3(A)(2).
C. Fibreboard Corporation, the Insurers and the SCB
agree to keep separate billing accounts for all fees and expenses subject to
reimbursement
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pursuant to Section 3.3(A)(2) or 3.3(A)(4) and, if requested by the Trustees or
Class Counsel's designee to the Interim Committee, submit them to the Court for
a determination as to the reasonableness and eligibility for reimbursement.
D. Class Counsel, Fibreboard Corporation, Continental
and Pacific shall each execute and deliver a written notice of termination of
the Escrow Agreement and execute and deliver escrow instructions to the Escrow
Agent sufficient to order distribution of the balance of the Escrow Fund to the
following persons upon occurrence of the following events:
(1) to the Trust upon occurrence of Global Approval
Judgment (including Global Approval Judgment as to
which an effective waiver of one or more elements has
been given);
(2) to the trust or other entity described in Section
2.3(c) of the Settlement Agreement if (i) Settlement
Agreement Approval Judgment occurs and Global Court
Disapproval occurs, and (ii) the conditions to the
establishment of such trust or other entity set forth
in Section 2.3(c) of the Settlement Agreement are
satisfied in the opinion of counsel for Fibreboard
Corporation, Continental and Pacific;
(3) to Continental and Pacific in the percentages of
64.71% and 35.29%, respectively, if (i) Settlement
Agreement Approval Judgment occurs and Global Court
Disapproval occurs, and (ii) the conditions to the
establishment of such trust or other entity set forth
of Section 2.3(c) of the Settlement Agreement are not
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satisfied in the opinion of counsel for Fibreboard
Corporation, Continental and Pacific; or
(4) to Continental and Pacific in the percentages of
64.71% and 35.29%, respectively, if both Settlement
Agreement Court Disapproval and Global Court
Disapproval occur.
ARTICLE 4
TERMINATION
SECTION 4.1 Termination.
This Agreement shall automatically terminate without any
further action by any of the Parties, upon Global Court Disapproval or upon a
stipulation terminating this Agreement signed by all parties and filed with
this Court. Upon such termination, the Settlement Class Members and the other
Parties shall, as far as may be practicable, be restored to their respective
positions, rights and obligations that existed as if this Agreement had not
been entered into. Notwithstanding the foregoing, the following provisions of
this Agreement and the Trust Distribution Process, and the rights, obligations,
and liabilities created therewith shall survive such termination: Sections
3.2, 3.3, 4.1, 8.2, 8.3, 8.4, 8.5, 8.8, 8.9, 8.10, 8.11, 8.13 and Article 7 of
this Agreement and section D.2.f(i) of the Trust Distribution Process.
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ARTICLE 5
SETTLEMENT TRUST
SECTION 5.1 Trust Agreement.
A Trust shall be created in accordance with the provisions of
the Trust Agreement attached as Exhibit B hereto. The funds in the Trust shall
be invested and expended in accordance with the terms of the Trust Agreement
and Trust Distribution Process. The Trust shall be separate and independent
from Fibreboard Corporation. Neither the Trust nor Fibreboard Corporation
shall be bound by any adjudications rendered in any litigation (other than the
Class Action, the related class action respecting the Defendant Class and any
future litigation to which both the Trust and Fibreboard Corporation are
parties) to which one, but not the other, has been a party or privy. Neither
Fibreboard Corporation nor the Trust shall be bound by any stipulations or
agreements entered into by the other.
SECTION 5.2 Continuing Jurisdiction of the Court.
The Court shall retain continuing jurisdiction over the
maintenance, administration and distribution of the Trust and the funds
contained therein, subject to and in accordance with the provisions of the
Trust Agreement, the Trust Distribution Process, and the Defendant Class
Settlement Agreement. However, the Court shall not have such continuing
jurisdiction of Settlement Class Members, Defendant Class Members, Fibreboard
Corporation or the Insurers beyond that necessary to enforce this Agreement,
the Trust Agreement, the Trust Distribution Process, and the Defendant Class
Settlement Agreement.
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SECTION 5.3 Preservation of Funds.
To ensure that adequate Trust funds remain available to pay
claims of all Settlement Class Members, the Parties agree that they will
support the goals and purposes of the Trust and that they will cooperate in
taking such steps as may be appropriate from time to time to require the
Trustees to comply with the spending limitations, budgeting requirements,
financial reporting, accounting and audit requirements set forth in the Trust
Agreement and Trust Distribution Process.
ARTICLE 6
THIRD PARTY CLAIMS
SECTION 6.1 Bar Orders.
All Third Party Claims shall be barred and permanently
enjoined from prosecution against any of the Fibreboard, Continental and Pacific
Releasees in any proceeding or court. Third Party Claims against the Trust in
its own capacity or in Fibreboard Corporation's stead shall be governed by
section H of the Trust Distribution Process and the Defendant Class Settlement
Agreement.
SECTION 6.2 Judgment Reduction and Subrogation Rights.
Defendant Class Members shall have such rights to obtain
credits, set-offs, judgment reductions and subrogation to claims of Settlement
Class Members as are provided for in the Defendant Class Settlement Agreement
and the Trust Distribution Process.
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SECTION 6.3 Actions Necessary to Obtain Discharges and
Bar Orders.
A. In exchange for the subrogation and the credit and
set-off rights accorded them under the Trust Distribution Process, the
Defendant Class Members in the Defendant Class Settlement Agreement are
releasing all Third Party Claims against the Fibreboard, Continental and
Pacific Releasees and have agreed that those releases be enforced by the Global
Approval Judgment. Notwithstanding the provisions of the Defendant Class
Settlement Agreement, and except as set forth in Section 6.3(C) below, in the
event that Global Approval Judgment cannot be obtained because of failure to
obtain the discharge of, or an injunction against, one or more Express
Indemnity or Additional Policy Claims, then each and every such Express
Indemnity or Additional Policy Claim against the Fibreboard, Continental and
Pacific Releasees shall (as a sole and exclusive remedy, in lieu of any claims
or remedies at law or in equity against the Fibreboard, Continental and Pacific
Releasees, which claims or remedies are and will be forever barred and
enjoined) be resolved with and compensated by the Trust as Residual Claims
under the provisions of the Trust Distribution Process.
B. Except as set forth in Section 6.3(C) below, in the
event the Parties receive notice that notwithstanding the right to compensation
under the provisions of Section 6.3(A) above, Global Approval Judgment cannot
be obtained because of failure to obtain the discharges of, or injunctions
against, any Third Party Claim against the Fibreboard, Continental and Pacific
Releasees, Settlement Class Members agree to reduce judgments in their favor
against Defendant Class Members
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in such amounts as may be necessary to obtain the discharges of and injunctions
against Third Party Claims as against the Fibreboard, Continental and Pacific
Releasees which are required for the entry of Global Approval Judgment. Any
such reduction of judgment may be up to (but may not exceed) the full amount
that a Defendant Class Member would have been entitled to recover from any of
the Fibreboard, Continental and/or Pacific Releasees in the event that a valid
Third Party Claim arising from the judgment or payment thereof could have been
brought against any of them in the absence of Global Approval Judgment.
C. The Parties believe that there are no valid Express
Indemnity Claims or Additional Policy Claims arising from the distribution of
asbestos or asbestos-containing materials or products manufactured by
Fibreboard and sold or distributed under a label, trade name or brand name of a
Person unaffiliated with Fibreboard pursuant to an agreement with Fibreboard.
Fibreboard Corporation represents that, except as disclosed to the Insurers and
to Class Counsel in writing, it knows of no Persons unaffiliated with
Fibreboard who sold or distributed such materials or products. In the event
the Parties receive notice that Global Approval Judgment cannot be obtained
because of failure to obtain the discharge of, or an injunction against, any
Express Indemnity Claim or Additional Policy Claim asserted by any Person
listed in the writing referred to in the second sentence of this Section
6.3(C), then (i) the obligations imposed on Settlement Class Members set forth
in Section 6.3(B) do not apply to those claims, (ii) Continental, Pacific and
Fibreboard Corporation may advise Class Counsel within seven days of receipt of
such notice that they have waived such failure to obtain the discharge of, or
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injunction against, such claim or claims, and (iii) in the event that
Continental, Pacific and Fibreboard Corporation have not so advised Class
Counsel, then the Attorney Ad Litem shall for 14 days following expiration of
the seven-day period have the option, but not the obligation, to elect to have
Section 6.3(B) apply to such claim or claims. If Continental and Pacific elect
pursuant to the foregoing sentence to waive failure to obtain the discharge of,
or an injunction against, any of the Express Indemnity Claims or Additional
Policy Claims described in the preceding sentence, Fibreboard Corporation shall
be deemed to have waived such failure if Continental and Pacific agree to
indemnify and hold harmless Fibreboard Corporation against any cost or
liability resulting from the assertion of any such claims against Fibreboard
Corporation.
ARTICLE 7
INTERIM CLAIM LIQUIDATION PROCEDURES
SECTION 7.1 Interim Claims.
The provisions of this Article 7 specify the procedures to be
followed in handling certain Class Member Claims presented during the "Interim
Period," which is the period commencing at the later of January 1, 1994 or the
execution of this Global Settlement Agreement, and ending at Global Approval
Judgment or Global Court Disapproval. Third Party Claims of Defendant Class
Members arising out of Interim Claims shall be resolved in accordance with the
terms of the Defendant Class Settlement Agreement. An "Interim Committee,"
consisting of a designee of Class Counsel, a designee of Fibreboard
Corporation, and a designee of
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the Insurers, shall perform the functions specified for it in this Article
in connection with Liquidation of Interim Claims.
An "Interim Claim" is a Class Member Claim which a Settlement
Class Member seeks to Liquidate during the Interim Period and which meets one
of the following criteria:
A. it is an Exigent Health Claim;
B. it is an Extreme Hardship Claim; or
C. the Settlement Class Member establishes to the
satisfaction of the Interim Committee that his or her asbestos-related personal
injury claim in the tort system against a Defendant Class Member will be tried
to judgment during the Interim Period and that the trial will adjudicate issues
unique to that Settlement Class Member (e.g., damages, legal causation), as
distinguished from issues common to a number of plaintiffs (e.g., negligence,
strict liability, punitive damages).
SECTION 7.2 Processing Interim Claims.
A. Any Settlement Class Member electing to submit an
Interim Claim shall forward a notice of Interim Claim and a proof of claim to
the Interim Committee, on forms to be prescribed by the Interim Committee.
B. Interim Claims shall be processed in accordance with
the claims procedures set forth in the Trust Distribution Process, except as
follows:
(1) Negotiations and any arbitration with respect to any
Interim Claim shall be between the Interim Claimant,
on the one hand, and Fibreboard Corporation and the
Insurers (and not the Trust), on the other hand.
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(2) Each Interim Claimant asserting an Exigent Health
Claim or Extreme Hardship Claim shall present a
written demand within seven days of submitting the
notice of Interim Claim and properly completed proof
of claim. Fibreboard Corporation and the Insurers
shall evaluate such Interim Claim. Fibreboard
Corporation and the Insurers shall jointly respond
with a written offer in no more than seven days from
receipt of the written demand. If settlement
negotiations fail to produce a settlement within 14
days from receipt of the initial offer, such Interim
Claimant may proceed to binding arbitration. The
arbitration shall be held within 30 days after
arbitration is requested by such Interim Claimant.
(3) Each Interim Claimant asserting an Interim Claim
other than an Exigent Health Claim or Extreme
Hardship Claim shall within seven days of receipt of
a trial date submit a properly completed proof of
claim form and a notice of the date that trial is
scheduled to commence. A settlement demand shall
also be submitted by such Interim Claimant at that
time. Fibreboard Corporation and the Insurers shall
evaluate such Interim Claim. Fibreboard Corporation
and the Insurers shall jointly respond with a
written offer in no more than 28 days from receipt
of the written demand. The parties shall negotiate
in good faith, and, if a settlement is not reached
by 14 days prior to trial, such
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Interim Claim shall be set for binding arbitration
to be conducted and concluded prior to entry of
judgment in the trial court; provided, however,
that such Interim Claimant may, as early as 30 days
prior to the scheduled trial date, request binding
arbitration.
(4) The arbitration shall consist of an abbreviated
hearing which may be conducted by conference call,
with the award based upon the oral presentations,
and any written submissions, of the parties'
respective settlement positions. Neither party may
submit any evidence in the arbitration that was not
submitted to the other party at least seven days
prior to the earlier of the commencement of the
arbitration or the submission of its final offer or
demand. The written demands and offers required by
subsections (B)(1) and (B)(3) above shall be
included in such submissions.
(5) The Interim Committee shall establish and maintain a
list of Qualified Arbitrators. An arbitrator shall
be told the amount of the final offer and the amount
of the Interim Claimant's final demand at the
commencement of arbitration. The arbitrator shall
only have discretion to award one of those two
amounts.
C. Any settlement of an Interim Claimant shall be with
the consent of Class Counsel's designee, which consent shall not be
unreasonably withheld.
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SECTION 7.3 Payment of Exigent and Extreme Hardship
Claims.
Interim Claims that are Exigent Health Claims or Extreme
Hardship Claims shall be paid as follows:
A. 50% of the amount for which such Interim Claim has
been Liquidated shall be paid 30 days after the Interim Claim is Liquidated.
B. The remaining 50% of such amount shall be paid 60
days after the first to occur of (i) Global Approval Judgment, (ii) Settlement
Agreement Approval Judgment or (iii) entry of the Final Decision in the
Coverage Case; provided that (x) any amount to be paid under this Section
7.3(B) by reason of the fact that the Final Decision is the first to occur of
the foregoing triggering events shall be paid 60 days after that event only to
the extent of the Insurer's coverage obligations as determined by the Final
Decision and (y) any portion of such amount that remains unpaid after that time
shall be paid 60 days after the first to occur of (a) any of other triggering
events or (b) both Global Court Disapproval and Settlement Agreement Court
Disapproval.
SECTION 7.4 Payment of Interim Claims Other Than Exigent
Health Claims and Extreme Hardship Claims.
Interim Claims other than Exigent Health Claims or Extreme
Hardship Claims shall be paid as follows:
A. If Global Approval Judgement is entered on or before
June 30, 1996, these Interim Claims shall be paid in accordance with the Trust
Distribution Process in the same manner as other Class Member Claims.
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B. If Global Approval Judgment has not been entered on
or before June 30, 1996,
(1) 50% of the amount for which such Interim Claim has
been Liquidated shall be paid upon the later of (i)
the first to occur of November 30, 1996 or 30 days
after Settlement Agreement Approval Judgment, or
(ii) 60 days after receipt by the Insurers and
Fibreboard Corporation of a declaration or affidavit
stating that the case against a Defendant Class
Member has been tried to judgment or has been
settled against all non-bankrupt defendants in such
case, unless both Global Court Disapproval and
Settlement Agreement Court Disapproval have occurred
by such time.
(2) Any unpaid balance of such amount shall be paid 60
days after the first to occur of (i) Global Approval
Judgment, (ii) Settlement Agreement Approval
Judgment or (iii) entry of the Final Decision in the
Coverage Case; provided that (x) any amount to be
paid under this Section 7.4(B)(2) by reason of the
fact that the Final Decision is the first to occur
of the foregoing triggering events shall be paid 60
days after that event only to the extent of the
Insurer's coverage obligations as determined by the
Final Decision and (y) any portion of such amount
that remains unpaid after that time shall be paid 60
days after the first to occur of (a) any of the
other triggering events or
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(b) both Global Court Disapproval and Settlement
Court Agreement Disapproval.
(3) Notwithstanding the provisions of subsections B(1)
and B(2) above, if an Interim Claim against one or
more Defendant Class Members is consolidated for
trial with the claims of more than 50 other
Settlement Class Members, (i) the Interim Committee,
at the request of the Trustees, shall pay amounts
payable out of the Escrow Fund with respect to such
Interim Claims in such manner and over such a longer
time period (not to exceed 10 years) as the Trustees
shall determine is in the best interests of the
Trust and the Beneficiaries and (ii) the Trustees
shall have discretion to pay amounts payable by the
Trust with Respect to such Interim Claims in such
manner and over such a longer time period (not to
exceed 10 years) as the Trustees shall determine is
in the best interests of the Trust and the
Beneficiaries.
SECTION 7.5 Sources of Payment of liquidated amounts for
Interim Claims.
The amounts due for payment under Sections 7.3 and 7.4 shall be
paid:
A. by the Trust if Global Approval Judgment has been
entered by the date payment is due;
B. by Fibreboard Corporation if both Settlement
Agreement Approval Judgment and Global Court Disapproval have occurred by the
date payment is due;
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C. by the Insurers to the extent of their coverage
obligations as determined by the Final Decision in the Coverage Case, with any
remaining balance paid by Fibreboard Corporation, if each of Global Court
Disapproval, Settlement Agreement Court Disapproval and the Final Decision has
occurred by the date payment is due; and
D. out of the Escrow Fund if neither (A), (B), nor (C)
is applicable by the date a payment is due.
SECTION 7.6 Miscellaneous Interim Claim Provisions.
Any Interim Committee decision shall require the unanimous
approval of all members of the Interim Committee. In the event that unanimity
cannot be achieved, disputes over the handling of Interim Claims shall be
submitted to the Court for resolution. Class Counsel's designee shall not
disclose any privileged or confidential information supplied to such designee
by Fibreboard Corporation or the Insurers except as required by court order and
shall promptly notify the Party which designated such information as privileged
or confidential upon receipt of any subpoena or other formal request for such
information. The members of the Interim Committee shall not disclose any
settlement information with respect to Interim Claims to anyone other than
Fibreboard Corporation, Continental, Pacific or the Trust, except as required
by court order and upon reasonable prior notice to Fibreboard Corporation,
Continental, Pacific and the Trust.
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ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Designated or Qualified Settlement Fund.
Fibreboard Corporation's, Continental's, CNA Casualty's,
Columbia's and Pacific's obligation to proceed with this Agreement are
expressly conditioned upon the receipt by Fibreboard Corporation and the
Insurers of a letter ruling from the Internal Revenue Service pursuant to which
the Internal Revenue Service confirms that the Trust will be treated either (i)
as a Designated Settlement Fund or (ii) as a Qualified Settlement Fund. In the
event that the Internal Revenue Service has not issued such a ruling within
twelve months after execution of this Agreement and has not expressed
substantial concerns about the merits of the ruling request, then Fibreboard
Corporation's and the Insurers' obligations to proceed are expressly
conditioned upon receipt of a written opinion reasonably satisfactory to
Fibreboard Corporation no later than twelve months after the date of this
Agreement from an independent and distinguished professional tax advisor that
either (i) the Trust will be treated either as a Designated Settlement Fund or
as a Qualified Settlement Fund or (ii) Fibreboard Corporation will not
recognize any net taxable income as a result of the Global Approval Judgment
and the transactions contemplated thereby, establishment of the Trust, or any
payments (other than those paid to Fibreboard Corporation) made by the Trust for
Trust Expenses, Class Member Claims or Third Party Claims. Fibreboard
Corporation and the Insurers shall use good faith efforts to obtain such a
ruling or advice, as the case may be, as promptly as practicable after
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the date of this Agreement. Class Counsel shall be kept fully informed about,
and may participate in, the efforts to obtain such a ruling.
The tax advisor will be selected in the following manner.
Fibreboard Corporation shall name three tax advisors. Within 5 days of receipt
of such names, Class Counsel or the Insurers may notify Fibreboard Corporation
that either of them objects to any such person on the ground that he or she is
not an independent and distinguished professional tax advisor. Fibreboard
Corporation shall select the final tax advisor from those persons remaining.
If no persons remain, Fibreboard Corporation may name a substitute or
substitutes, or may apply to Judge Patrick H. Higginbotham for (i) his binding
determination that any of the persons objected to is an independent and
distinguished professional tax advisor, and if he determines that any of the
persons selected is an independent and distinguished tax advisor Fibreboard
Corporation shall select the final tax advisor, from those persons remaining,
and (ii) if he determines that none of the persons remaining is an independent
and distinguished tax advisor, he will give his determination how any future
naming of candidates by Fibreboard Corporation and objections by Class Counsel
and the Insurers will proceed. If Fibreboard Corporation names a substitute or
substitutes, within five days of receipt of such name(s), Class Counsel or the
Insurers may notify Fibreboard Corporation that either of them objects to any
such person on the ground that he or she is not an independent and
distinguished professional tax advisor. Objections to any such substitute may
be brought to Judge Higginbotham as described above.
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SECTION 8.2 Counsel.
Any act or consent required by or which may be given by Representative
Plaintiffs pursuant to this Agreement may be accomplished by Class Counsel
acting on behalf of all Representative Plaintiffs. Class Counsel may act or
give their consent with the approval of any three or more of the Class Counsel
and, in such event, the Representative Plaintiffs shall be deemed to have so
acted or consented. Continental, Pacific, CNA Casualty, Columbia and Fibreboard
Corporation shall be entitled to rely upon such act or consent by Class Counsel
in any case where the act or consent is evidenced in a writing reflecting the
approval of any three of Class Counsel.
SECTION 8.3 No Oral Representations.
This Agreement, together with its accompanying exhibits, supersedes
and renders unenforceable all earlier oral representations, warranties or
promises made by any Party to any other Party with respect to the subject
matter of this Agreement.
SECTION 8.4 Payment of Costs.
Except as otherwise agreed, each of Fibreboard Corporation,
Continental, CNA Casualty, Columbia and Pacific shall pay its own legal and
other costs and expenses incurred in connection with the preparation,
negotiation, execution and delivery of this Agreement and the consummation of
the settlement contemplated hereby.
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SECTION 8.5 Modification and Waiver.
A. Subject to any necessary court approvals, this Agreement
and any of the exhibits hereto may be amended, supplemented or modified from
time to time by a writing executed by each of the Parties or, in the case of
Representative Plaintiffs, by Class Counsel (prior to Global Approval Judgment)
or the SCB (after Global Approval Judgment); provided, however, that the Trust
Agreement and the exhibits thereto, including the Trust Distribution Process,
may be amended only in accordance with the requirements and procedures
contained therein.
B. Fibreboard Corporation, Continental, CNA Casualty, Columbia,
Pacific or the Representative Plaintiffs (on behalf of the Settlement Class),
as the case may be, may from time to time by written instrument waive any
provision of this Agreement or any of the exhibits hereto which inures to its
or their benefit; provided, however, that the provisions of the Trust Agreement
and exhibits thereto, including the Trust Distribution Process, may be waived
only in accordance with the requirements and procedures contained therein. Any
such waiver or consent shall be effective only in the specific instance, for
the specific provision of this Agreement or exhibit hereto and for the specific
purpose for which it is given.
SECTION 8.6 Further Actions.
Each of Fibreboard Corporation, Continental, CNA Casualty, Columbia,
Pacific and the Representative Plaintiffs and their respective counsel shall
take such actions and execute such additional documents as may be reasonably
necessary or appropriate to consummate or implement the settlement contemplated
by this Agreement.
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SECTION 8.7 Effectiveness of Agreement Notwithstanding Developments.
The Parties understand and contemplate that during the period
necessary to obtain Global Approval Judgment there will almost certainly be
developments that bear on the issues being resolved and compromised by this
Agreement, including but not limited to, decisions on issues common to other
parties in the Coverage Case, controlling decisions by the California Supreme
Court issued in other cases, changes in estimates as to volume and severity of
future asbestos personal injury claims, procedural rulings or legislative
actions that may make it easier or more difficult successfully to prosecute
claims against asbestos defendants or their insurers and changes in the
financial condition of other asbestos defendants, any of which may appear to
have a bearing on the settlement of issues resolved herein. The Parties have
carefully weighed potential developments of this nature and have taken them
into account in reaching the compromise recited on the record on August 27,
1993 and reflected in this Agreement and no such event subsequent to that date
shall be the basis for modifying this Agreement or relieving any of the Parties
from any of its terms. The fairness and reasonableness of this Agreement shall
be assessed as of August 27, 1993.
SECTION 8.8 No Admission or Use.
This Agreement and the provisions thereof, whether or not Global
Approval Judgment is entered, shall in no event be offered as or be deemed to
be evidence or an admission or a concession on the part of any of the Parties
of or with respect to any claim or any fault, liability or damages
whatsoever. This Agreement
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and the settlement provided for herein, whether or not consummated, and any
actions or proceedings taken to enter into or pursuant to this Agreement or
otherwise, are not, and shall not in any event be construed, interpreted or
used as evidence of a presumption, concession or admission by any Party of the
truth of any fact alleged or the validity of any claim or defense which has,
could have been or could be asserted in any litigation, or of any deficiency in
any claim or defense which was, could have been or could be asserted in any
litigation, or of any liability, fault or dereliction of duty or breach of
contract of any Party. Notwithstanding the foregoing, any Party shall be
entitled to introduce this Agreement in evidence for the purpose of enforcing
its terms. Nothing herein is intended to suggest that any asbestos-related
personal injury claim may be asserted against Fibreboard, the Settlement Trust
or the Insurers by a person who cannot prove exposure to asbestos-containing
materials manufactured by Fibreboard.
SECTION 8.9 No Breach of Other Obligations.
Neither this Agreement nor any acts, statements or omissions of the
Parties in connection with the negotiation, execution or performance thereof
shall be claimed to constitute a breach of any contract, policy of insurance or
law or the basis for any claim of bad faith. Nothing in this Agreement calls
for or obligates any of the Parties in any way to violate or breach its
obligations under any agreement and no term or provision of this Agreement
shall be so construed.
SECTION 8.10 Third Party Beneficiaries.
There shall be no third party beneficiaries of this Agreement other
than the non-Party Releasees hereunder. No Person other than the Parties hereto,
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45
the Settlement Class Members and the Releasees hereunder, shall have any right
or claim under or in respect of this Agreement.
SECTION 8.11 Rights and Obligations of Fibreboard Corporation
and the Insurers Under the Settlement Agreement
and Related Agreements.
This Agreement shall not abridge or in any way modify or affect the
rights or obligations of Fibreboard Corporation, Pacific, Continental, CNA
Casualty or Columbia in relation to each other under the Settlement Agreement
or related agreements referred to therein. All such rights and obligations
shall be in addition to those created by this Agreement even where they pertain
to the same subject matter. The definitions contained in the Glossary and in
the provisions of this Global Settlement Agreement and its exhibits shall have
no application to the Settlement Agreement or the related agreements referred
to therein unless incorporated explicitly by written addendum to such
agreements.
SECTION 8.12 Headings.
The section headings contained in this Agreement and its exhibits are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement or its exhibits.
SECTION 8.13 Notices.
All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given if it is sent by registered
or certified mail, postage prepaid, or sent by prepaid overnight courier or
confirmed telecopier, and addressed to the intended recipient as set forth
below:
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46
If to Fibreboard Corporation, addressed to:
Fibreboard Corporation
2121 North California Blvd.
Walnut Creek, CA 94596
Attention: Michael R. Douglas
Senior Vice President and
General Counsel
Telecopier: (510) 274-0714
and
BROBECK, PHLEGER & HARRISON
Spear Street Tower
One Market Plaza
San Francisco, California 94105
Attention: Stephen M. Snyder, Esq.
Telecopier: (415) 442-1020
If to Continental, addressed to:
Continental Casualty Co.
Specialty Claims Office, 12th Floor
50 Fremont Street
San Francisco, CA 94105
Attention: Claim Manager
Telecopier: (415) 512-4899
and
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd St.
New York, New York 10019
Attention: Herbert M. Wachtell, Esq.
Telecopier: (212) 403-2000
and
CARROLL, BURDICK & McDONOUGH
44 Montgomery St., Suite 400
San Francisco, CA 94104
Attention: Rodney L. Eshelman, Esq.
Telecopier: (415) 989-0932
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47
If to Columbia, addressed to:
Columbia Casualty Company
c/o Continental Casualty Co.
Specialty Claims Office, 12th Floor
50 Fremont Street
San Francisco, CA 94105
Attention: Claim Manager
Telecopier: (415) 512-4899
and
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd St.
New York, New York 10019
Attention: Herbert M. Wachtell, Esq.
Telecopier: (212) 403-2000
and
CARROLL, BURDICK & McDONOUGH
44 Montgomery St., Suite 400
San Francisco, CA 94104
Attention: Rodney L. Eshelman, Esq.
Telecopier: (415) 989-0932
If to CNA Casualty, addressed to:
CNA Casualty Company of California
c/o Continental Casualty Co.
Specialty Claims Office, 12th Floor
50 Fremont Street
San Francisco, CA 94105
Attention: Claim Manager
Telecopier: (415) 512-4899
and
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd St.
New York, New York 10019
Attention: Herbert M. Wachtell, Esq.
Telecopier: (212) 403-2000
-44-
48
and
CARROLL, BURDICK & McDONOUGH
44 Montgomery St., Suite 400
San Francisco, CA 94104
Attention: Rodney L. Eshelman, Esq.
Telecopier: (415) 989-0932
If to Pacific, addressed to:
Pacific Indemnity Company
Chubb & Son Inc.
15 Mountain View Road
P.O. Box 1615
Warren, NJ 07061-1615
Attention: Malcolm B. Burton
Telecopier: (908) 580-3030
and
WHITE & CASE
1155 Avenue of the Americas
New York, NY 10036
Attention: Paul J. Bschorr, Esq.
Telecopier: (212) 354-8113
If to the Representative Plaintiffs, addressed to:
NESS, MOTLEY, LOADHOLT,
RICHARDSON & POOLE
151 Meeting Street, Suite 600
P.O. Box 1137
Charleston, South Carolina 29402
Attention: Joseph F. Rice, Esq.
Joseph B. Cox, Jr., Esq.
Telecopier: (803) 577-7513
CARTWRIGHT, SLOBODIN, BOKELMAN, BOROWSKY,
WATNICK, MOORE & HARRIS, INC.
101 California Street, Suite 2600
San Francisco, California 94111
Attention: Harry F. Wartnick, Esq.
Telecopier: (415) 391-5845
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KAZAN, McCLAIN, EDISES & SIMON
171 Twelfth Street, Suite 300
Oakland, California 94607
Attention: Steven Kazan, Esq.
Telecopier: (510) 835-4913
and
CAPLIN & DRYSDALE, CHARTERED
399 Park Avenue
New York, New York 10022
Attention: Elihu Inselbuch, Esq.
Telecopier: (212) 644-6755
Such communications shall be effective when they are received by the addressee
thereof. Any party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other party notice in the manner herein set forth.
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SECTION 8.14 Counterparts.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together will constitute
one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed on December
23, 1993 by the undersigned, thereunto duly authorized.
On behalf of the
Representative Plaintiffs
By: /S/ JOSEPH RICE, ESQ.
--------------------------------------------------------------------
Joseph Rice, Esq.
By: /S/ JOSEPH B. COX, JR., ESQ.
--------------------------------------------------------------------
Joseph B. Cox, Jr., Esq.
By: /S/ HARRY F. WARTNICK, ESQ.
--------------------------------------------------------------------
Harry F. Wartnick, Esq.
By: /S/ STEVEN KAZAN, ESQ.
--------------------------------------------------------------------
Steven Kazan, Esq.
By: /S/ ELIHU INSELBUCH, ESQ.
--------------------------------------------------------------------
Elihu Inselbuch, Esq.
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FIBREBOARD CORPORATION
By: /S/ MICHAEL R. DOUGLAS
----------------------------------------------------------------------
Title Senior Vice President & General Counsel
--------------------------------------------------------------------
CONTINENTAL CASUALTY COMPANY
By: /S/ LAURENS F. TERRY
----------------------------------------------------------------------
Title Vice President
-------------------------------------------------------------------
CNA CASUALTY COMPANY OF CALIFORNIA
By: /S/ LAURENS F. TERRY
----------------------------------------------------------------------
Title Vice President
--------------------------------------------------------------------
COLUMBIA CASUALTY COMPANY
By: /S/ LAURENS F. TERRY
----------------------------------------------------------------------
Title Vice President Columbia Casualty Co.
--------------------------------------------------------------------
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PACIFIC INDEMNITY COMPANY
By: /S/ JOHN J. DEGNAN
---------------------------------------------------------------------
Title Senior Vice President
-------------------------------------------------------------------
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EXHIBIT A
GLOSSARY OF TERMS
IN
GLOBAL SETTLEMENT AGREEMENT,
TRUST AGREEMENT,
TRUST DISTRIBUTION PROCESS,
AND
DEFENDANT CLASS SETTLEMENT AGREEMENT
54
TABLE OF CONTENTS
Additional Policy Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
April 9 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Asbestos Lung Disease I or ALD-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Asbestos Lung Disease II or ALD-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Attorney Ad Litem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
B-reader Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Claimant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Claims Resolution Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Class Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Class Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class Member Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CNA Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Columbia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Continental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Continental-Pacific Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Continental Releasees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Coverage Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Defendant Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Defendant Class Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Defendant Class Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Defendant Class Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Defendant Class Settlement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Defense Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Designated Settlement Fund or DSF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Earnings Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Escrow Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exigent Health Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Expedited Review Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exposed Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Express Indemnity Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Extreme Hardship Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Fibreboard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fibreboard Releasees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FIFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Final Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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55
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Fund I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Fund II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Fund III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Global Approval Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Global Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Global Court Disapproval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Global Settlement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Increased Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Initial Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Insurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interim Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interim Claimant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interim Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interim Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Judgment Forum Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Lung Cancer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Malignancy Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Medical Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Mesothelioma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Non-Malignancy Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other Cancer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other Claims Resolution Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Pacific Indemnity Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Pacific Releasees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Personal Injury Asbestos Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PFT Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Qualified Arbitrator and Qualified Mediator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Qualified Settlement Fund or QSF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Released Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Representative Defendant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Representative Plaintiffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Residual Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Rule 23 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Select Counsel for the Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Schedule Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-ii-
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Scheduled Disease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Second Injury Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Settled Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Settlement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Settlement Agreement Approval Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Settlement Agreement Court Disapproval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Settlement Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Settlement Class Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Settlement Class Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Settlement Conference Designee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Third Party Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Third Party Claimant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trust Distribution Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trust Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Trustors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Unreimbursed Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Unsettled Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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1. "Additional Policy Claim" means each and every claim,
demand, action or suit of any kind (i) which arises under, pursuant to or
related to the Insurance Policies by any person or entity, whether directly or
indirectly asserted against the Insurers or any third party, or arising under
any term or terms or alleged coverage provided by the Insurance Policies and
(ii) which arises directly or indirectly from personal injury resulting from
exposure to asbestos or asbestos-containing materials for which Fibreboard may
bear legal liability.
2. "Affiliate" of a Person means (i) a Subsidiary of such
Person, (ii) a Person which owns, either alone or with or through one or more
Affiliates, directly or indirectly, securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions of such Person, and (iii) a
Subsidiary of any Affiliate of such Person.
3. "April 9 Agreement" means the agreement between Continental
and Fibreboard Corporation dated April 9, 1993, as it has been amended,
pursuant to which Continental and Fibreboard Corporation agreed, among other
things, upon terms and conditions set forth therein, to use their best efforts
jointly to negotiate and finalize a global class action settlement with
personal injury claimants and Continental agreed, whether or not a global
settlement was reached, to pay certain defense and other costs of certain
asbestos-related claims on an interim basis.
-1-
58
4. "Asbestos Lung Disease I" or "ALD-1" means either:
(1) a diagnosis of pulmonary asbestosis by a
board-certified internist or pulmonary specialist based on the following
minimum objective criteria:
(i) Chest X-rays for which a B-reader report
is furnished showing small irregular opacities of ILO Grade 1/0
and pulmonary function testing and physical examination that
shows either:
a. FVC <80% of predicted with
FEV-1/FVC > or = to 75% (actual value);
or
b. TLC <80% of predicted, with either
DLCO < or = to 76% of predicted or bilateral
basilar crackles, and also the absence of any
probable explanation for this DLCO result or
bilateral basilar crackles finding other than the
presence of asbestos lung disease; or
(ii) Chest X-rays for which B-reader report is
furnished showing small irregular opacities of ILO Grade 1/1 or
greater; and pulmonary function testing that shows either:
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a. FVC <80% of predicted with FEV-1/FVC
> or = to 72% (actual value) or, if the individual
tested is at least 68 years old at the time of the
testing, with FEV-1/FVC > or = to 65% (actual
value);
or
b. TLC <80% of predicted.
or
(2) A statement by a board-certified pathologist that
more than one representative section of lung tissue otherwise
uninvolved with any other process (e.g., cancer or emphysema)
demonstrates a pattern of peribronchiolar or parenchymal scarring
in the presence of characteristic asbestos bodies, and also that
there is no other more likely explanation for the presence of the
fibrosis.
5. "Asbestos Lung Disease II" or "ALD-2" means a diagnosis by
a qualified physician that indicates other abnormalities of the parenchyma or
pleura attributed to prior asbestos exposure, including pleural plaques,
pleural thickening, pleural encasement and mild parenchymal fibrosis not
meeting the definition of ALD-1.
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6. "Attorney Ad Litem" means Professor Eric Green of Boston
University Law School or such successor as may be appointed by the Court.
7. "Beneficiary" means any Settlement Class Member who asserts
a Class Member Claim, now or at any time in the future.
8. "B-reader Report" means a report of a B-reader certified at
the time the report is prepared (or of an individual who at one time was a
certified B-reader and who has not subsequently failed the examination for
certification or recertification as a B-reader) based on chest x-rays of an
Exposed Person.
9. "Claimant" means any Person, or legal representative of a
Person, who seeks recovery from the Trust for a Personal Injury Asbestos Claim
of any kind.
10. "Claims Resolution Facility" means a facility that
establishes a method for the liquidation and resolution of claims that is
administered by the Trust.
11. "Class Action" means Ahearn et al. v. Fibreboard Corp. et
al., 6:93 cv 526 (E.D. Tex.), filed by Representative Plaintiffs in the Global
Court on behalf of themselves and the Settlement Class Against Fibreboard
Corporation on September 9, 1993.
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12. "Class Counsel" means Joseph F. Rice and Joseph B. Cox,
Jr., of the firm of Ness, Motley, Loadholt, Richardson & Poole, P.C.; Harry F.
Wartnick, of the firm of Cartwright, Slobodin, Bokelman, Borowsky, Wartnick,
Moore & Harris, Inc.; and Steven Kazan, of the firm of Kazan, McClain, Edises &
Simon; or successors of the foregoing individuals.
13. "Class Member Claim" means any Personal Injury Asbestos
Claim of a Settlement Class Member.
14. "CNA Casualty" means CNA Casualty Company of California, a
California corporation.
15. "Columbia" means Columbia Casualty Company, an Illinois
Corporation.
16. "Continental" means Continental Casualty Company, an
Illinois Corporation.
17. "Continental-Pacific Agreement" means the agreement between
Continental and Pacific dated as of October 12, 1993 pursuant to which
Continental and Pacific settled the dispute between them and agreed upon terms
for the sharing of liabilities of each of them with respect to ceratin
asbestos-related claims.
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18. "Continental Releases" are as defined in Section 2.5(B) of
the Global Settlement Agreement.
19. "Court" means the Honorable Robert M. Parker, now the Chief
Judge for the United States District Court for the Eastern District of Texas.
In the event that for any reason Judge Parker ceases to be a Judge of the
United States as defined in Article III of the United States Constitution or
otherwise cannot fulfill the responsibilities of the Court, the term "Court"
shall mean any United States Circuit or District Judge designated by the Chief
Judge of the United States Court of Appeals of the Fifth Circuit to exercise
continuing jurisdiction over the Trust and the Global Settlement Agreement.
20. "Coverage Case" means the action bearing the caption
Asbestos Insurance Coverage Cases, Judicial Council Coordination Proceeding No.
1072, which was pending as of the date of the Global Settlement Agreement in
the Court of Appeal of the State of California, First Appellate District,
Division One, Nos. A049419 et al.
21. "Defendant Class" means all Persons with Third Party Claims.
22. "Defendant Class Counsel" means Richard Josephson of Baker
& Botts and R. Bruce Shaw of Nelson, Mullins, Riley & Scarborough or their
successors.
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23. "Defendant Class Member" means any Person who or which is a
member of the Defendant Class.
24. "Defendant Class Order" means an order of the Court finally
certifying the Defendant Class as a class for settlement purposes under Rule
23(b)(1) and/or (b)(2) of the Federal Rules of Civil Procedure.
25. "Defendant Class Settlement Agreement" means the agreement
annexed to the Global Settlement Agreement as Exhibit C.
26. "Defense Costs" mean Fibreboard Corporation's defense fees
and costs, including case management system fees and costs, as more fully
defined in the Settlement Agreement.
27. "Designated Settlement Fund" or "DSF" is as defined in
Section 468B of the Internal Revenue Code of 1986.
28. "Distributable Amount" means, with respect to Fund I, Fund
II or Fund III, for any Fiscal Year, the sum of the Earnings Amount for that
Fund for that Fiscal Year plus (i) the Principal Amount or (ii) in the event
that the provisions of Appendix 1 to the Trust Distribution Process apply, the
Increased Principal Amount, for that Fiscal Year.
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29. "Distribution Date" is as defined in paragraph E.4 of the
Trust Distribution Process.
30. "Earnings Amount" means, with respect to Fund I, Fund II or
Fund III, as the case may be, all elements of current periodic income from such
Fund (other than any such income on the amounts in the Reserve Account),
including interest, periodic dividends (but not special, liquidating or wasting
dividends), rent, royalty and other similar payments which represent earnings
or profit on an asset, and do not represent elements of appreciation or gain or
depreciation or loss (whether realized or unrealized) on an asset, all
determined on an accrual basis in accordance with generally accepted accounting
principles.
31. "Escrow Agent" means the Person acting as escrow agent
pursuant to the Escrow Agreement.
32. "Escrow Agreement" means an Escrow Agreement substantially
in the form attached to the Global Settlement Agreement as Exhibit D.
33. "Escrow Fund" means the escrow account established pursuant
to Section 2.3(A) of the Global Settlement Agreement.
34. "Exigent Health Claim" means a Class Member Claim that is
supported by an affidavit or declaration made under penalty of perjury from a
physician who has examined the Settlement Class Member within 120 days of the
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date of the affidavit or declaration, which states that the physician believes
that because of asbestos-related disease there is substantial medical doubt
that the Settlement Class Member will survive beyond six months from the date
of the declaration or affidavit.
35. "Expedited Review Claim" is as defined in Section B.2 of
the Trust Distribution Process.
36. "Exposed Person" means the individual whose exposure to
asbestos results in a Personal Injury Asbestos Claim.
37. "Express Indemnity Claim" means a Third Party Claim (i)
which asserts that Fibreboard is liable to indemnify or reimburse the holder
of such claim for payments made or liabilities, expenses or costs incurred by
such claim holder on account of an asbestos-related personal injury claim
asserted against such claim holder by a Settlement Class Member and (ii) which
would not be barred under applicable law by a court determination that a
settlement between Fibreboard (or the Trust) and the Settlement Class Member
asserting such asbestos-related personal injury claim was made in good faith.
38. "Extreme Hardship Claim" means a Class Member Claim as to
which the Interim Committee (if the Class Member Claim is submitted during the
Interim Period) or the Trust (if the Class Member Claim is submitted after
entry of
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Global Approval Judgment), in its sole discretion, determines that because of
an asbestos-related disease the Settlement Class Member is suffering a severe
financial hardship.
39. "Fibreboard" means Fibreboard Corporation; Fibreboard Paper
Product Corporation; Fibreboard Products, Incorporated; Paraffine Companies,
Incorporated; Plant Rubber & Asbestos Works; Pabco Products, Incorporated; and
Pabco Insulation Corporation; and each of their respective predecessors,
Subsidiaries and divisions, and with regard to Fibreboard Corporation's
liability only, each of their respective successors in interest.
40. "Fiberboard Releasees" mean the following entities, each of
their respective predecessors, Subsidiaries, divisions, current and former
attorneys, officers, directors and employees, and, with regard to Fiberboard
Corporation's liability only, each of their respective successors in interest:
(i) Fibreboard Corporation; Fibreboard Paper Products
Corporation; Fibreboard Products, Incorporated; Paraffine
Companies, Incorporated; Plant Rubber & Asbestos Works;
Pabco Products, Incorporated; and Pabco Insulation
Corporation;
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(ii) Louisiana-Pacific Corporation (other than for
asbestos-related claims against Louisiana-Pacific
which (a) state a basis for liability by
Louisiana-Pacific wholly independent of any
relationship between Louisiana-Pacific and
Fibreboard Corporation or any act or omission in
connection with such a relationship, and (b) as
to which there is no basis for any claim against
Fibreboard Corporation by the claimant or by
Louisiana-Pacific).
41. "FIFO" means first in, first out.
42. "Final Decision" means the final decision or
decisions obtained when all the issues that are pending in the Coverage Case by
Fibreboard Corporation against certain of the Insurers have been finally
resolved and no further appellate review or remand proceedings are possible
with respect to such claims.
43. "Fiscal Year" means the calendar year, except
that the first Fiscal Year shall be that portion of a calendar year commencing
with the date of execution of the Trust Agreement and ending on the last day of
the calendar year in which such execution occurs, and references to a number of
Fiscal Years after Global Approval Judgment shall be determined based on the
assumption that the first Fiscal Year after Global Approval Judgment shall be
the Fiscal Year during which Global Approval Judgment occurs.
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44. "Fund I" is as defined in paragraph E of the Trust
Distribution Process.
45. "Fund II" is as defined in paragraph E of the
Trust Distribution Process.
46. "Fund III" is as defined in paragraph E of the
Trust Distribution Process.
47. "Global Approval Judgment" means a judgment,
order or other decree issued and entered by the Global Court in an action in
which Fibreboard Corporation, Continental, CNA Casualty, Columbia, Pacific, the
Settlement Class and all persons having or who may have Third Party Claims
have been made parties, either directly or in a representative capacity, as to
which judgment, order or decree any appeal (and subsequent remand, if any) has
been finally decided and no further appeal or petition for certiorari can be
taken or granted and which judgment, order or decree:
(a) approves the terms and provisions of the Global
Settlement Agreement, including the releases and
indemnities contained therein;
(b) approves the Trust Agreement and the Trust
Distribution Process incorporated in the
Global Settlement Agreement;
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(c) orders the parties to implement the Global
Settlement Agreement;
(d) determines and awards the fees and expenses of
Class Counsel;
(e) declares that the settlement reflected by the
Global Settlement Agreement, with respect to both
Class Member Claims and Third Party Claims, is
fair, reasonable and adequate and was entered into
in good faith;
(f) declares that the Settlement Class Members and the
Defendant Class Members have received adequate
notice of the settlement contemplated by the
Global Settlement Agreement and Rule 23 of the
Federal Rules of Civil Procedure;
(g) declares that the Settlement Class Members have
been adequately, professionally and ethically
represented by Class Counsel;
(h) orders all Class Member Claims, except for claims
for punitive or exemplary damages, directed to the
Trust for disposition pursuant to the Trust
Agreement and Trust Disposition Process;
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(i) declares that, as provided in Section 2.2(B) of
the Global Settlement Agreement, only payment of
funds pursuant to the Settlement Class Members'
individual settlements with the Trust shall
trigger the notice, approval and forfeiture
provisions of the Longshore and Harbor Workers
Compensation Act and other similar state and
federal workers compensation provisions;
(j) orders dismissal on the merits, without costs and
with prejudice, of the Class Action and all of the
Class Member Claims (including all punitive and
exemplary damage claims) against the Fibreboard,
Continental and Pacific Releasees;
(k) declares the provision contained in the Global
Settlement Agreement whereby Fibreboard
Corporation and the Insurers agree that the
Insurers shall be discharged from any further
obligation under or in connection with the
Insurance Policies, except as an Insurer has
specifically assumed under the Global Settlement
Agreement or has preserved under the Settlement
Agreement (and the related agreements referred to
therein), to be fair, reasonable and non-collusive;
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(l) discharges the Fibreboard, Continental and Pacific
Releasees from any further liability with respect
to any Class Member Claim or Third Party Claim;
(m) permanently enjoins Fibreboard Corporation from
asserting any claim released or discharged under
the Global Settlement Agreement against any
Continental or Pacific Releasee;
(n) permanently enjoins any Settlement Class Member
or Third Party Claimant from asserting any claim
released or discharged under the Global Settlement
Agreement against any Fibreboard, Continental or
Pacific Releasee;
(o) approves the provisions set forth in the Global
Settlement Agreement and the Trust Distribution
Process for the resolution of Third Party Claims;
and
(p) retains exclusive jurisdiction in the Court
rendering such judgment, order or decree (1) to
enforce the provisions of such judgment, order
or decree, (2) to resolve any disputes as to the
performance or interpretation of the Global
Settlement Agreement, or such judgment, order or
decree, (3) to adjudicate any attempt by any
person to challenge such judgment, order or
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decree in any respect, and (4) over the
maintenance, administration and distribution of
the Trust and the funds contained therein, subject
to and in accordance with the provisions of the
Trust Agreement and the Trust Distribution
Process incorporated therein;
provided that Global Approval Judgment shall not be deemed to have been entered
unless and until either Settlement Agreement Approval Judgment has been entered
or Settlement Agreement Court Disapproval occurs.
48. "Global Court" means the United States District
Court for the Eastern District of Texas.
49. "Global Court Disapproval" means a judgment, order
or other decree of the Global Court or other court of competent jurisdiction
in an action in which Fibreboard Corporation, Continental, CNA Casualty,
Columbia, Pacific and the Settlement Class have been made parties, as to which
judgment, order or decree any appeal (and subsequent remand, if any) has been
finally decided and no further appeal or petition for certiorari can be taken
or granted and which judgment, order or decree disapproves or declines to
approve the Global Settlement Agreement.
50. "Global Settlement Agreement" means the settlement
agreement as of August 27, 1993 among Continental, CNA Casualty, Columbia,
Pacific,
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Fibreboard Corporation and the Representative Plaintiffs as representatives of
the Settlement Class.
51. "Glossary" means this Exhibit A to the Global
Settlement Agreement.
52. "Increased Principal Amount" (i) for any of the
third through the twelfth Fiscal Years after Global Approval Judgment, means
125% of the Principal Amount for such Fiscal Year and (ii) for any of the
sixteenth through the twentieth Fiscal Years after Global Approval Judgment,
means 112.5% of the Principal Amount for such Fiscal Year.
53. "Initial Trustee" is as defined in Section 7.18 of
the Trust Agreement.
54. "Insurance Policies" mean policy number CLP
3197650 issued by Continental effective May 4, 1957, in favor of Fibreboard
Corporation under its former name, Fibreboard Paper Products Corporation,
policy number RD 951 90 81 issued by Continental, policy number RDU 975 65 87
issued by CNA Casualty and an endorsement thereto issued by Continental, policy
number RDU 186 27 82 issued by Columbia, policy number RDU 186 30 62 issued by
Columbia, policy number RDU 365 32 19 issued by Columbia, the policy that was
alleged by Fibreboard Corporation to have been issued by Continental in the
period 1954-1956, and policy number LAC 88700 found to have been issued by
Pacific to Fibreboard Corporation
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effective May 4, 1956, and any other policies that were, or may be alleged to
have been, issued to Fibreboard Corporation by any of the Insurers, including
those set forth in the Pacific Indemnity Agreement.
55. "Insurers" mean (i) Continental, CNA Casualty,
Columbia and all insurance or indemnity companies controlling, controlled by or
under common control with any of them and (ii) Pacific and all insurance or
indemnity companies controlling, controlled by or under common control with it.
56. "Interim Claim" is as defined in Section 7.1 of the
Global Settlement Agreement.
57. "Interim Claimant" is a Person asserting an Interim
Claim.
58. "Interim Committee" is as defined in Section 7.1 of
the Global Settlement Agreement.
59. "Interim Period" is as defined in Section 7.1 of the
Global Settlement Agreement.
60. "Judgment Forum Law" is as defined in Section H.1.a
of the Trust Distribution Process.
61. "Liquidation" occurs with respect to any Class Member
Claim or Third Party Claim on the date on which the validity and amount thereof
is finally
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determined pursuant to the Trust Distribution Process or the date on which a
final, nonappealable judgment is entered against the Trust with respect to such
Class Member Claim or Third Party Claim.
62. "Lung Cancer" means a diagnosis by a qualified
physician of a malignant primary tumor of any cell type, originating within the
lung, caused or contributed to by exposure to asbestos.
63. "Malignancy Claim" means a claim for Mesothelioma,
Lung Cancer, or Other Cancer as defined in this Glossary.
64. "Medical Report" means a written narrative report by
a physician confirming that (i) an Exposed Person has an asbestos-related
personal injury or disease, based on a physical examination (as reflected in
medical records or performed by the physician preparing the narrative report)
of the Exposed Person, or (ii) following review of pertinent medical records
and information, that an asbestos-related personal injury or disease caused or
substantially contributed to the death of an Exposed Person.
65. "Mesothelioma" means a diagnosis by a board certified
pathologist of a malignant tumor caused or contributed to by exposure to
asbestos originating in the mesothelial cells of the pleura, peritoneum or like
tissue, or
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reasonable equivalent clinical diagnosis in the absence of adequate tissue for
pathological diagnosis.
66. "Non-Malignancy Claim" means a claim for ALD-1 or
ALD-2 as defined in this Glossary.
67. "Other Cancer" means a diagnosis by a qualified
physician that indicates a malignant tumor originating in the larynx, pharynx,
stomach, esophagus, colon or rectum, caused or contributed to by exposure to
asbestos.
68. "Other Claims Resolution Facility" means a facility
that establishes a method for the liquidation and resolution of
asbestos-related personal injury claims administered by a Person other than the
Trust.
69. "Pacific" means Pacific Indemnity Company, a
California corporation.
70. "Pacific Indemnity Agreement" collectively means the
Agreement and a Rescission of Insurance Policies, both dated March 27, 1992,
between Fibreboard Corporation and Pacific, pursuant to which Pacific and
Fibreboard Corporation agreed to settle their insurance coverage dispute.
71. "Pacific Releasees" are as defined in Section 2.5(C)
of the Global Settlement Agreement.
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72. "Permitted Investments" are as defined in Section 4.3
of the Trust Agreement.
73. "Person" means any individual, corporation,
partnership or association, whether or not incorporated, and any federal, state
or local government or agency thereof, or any other entity and his, her or its
legal representative.
74. "Personal Injury Asbestos Claim" means:
(i) each and every claim, demand, action or suit of any kind
for personal injury arising, directly or indirectly, from
exposure to asbestos-containing products (including, without
limitation, any direct action claim, wrongful death claim,
punitive or exemplary damages claim, loss of consortium claim,
fear of disease claim, bad faith claim, or surviving personal
injury claim) and whether such injury manifested itself
heretofore or hereafter, or (ii) any claim, demand, action or
suit of any kind arising, directly or indirectly, from any
such claim, demand, action or suit referred to in (i) above
(including without limitation any bad faith claim,
contribution claim, indemnity claim, warranty claim, direct
action claim or Additional Policy Claim)
against Fibreboard, against the Insurance Policies or against the Insurers in
any way predicated on obligations created by the Insurance Policies; provided,
however, that
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a Personal Injury Asbestos Claim shall not include any claim for benefits
brought by an employee or his or her personal representative under any federal
or state workers compensation statute (including, but not limited to, the
United States Longshore and Harbor Workers Compensation Act and the Federal
Employees Compensation Act), but shall include any subrogation, contribution or
indemnity claim arising from such claim for benefits.
75. "PFT Report" means a report by a pulmonary specialist
or a board-certified internist interpreting the results of pulmonary function
testing of an Exposed Person.
76. "Principal Amount" means, for any Fiscal Year after
Global Approval Judgment:
(i) (a) (x) the aggregate fair market value of all of the
investment assets contained in the Fund for which the
Distributable Amount is being determined (excluding the then
outstanding balance of the Reserve Account) at the close of
business on the last business day of the Fiscal Year for which
the calculation is made, minus (y) the Earnings Amount for
such Fiscal Year, plus (z) all amounts, if any, paid during
such Fiscal Year for Trust Expenses, Class Member Claims,
Third Party Claims and payments made pursuant to Section 7.16
of the Trust Agreement, in each case for such Fiscal Year
(other than any such payments made out of the Reserve
Account), minus
(b) for any Fiscal Year prior to the 21st Fiscal Year after
Global Approval Judgment, the greater of (i) Zero and (ii) the
lesser of (Y) the aggregate Surplus for all prior Fiscal Years
and (Z) Zero minus Unreimbursed Borrowings; multiplied by
(ii) a fraction, the numerator of which is one and the denominator
of which is the number of Fiscal Years that will occur from
the beginning
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of the Fiscal Year for which the calculation is made through
and including the end of the 25th Fiscal Year after Global
Approval Judgment in the case of Fund I, the 20th Fiscal Year
after the end of Fund I (or, if the Trustees have determined
to delay the transfer of the remaining balance in Fund II
beyond the twentieth Fiscal Year after the end of Fund I
pursuant to Section E.2.c(ii) of the Trust Distribution
Process, the end of Fund II so determined by the Trustees) in
the case of Fund II and the 15th Fiscal Year after the end of
Fund II in the case of Fund III (so that, for example, for the
Principal Amount applicable to the tenth Fiscal Year after
Global Approval Judgment, such denominator would be 16);
provided, however, that
(1) for the first Fiscal Year after Global Approval Judgment (a) the
numerator in the fraction stated in clause (ii) above shall be a
fraction in which the numerator is the number of full weeks in such
Fiscal Year (but not less than one) and the denominator is 52 (to
adjust for the length of such Fiscal Year) and (b) the Principal
Amount determined as provided above, including as set forth in clause
(1)(a) of this proviso shall be multiplied by 0.4;
(2) for the second Fiscal Year after Global Approval Judgment the
Principal Amount shall be the sum of (A) the Principal Amount
otherwise determined as provided in this definition of Principal
Amount multiplied by 0.4, plus (B) the Principal Amount with respect
to the first Fiscal Year after Global Approval Judgment as determined
in clause (1) above multiplied by 0.75; and
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(3) for each of the twenty-first through the twenty-fifth Fiscal Years
after Global Approval Judgment, the Distributable Amount may be
increased by the Trustees up to an amount not in excess of the
Principal Amount and the Earnings Amount that was in effect for the
twentieth Fiscal Year after Global Approval Judgment.
77. "Qualified Arbitrator" and "Qualified Mediator" shall
each be an impartial, neutral person. No person shall serve as an arbitrator
or mediator if he/she has any financial or personal interest in the proceedings
or, except when otherwise agreed by the parties, in any asbestos-related
matters. Prior to accepting an appointment, the prospective arbitrator or
mediator shall disclose any circumstances likely to create a reasonable
inference of bias or prevent a prompt hearing or conference with the parties.
78. "Qualified Settlement Fund" or "QSF" is as defined in
the Treasury Regulations under Section 468.B of the Internal Revenue Code of
1986.
79. "Released Parties" collectively, and "Released Party"
individually, mean the Fibreboard, Continental and Pacific Releasees.
80. "Representative Defendant" means Owens-Illinois,
Inc., a Delaware corporation, or such other Person or Persons as may be
certified by the Global Court, in the capacity as representative(s) of the
Defendant Class Members.
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81. "Representative Plaintiffs" mean Gerald Ahearn, James
Dennis and Charles W. Jeep, the named plaintiffs in the Class Action, or such
other, lesser or greater number of Representative Plaintiffs as may be
certified by the Global Court, in their capacities as representatives of the
interests of the Settlement Class Members.
82. "Reserve Account" means the reserve (which shall be
part of Fund I) in the original principal amount described on Appendix I to the
Trust Distribution Process as such amount may be increased or decreased from
time to time in accordance with the provisions described on Appendix 1 to the
Trust Distribution Process and by earnings, capital gains or losses or other
similar items.
83. "Residual Claim" means any Express Indemnity Claim or
Additional Policy Claim, the disposition of which becomes the responsibility of
the Trust pursuant to the Global Approval Judgment.
84. "Rule 23 Notice" means the notice to be given to the
Settlement Class Members and Defendant Class Members pursuant to Rule 23 of the
Federal Rules of Civil Procedure.
85. "Select Counsel for the Beneficiaries" or "SCB" means
four lawyers, initially: Joseph B. Cox, Jr., Steven Kazan, Joseph F. Rice and
Harry F.
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Wartnick, and a fifth to be selected unanimously by the other four lawyers as
provided in Section 6.1 of the Trust Agreement.
86. "Schedule Category" means: 1) Mesothelioma and Lung
Cancer; 2) ALD-1 and Other Cancer; 3) ALD-2; and 4) Residual Claims.
87. "Scheduled Disease" means Mesothelioma, Lung Cancer, Other
Cancer, Asbestos Lung Disease I and Asbestos Lung Disease II.
88. "Second Injury Claim" is a Malignancy Claim by a Claimant
who settled a Non-Malignancy Claim in exchange for a limited release which
allowed subsequent Malignancy Claims.
89. "Settled Claims" means claims of individuals for
asbestos-related personal injuries (a) that are not Class Member Claims and
(b) that as of August 27, 1993 had been settled (by Fibreboard Corporation or
by Fibreboard Corporation and Continental) or were the subject of a verdict or
judgment.
For the purposes of this definition, a claim included within the
terms of a settlement agreement (whether written, oral or placed on a court
record) prior to August 27, 1993 shall be deemed to have been settled before
August 27, 1993 even if (i) an opt-out right with respect to that claim has
been or is exercised, or (ii) the settlement is subsequently repudiated by the
Plaintiff; provided, however, that no claim which was included within the terms
of a settlement agreement and
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which was not filed prior to August 27, 1993 shall be deemed settled unless it
was eligible to be processed and liquidated prior to August 27, 1993.
90. "Settlement Agreement" means the agreement among
Fibreboard Corporation, Continental, CNA Casualty, Columbia and Pacific dated
as of October 12, 1993 pursuant to which they agreed, among other things, to
settle and compromise all claims and potential claims against the Insurers
under the Insurance Policies.
91. "Settlement Agreement Approval Judgment" is as defined in
the Settlement Agreement.
92. "Settlement Agreement Court Disapproval" is as defined in
the Settlement Agreement.
93. "Settlement Class" means:
(a) All persons (or their legal representatives) who prior to
August 27, 1993 were exposed, directly or indirectly
(including but not limited to exposure through the
exposure of a spouse, household member or any other
person), to asbestos or to asbestos-containing products
for which Fibreboard may bear legal liability and who have
not, before August 27, 1993, (i) filed a lawsuit for any
asbestos related personal injury, or damage, or
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death arising from such exposure in any court against
Fibreboard or persons or entities for whose actions or
omissions Fibreboard bears legal liability; or (ii)
settled a claim for any asbestos-related personal injury,
or damage, or death arising from such exposure with
Fibreboard or with persons or entities for whose actions
or omissions Fibreboard bears legal liability;
(b) All persons (or their legal representatives) exposed to
asbestos or to asbestos-containing products, directly or
indirectly (including but not limited to exposure through
the exposure of a spouse, household member or any other
person), who dismissed an action prior to August 27, 1993
without prejudice against Fibreboard, and who retain the
right to sue Fibreboard upon development of a nonmalignant
disease process or a malignancy; provided, however, that
the Settlement Class does not include persons who filed
and, for cash payment or some other negotiated value,
dismissed claims against Fibreboard, and whose only
retained right is to sue Fibreboard upon development of an
asbestos-related malignancy; and
(c) All past, present and future spouses, parents, children
and other relatives (or their legal representatives) of
the class members
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described in paragraphs (a) and (b) above, except for any
such person who has, before August 27, 1993, (i) filed a
lawsuit for the asbestos-related personal injury, or
damage, or death of a class member described in paragraph
(a) or (b) above in any court against Fibreboard (or
against entities for whose actions or omissions Fibreboard
bears legal liability), or (ii) settled a claim for the
asbestos-related personal injury, or damage, or death of a
class member described in (a) or (b) above with Fibreboard
(or with entities for whose actions or omissions
Fibreboard bears legal liability).
For the purposes of this definition, a claim included within the
terms of a settlement agreement (whether written, oral, or placed on a court
record) prior to August 27, 1993 shall be deemed to have been settled before
August 27, 1993 even if (i) an opt-out right with respect to that claim has
been or is exercised, or (ii) the settlement is subsequently repudiated by the
Plaintiff; provided, however that no claim which was included within the terms
of a settlement agreement and which claim was not filed prior to August 27,
1993 shall be deemed settled unless it was eligible to be processed and
liquidated prior to August 27, 1993.
94. "Settlement Class Member" means any Person who is a member
of the Settlement Class.
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95. "Settlement Class Order" means an order of the Court finally
certifying the Settlement Class as a class under Rule 23(b)(1)(B) of the
Federal Rules of Civil Procedure for settlement purposes.
96. "Settlement Conference Designee" is as defined in paragraph
D.1 of the Trust Distribution Process.
97. "Subsidiary" means, with respect to any Person, any
corporation or other entity in which that Person owns, directly or indirectly,
securities or other ownership interest having ordinary voting power to elect a
majority of the board of directors or other Persons performing similar
functions.
98. "Surplus" means, as of any Distribution Date:
(i) the Distributable Amount for the prior Fiscal Year,
minus
(ii) the aggregate amounts (other than payments from the
Reserve Account) actually paid by the Trust for Trust Expenses, Class Member
Claims, Third Party Claims and payments made pursuant to Section 7.16 of the
Trust Agreement, in each case for such prior Fiscal Year.
99. "Termination Date" is as defined in Section 7.2 of the
Trust Agreement.
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100. "Third Party Claim" shall mean any Personal Injury Asbestos
Claim that is not a Class Member Claim, except for Settled Claims, Unsettled
Claims or any claims arising directly or indirectly from any such Settled
Claims or Unsettled Claims.
101. "Third Party Claimant" shall mean any Person having a Third
Party Claim.
102. "Trust" means the trust referred to in Article V of the
Global Settlement Agreement.
103. "Trust Agreement" means the Fibreboard Asbestos
Compensation Trust Agreement among Continental, CNA Casualty, Columbia,
Pacific, Fibreboard Corporation and the Trustees attached as Exhibit B to the
Global Settlement Agreement.
104. "Trust Distribution Process" means Annex A to the Trust
Agreement.
105. "Trust Estate" at any time means all assets of the Trust at
such time.
106. "Trust Expenses" means all expenses of the Trust
(including, without limitation, compensation, legal, accounting and other
professional fees,
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expenses relating to the operation of a Claims Resolution Facility, an Other
Claims Resolution Facility, disbursements and related expenses, administrative
expenses, taxes and related expenses, the cost of liability insurance and
reimbursement and indemnification payments), other than payments in respect of
Class Member Claims and Third Party Claims and payments made pursuant to
Section 7.16 of the Trust Agreement.
107. "Trustees" are as defined in Section 7.18 of the Trust
Agreement.
108. "Trustors" mean Continental, CNA Casualty, Columbia,
Pacific and Fibreboard Corporation.
109. "Unreimbursed Borrowings" means, as of any Distribution
Date:
(a) the aggregate of the Principal Amounts (not including any
Increased Principal Amounts) and Earnings Amounts for all Fiscal Years prior to
the Fiscal Year to which such Distribution Date relates, minus
(b) the aggregate amounts (other than payments from the Reserve
Account) actually paid by the Trust for Trust Expenses, Class Member Claims and
Third Party Claims for all such prior Fiscal Years.
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110. "Unsettled Claims" shall mean claims of individuals for
asbestos-related personal injuries brought against Fibreboard in lawsuits filed
prior to August 27, 1993 and that are not Settled Claims. For purposes of this
definition, "Unsettled Claims" shall include claims of persons who filed and
for cash payment or some other negotiated value dismissed claims against
Fibreboard and whose only retained right is to sue Fibreboard upon development
of an asbestos-related malignancy.
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EXHIBIT B
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FIBREBOARD ASBESTOS COMPENSATION
TRUST AGREEMENT
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II DECLARATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Purposes . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Transfer of Assets . . . . . . . . . . . . . . . . . . . 2
2.4 Acceptance of Assets and Assumption of
Liabilities . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Maintenance of Trustor Privileges and
Confidences . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III POWERS; TRUST ADMINISTRATION . . . . . . . . . . . . . . . . . . 3
3.1 Powers . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Administration . . . . . . . . . . . . . . . . . . . . . 10
3.3 Actions by Trustors . . . . . . . . . . . . . . . . . . . 14
3.4 Protection of Confidential Information from
Disclosure to the Beneficiaries . . . . . . . . . . . . . 14
ARTICLE IV FUNDS, PAYMENTS AND INVESTMENTS . . . . . . . . . . . . . . . . 14
4.1 Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Investments . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Source of Payments . . . . . . . . . . . . . . . . . . . 20
ARTICLE V TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Number . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Term of Service . . . . . . . . . . . . . . . . . . . . . 21
5.3 Appointment of Successor Trustees . . . . . . . . . . . . 22
5.4 Liability of Trustees, Officers and Employees . . . . . . 23
5.5 Compensation and Expenses of Trustees . . . . . . . . . . 23
5.6 Indemnification of Trustees, Officers and
Employees . . . . . . . . . . . . . . . . . . . . . . . . 24
5.7 Trustees' Employment of Experts . . . . . . . . . . . . . 24
ARTICLE VI SELECT COUNSEL FOR THE BENEFICIARIES . . . . . . . . . . . . . . 25
6.1 Formation; Duties . . . . . . . . . . . . . . . . . . . . 25
6.2 Term of Office . . . . . . . . . . . . . . . . . . . . . 26
6.3 Appointment of Successor . . . . . . . . . . . . . . . . 26
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6.4 Compensation, Expenses and Liability of SCB
Members . . . . . . . . . . . . . . . . . . . . . . . . 27
6.5 Resolution of Disputes Involving Approval of
the Select Counsel for the Beneficiaries . . . . . . . 28
ARTICLE VII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . 29
7.1 Irrevocability . . . . . . . . . . . . . . . . . . . . 29
7.2 Termination . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Amendments . . . . . . . . . . . . . . . . . . . . . . 30
7.4 Severability . . . . . . . . . . . . . . . . . . . . . 30
7.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . 31
7.6 Counterparts . . . . . . . . . . . . . . . . . . . . . 31
7.7 Successors and Assigns . . . . . . . . . . . . . . . . 31
7.8 No Waiver . . . . . . . . . . . . . . . . . . . . . . . 32
7.9 Headings; Section References . . . . . . . . . . . . . 32
7.10 Governing Law . . . . . . . . . . . . . . . . . . . . . 32
7.11 Dispute Resolution . . . . . . . . . . . . . . . . . . 33
7.12 Enforcement and Administration . . . . . . . . . . . . 33
7.13 Settlement of Trustees' Accounts . . . . . . . . . . . 33
7.14 No Bond Required . . . . . . . . . . . . . . . . . . . 33
7.15 Service of Process . . . . . . . . . . . . . . . . . . 34
7.16 Lawsuits Against Trustors . . . . . . . . . . . . . . . 34
7.17 No Disqualification of SCB . . . . . . . . . . . . . . 35
7.18 Initial Trustee; Powers . . . . . . . . . . . . . . . . 35
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FIBREBOARD ASBESTOS COMPENSATION
TRUST AGREEMENT
Trust Agreement ("Trust Agreement") dated as of December 23,
1993, among Continental, CNA Casualty, Columbia, Pacific, and Fibreboard
Corporation, as Trustors and Francis McGovern, as Initial Trustee as provided
in Section 7.18.
NOW, THEREFORE, THIS TRUST AGREEMENT WITNESSETH AND IT IS HEREBY
DECLARED as follows:
ARTICLE I
DEFINITIONS
1.1 Capitalized terms used in this Trust Agreement are defined
herein or in the Glossary.
ARTICLE II
DECLARATION OF TRUST
2.1 Name. The Trust shall be known as the "Fibreboard Asbestos
Compensation Trust," and the Trustees may transact the business and affairs of
the Trust in that name.
2.2 Purposes. The purposes of the Trust are:
(a) to use the assets in the Trust Estate efficiently to
deliver fair and equitable compensation to all qualified Beneficiaries
consistent with Trust resources, without overpaying or underpaying any
Beneficiary and with settlement to be preferred
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over mediation, mediation to be preferred over arbitration, and arbitration to
be preferred over resort to the tort system, all pursuant to the provisions of
this Trust Agreement and the Trust Distribution Process;
(b) to enhance and preserve the Trust Estate;
(c) otherwise to carry out the provisions of this Trust
Agreement and the Trust Distribution Process.
2.3 Transfer of Assets. On the date of Global Approval
Judgment, the Trustors shall transfer and assign to the Trust the amounts
provided for in Section 2.3(B) of the Global Settlement Agreement, having
heretofore taken any and all steps necessary and prerequisite to such transfer.
2.4 Acceptance of Assets and Assumption of Liabilities. In
connection with and in furtherance of its purposes, and subject to Section 5.4,
the Trustees hereby agree to accept on behalf of the Trust the transfer of the
assets described in Section 2.3 above and hereby further expressly agree on
behalf of the Trust to assume liability or undertake responsibility for all
Class Member Claims and those Third Party Claims for which the Trust is
responsible under the Global Settlement Agreement and Trust Distribution
Process. Except as otherwise provided in the Trust Distribution Process, the
Trust shall have all defenses, cross claims, and rights to liens, offsets and
recoupment that Fibreboard or any other Trustor would have had under applicable
law with respect to the Class Member Claims and Third Party Claims to be
assumed by the Trust.
2.5 Maintenance of Trustor Privileges and Confidences. The
Trust shall maintain as privileged and confidential all information expressly
designated as such
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which is provided to it by or on behalf of Fibreboard Corporation or any other
Trustor, including without limitation information relating to Fibreboard's
products and their distribution, the history of the conduct of Fibreboard's or
any other Trustor's business, and Fibreboard's or any other Trustor's defenses
and the history of Fibreboard's settlements in asbestos-related personal injury
lawsuits. The Trust will not waive the privileged and confidential status of
such information without the prior written consent of the Trustor which
designated such information privileged and confidential. The Trust shall
promptly upon receipt of any subpoena or other formal request for such
information notify the Trustor which designated such information as privileged
or confidential.
ARTICLE III
POWERS; TRUST ADMINISTRATION
3.1 Powers.
(a) Subject to the limitations set forth in this Trust
Agreement and the Trust Distribution Process, the Trustees shall have the
powers to take any and all actions as in the judgment of the Trustees are
necessary or convenient to effectuate the purposes of the Trust, including,
without limitation, each power expressly granted in Subsection (b) below and
any power reasonably incidental thereto. Unless otherwise specified in this
Trust Agreement or the Trust Distribution Process, the Trustees may act by the
vote of a majority. All actions by the Trustees shall be taken at a meeting
(which may be by conference telephone call at which all participants may hear,
and be heard by,
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each other) of all Trustees or by unanimous written consent that a particular
action may be taken without a meeting; provided, however, that any such meeting
at which at least two Trustees are present shall be deemed to satisfy the
requirement of this sentence if notice of such meeting was given to all
Trustees not less than five business days' prior thereto, or if all Trustees
have executed, at or prior to such meeting, a waiver of such notice, and all
Trustees are given the opportunity to participate in person or by such a
conference telephone call.
(1) The following actions may be taken only with the
unanimous consent of the Trustees:
(i) Joining in, engaging in or disengaging from
an Other Claims Resolution Facility pursuant to Section
3.1(b)(iii), except that this action shall also require SCB
approval.
(ii) Appointment or removal of the chief executive
officer, chief financial officer or general counsel pursuant to
Section 3.1(b)(ix).
(iii) Taking of structural or other actions to
minimize tax on the Trust Estate pursuant to Section 3.2(b)(iv),
except that this action shall also require SCB approval.
(iv) Approval of annual and quarterly financial
statements of the Trust pursuant to Sections 3.2(c)(i) and (ii);
provided, however, that after a good faith effort to act
unanimously, a majority of the Trustees may grant approval in a
writing that shall include either comments of the Trustee who did
not join in the approval reflecting the reasons for his or
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her failure to join in the approval or, if such Trustee is not
willing to provide such comments, comments from the other Trustee
or Trustees reflecting their understanding as to such reasons.
(v) Approval of reports of claims dispositions
pursuant to Section 3.2(c)(iii); provided, however, that after a
good faith effort to act unanimously, a majority of the Trustees
may grant approval in a writing that shall include either comments
of the Trustee who did not join in the approval reflecting the
reasons for his or her failure to join in the approval or, if such
Trustee is not willing to provide such comments, comments from the
other Trustee or Trustees reflecting their understanding as to
such reasons.
(vi) Approval of budgets and cash flow projections
pursuant to Section 3.2(d); provided, however, that after a good
faith effort to act unanimously, a majority of the Trustees may
grant approval in a writing that shall include either comments of
the Trustee who did not join in the approval reflecting the
reasons for his or her failure to join in the approval or, if such
Trustee is not willing to provide such comments, comments from the
other Trustee or Trustees reflecting their understanding as to
such reasons.
(vii) Amendment or waiver of the Trust Agreement
other than Sections 2.2, 2.3, 2.4, 2.5, 3.1, 3.2, 3.3, 4.1, 4.2,
4.3, 4.4, 5.1, 5.2, 5.3, 5.4, 5.6, 5.7, 7.1, 7.2, 7.3, 7.4, 7.7,
7.8, 7.11, 7.12, 7.13, 7.16, 7.17 and 7.18, except
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that any amendment or waiver of any provision of Article VI shall
also require SCB approval.
(viii) Approval of the fixed cash payment for
Expedited Review Claims pursuant to Trust Distribution Process
Section B.2.
(ix) Approval of additional categories of
Expedited Review Claims pursuant to Trust Distribution Process
Section B.2, except that this action shall also require SCB
approval.
(x) Elimination or suspension of the Expedited
Review Option for one or more categories of Class Member Claims
pursuant to Trust Distribution Process Section B.2.
(xi) Increase in the amount distributable in any
Fiscal Year from the Principal Amount to the Increased Principal
Amount in accordance with Appendix 1 to the Trust Distribution
Process.
(xii) Amendment or waiver of Section B.6 of the
Trust Distribution Process (but only as to the amounts referred to
therein, and except that any such amendment or waiver shall also
require SCB approval) or Section F.3.a of the Trust Distribution
Process (provided that no such amendment or waiver can advance
the time for any payments referred to therein for any Fiscal Year
in which any of the Increased Principal Amount was utilized).
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(xiii) Permitting another Person to join in any
claims resolution facility established pursuant to Section
3.1(b)(ii), except that this action shall also require SCB
approval.
(2) The following actions shall require the approval of a
majority of the Trustees and, unless the unanimous approval of the
Trustees has been obtained, shall also require the approval of the
SCB pursuant to Section 6.1:
(i) Approval of the claim forms pursuant to Trust
Distribution Process Section B.1.
(ii) Approval of the Expedited Review Claim form
pursuant to Trust Distribution Process Section B.2.
(iii) Approval of form of release pursuant to Trust
Distribution Process Section B.4.
(iv) Requirement that Beneficiaries submit
additional kinds of medical evidence in support of Class Member
Claims pursuant to Trust Distribution Process Section B.4.
(v) Selection of locations for mediations and
arbitrations pursuant to Trust Distribution Process Section
C.3.
(3) Any provision of the Trust Agreement, the Trust
Distribution Process, or the Glossary not expressly described above
in Sections 3.1(a)(1) and (2) may be amended or waived with the
unanimous approval of each of the Trustors and the Trustees, the
approval of a majority of the SCB, and the approval of the Court,
and not otherwise.
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(b) Without limiting the generality of Subsection (a)
above, the Trustees shall have the power to:
(i) receive and hold the Trust Estate, and invest
monies held from time to time therein;
(ii) establish, supervise and administer a Claims
Resolution Facility;
(iii) join in or with or engage an Other Claims
Resolution Facility to reduce the costs of liquidating Class
Member Claims and Third Party Claims;
(iv) pay Trust Expenses, Class Member Claims and
Third Party Claims Liquidated in accordance with the Trust
Distribution Process;
(v) borrow money and issue notes and other
evidences of indebtedness (which notes or other evidences of
indebtedness may exonerate the Trustees from personal liability
with respect thereto) in the ordinary course of operations in
order to finance the acquisition of equipment or to pay Trust
Expenses; provided, however, that no such borrowing shall be for a
term in excess of five years or for an amount in excess of $2
million outstanding at any time;
(vi) take all actions contemplated hereunder with
respect to the Funds of the Trust and establish such reserves and
accounts within such Funds as may be useful in carrying out the
purposes of the Trust;
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(vii) sue and be sued and participate, as a party
or otherwise, in any judicial, administrative, arbitration or
other proceeding, including, without limitation, in connection
with any Claims Resolution Facility administered by or for the
Trust;
(viii) adopt and amend bylaws to govern the affairs
of the Trust which are consistent with this Trust Agreement, the
Trust Distribution Process and the Global Settlement Agreement;
(ix) appoint such officers, including a chief
executive officer, chief financial officer and general counsel,
hire such employees and engage such legal, financial and other
advisors and agents as the business of the Trust requires, pay the
Trustees and the SCB subject to Sections 5.5 and 6.4 and pay such
officers, employees, advisors and agents reasonable compensation;
(x) enter into such other arrangements with third
parties as are deemed by the Trustees to be useful in carrying out
the purposes of the Trust (including, without limitation, engaging
a Person to act as paying agent, depositary or custodian and pay
such third parties reasonable compensation);
(xi) enter into the indemnification agreements
referred to in Sections 5.6, 6.4(c) and 7.16;
(xii) enter into any contract or otherwise engage
in any transaction with any Trustee or any Person affiliated with
any Trustee,
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provided that such contract or such transaction is approved by the
unanimous vote of the Trustees who are not parties to or otherwise
involved in, and do not have an interest in, such contract or
transaction; it being understood that the usual rules prohibiting
fiduciaries from dealing with themselves as individuals or from
dealing with respect to any matter in which they have a personal
interest shall apply to the Trustees; and
(xiii) make such elections and determinations with
respect to taxes as are deemed by the Trustees to be useful in
carrying out the purposes of the Trust.
(c) The Trustees shall not have the power to guarantee or
assume, directly or indirectly, any debt or borrowings of other Persons.
3.2 Administration.
(a) The accounting period for the Trust shall be the
Fiscal Year. The first Fiscal Year shall begin on the date of this Agreement
and end on December 31 of the same year. The Trust shall use the accrual
method of accounting under generally accepted accounting principles.
(b) (i) The Trustees shall timely file such income
tax and other returns and statements, and shall provide for and
pay such Trust taxes, as are required to comply with applicable
provisions of the Internal Revenue Code and of any state or local
law and the regulations promulgated thereunder.
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(ii) For federal income tax purposes, the Trustees
and the Trustors intend that the Trust will be taxable either as a
Qualified Settlement Fund or a Designated Settlement Fund.
Trustors agree to cooperate in providing such information or
documents as the Trustees determine are useful for the preparation
and filing of tax returns by the Trust. Each of the Trustors
agrees to do such other and further things as may be reasonably
requested by the Trustees in connection with the tax affairs of
the Trust which shall not result in any tax liability or other
material liability to any of the Trustors.
(iii) The Trustees are hereby designated as the
"administrator" of the Qualified Settlement Fund or Designated
Settlement Fund for federal income tax purposes within the meaning
of Treasury Regulations section 1.468B-2(k)(3). For federal
income tax purposes, the taxable year of the Trust shall be the
calendar year and the Trust shall use an accrual method of
accounting.
(iv) The Trustees are authorized to take such
structural changes or other actions, as the Trustees deem prudent
and appropriate in reducing or minimizing the effect of taxes on
the Trust Estate, provided that such changes or actions do not
result in any additional tax liability or other material liability
to any of the Trustors or directly or indirectly amend any
provision of this Agreement or the Trust Distribution Process that
cannot be amended except pursuant to Section 3.1(a)(3).
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(c) (i) The Trustees shall cause to be prepared, and
file with the Court, as soon as available and in any event within
90 days following the end of each Fiscal Year, an annual report
containing financial statements of the Trust (including, without
limitation, a balance sheet of the Trust as of the end of such
Fiscal Year and a statement of operations for such Fiscal Year)
audited by a nationally recognized firm of independent public
accountants selected by the Trustees and certified by such firm.
(ii) The Trustees shall cause to be prepared and
file with the Court as soon as available and in any event within
45 days following the end of each of the first three quarters of
each Fiscal Year, a quarterly report containing financial
statements of the Trust (including, without limitation, an
unaudited balance sheet of the Trust as of the end of such quarter
and a statement of operations for such quarter), certified,
subject to normal year-end adjustments (including without
limitation as to consistency with the prior Fiscal Year's audited
financial statements), by an appropriate officer of the Trust.
(iii) Simultaneously with delivery of each set of
financial statements referred to in Subsections (i) and (ii)
above, the Trustees shall cause to be prepared, approve and file
with the Court a report containing a summary (in reasonable
detail) of the following information with respect to the period
covered by the financial statement:
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(1) the number of Class Member Claims Liquidated;
(2) the amount of investment income earned by the
Trust and the fair market value of the assets of the Trust as of
the last business day of the applicable accounting period;
(3) the amount of Trust Expenses incurred by the
Trust; and
(4) a certification as to compliance with the
Trust Agreement and Trust Distribution Process, specifically
identifying any lack of compliance.
(d) The Trustees shall cause to be prepared
and approve not later than 30 days nor more than 60 days prior to the
commencement of each Fiscal Year annual budgets and cash flow
projections for the next five years of the Trust and budgets and cash
flow projections for the remaining life of the Trust. The budgets and
cash flow projections shall be based on the actual number and type of
claims filed against the Trust, the income, expense and claims payment
history of the Trust to date as well as projected trends in such items.
(e) A copy of all financial statements, reports,
budgets and cash flow projections (including any general historical
information upon which such budgets and projections are based) prepared
by the Trustees pursuant to this Section 3.2 shall be delivered to the
SCB and each of the Trustors or their successors and assigns at the
time of filing with the Court or, if not filed with the Court, at the
time such documents are prepared. The Trustees shall petition the Court
each year for approval of the annual
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financial statements and reports required by Section 3.2(c). The SCB and any
of the Trustors shall have standing to object to and be heard on such financial
statements and reports. The Trust will provide to any of the Insurers
information which it may need in order to pursue any reinsurance claim.
3.3 Actions by Trustors. All actions by the Trustors shall be
taken by unanimous vote, unless otherwise provided to the contrary in this
Trust Agreement or the Trust Distribution Process.
3.4 Protection of Confidential Information from Disclosure to
the Beneficiaries. Consistent with the purposes of the Trust, the Trustees
have the authority and power to keep confidential from the Beneficiaries such
information as the Trust may determine should be protected from disclosure in
order to avoid prejudicing the Trust's position in negotiation, mediation,
arbitration or litigation of claims presented to the Trust. Nothing contained
in this Section 3.4 shall affect the right of the SCB, the Trustees or the
Trustors to receive any such confidential information, provided that they shall
only use such confidential information for the purpose of conducting their
activities in such capacities.
ARTICLE IV
FUNDS, PAYMENTS AND INVESTMENTS
4.1 Funds.
(a) There are hereby created within the Trust Estate
three Funds, Fund I, Fund II and Fund III.
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(b) Fund I shall consist of all of the assets transferred
to the Trust (including all accrued interest) less $210,000,000 which will be
segregated and allocated to Funds II and III. The Trust shall invest the
amounts in Fund I subject to the limitations set forth in Section 4.3.
(c) Fund II shall consist of $200,000,000 segregated from
the assets transferred to the Trust. The Trust shall invest the $200,000,000
subject to the limitations set forth in Section 4.3. No payments of any kind
may be made from Fund II until at least 21 years after Global Approval
Judgment.
(d) Fund III shall consist of $10,000,000 segregated from
the assets transferred to the Trust. The Trust shall invest the $10,000,000,
subject to the limitations set forth in Section 4.3. No payments of any kind
may be made from Fund III until at least 41 years after Global Approval
Judgment.
(e) Subject to Section 2.2 hereof, the Trustees may, from
time to time, create additional reserves and accounts (all of which shall
remain part of the Fund from which such amounts were created) within the Trust
Estate as they may deem necessary, prudent or useful in order to provide for
the payment of Trust Expenses, Class Member Claims and Third Party Claims
assumed by the Trust, and may, with respect to any such reserve or account,
restrict the use of monies therein.
(f) Any investment earnings received with respect to, or
other proceeds of, any asset held within any Fund (including any reserve or
account which is a part thereof) created hereby or pursuant hereto shall be
credited to, and shall be a part of, such Fund.
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4.2 Payments. Payments of Trust Expenses, Class Member Claims
and Third Party Claims shall be made from Funds I, II and III and such other
reserves or accounts as the Trustees may from time to time establish pursuant
to Section 4.1(e). The maximum annual payments which may be made from such
Funds for such Trust Expenses, Class Member Claims and Third Party Claims are
set forth in Section E of the Trust Distribution Process.
4.3 Investments. Investment of monies held in the Trust Estate
shall be administered in the manner in which individuals of ordinary prudence,
discretion and judgment would act in the management of their own affairs with
the goal of constructing a reasonably conservative portfolio which minimizes
volatility. The Trust shall retain at least two nationally recognized,
independent, professional investment advisers or managers to assist in
investing the Trust Estate subject to the limitations contained in this Section
4.3. The Trust's investments shall be subject to each and every one of the
following limitations and provisions, and, notwithstanding anything to the
contrary in this Trust Agreement, the Trust shall not purchase or otherwise
acquire the equity, debt obligations or other securities of, assets of, or any
interest in any Person, or otherwise extend any credit to or make any
investments in any Person other than the investments described below
("Permitted Investments"):
(a) The Trust shall not (i) acquire, directly or
indirectly, any equity interest in any Person if, immediately following such
acquisition, the Trust would hold more than 5% of the equity in such Person or
business enterprise, or (ii) hold, directly or indirectly, more than 10% of the
equity interest in any Person.
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(b) The Trust may acquire and hold commercial paper if
such commercial paper is rated "Prime-1" or higher by Moody's Investors
Service, Inc. ("Moody's"), "A-1" or higher by Standard and Poor's Corporation
("S&P") or has been given an equivalent rating by another nationally recognized
statistical rating agency.
(c) The Trust may acquire and hold other corporate debt
securities if such securities are rated "A1" or higher by Moody's, "A+" or
higher by S&P, or have been given an equivalent investment grade rating by
another nationally recognized statistical rating agency.
(d) The Trust may acquire and hold equity securities
constituting preferred stock if such preferred stock is rated "a1" or higher by
Moody's, "A+" or higher by S&P or has been given an equivalent investment grade
rating by another nationally recognized statistical rating agency.
(e) The Trust shall not acquire or hold any equity
securities of any Person unless such equity is in the form of securities which
are traded on a national securities exchange in the United States or over the
National Association of Securities Dealers Automated Quotation System.
(f) The Trust may acquire and hold any equity securities
constituting common stock if the long-term debt securities of the issuer are
rated "A1" or higher by Moody's, or "A+" or higher by S&P or have been given an
equivalent rating by another nationally recognized statistical rating agency.
(g) The Trust may acquire and hold certificates of
deposit issued by and bankers' acceptances of and interest bearing deposits
with any U.S. commercial
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bank or any branch or agency of a non-U.S. bank licensed to conduct business in
the U.S. having combined capital and surplus of not less than $1,000,000,000, if
all publicly held long-term debt securities, if any, of such bank and the
holding company, if any, of which such bank is a Subsidiary meet the standards
set forth in Section 4.3(c).
(h) The Trust may acquire and hold repurchase obligations
if (1) in the opinion of the Trustees, they are adequately collateralized, (2)
the collateral constitutes investment instruments that would otherwise
constitute Permitted Investments hereunder and (3) such obligations are entered
into with either a nationally recognized investment banking firm or a
commercial bank meeting the requirements set forth in Section 4.3(g).
(i) The Trust may acquire and hold marketable direct
obligations issued or unconditionally guaranteed by the United States
government or issued by any agency or instrumentality thereof.
(j) The Trust may acquire and hold marketable direct
obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof if such
securities are rated "A1" or higher by Moody's, "A+" or higher S&P, or have
been given an equivalent rating by another nationally recognized statistical
rating agency.
(k) The Trust may acquire and hold equity, bond, money
market and other funds organized under the laws of the United States or any
state thereof that invest solely in any of the foregoing investments permitted
under Sections 4.3(b) through (j).
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(l) The Trust may enter into futures and options
arrangements, and interest rate and currency swap agreements, cap, floor and
collar agreements, interest rate insurance, currency spot and forward contracts
and other agreements or arrangements solely for the purposes or protecting
against fluctuations in the principal of, or interest or currency exchange
rates on, the Trust's investments, provided that the net obligations of the
Trust in respect thereof shall not exceed 5% of the Trust Estate at any time.
(m) The Trust shall not acquire or hold any obligations
or securities denominated in a currency other than U.S. Dollars without
substantially hedging against fluctuations in such currency, provided that the
net obligations of the Trust in respect thereof shall not exceed 5% of the
Trust Estate at any time.
(n) The Trust shall not acquire or hold any equity, debt
securities or other instruments or obligations of any Person (other than debt
securities or other debt instruments described in Section 4.3(i) or any fund
described in Section 4.3(k) investing solely in the foregoing) if the aggregate
market value of all equity, debt securities and other instruments and
obligations of such Person held by the Trust would exceed 5% of the aggregate
value of the Trust Estate.
(o) The Trust shall not (i) acquire any equity securities
of any Person if, following such acquisition, the aggregate market value of all
equity securities held by the Trust would exceed 50% of the aggregate value of
the Trust Estate, or (ii) hold any equity securities to the extent that the
aggregate market value of all equity
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securities held by the Trust would exceed 60% of the aggregate value of the
Trust Estate.
(p) The Trust may acquire and hold mutual funds investing
in "baskets" of securities designed to track the performance of the S&P 500
stock index or the Lehman Brothers Aggregate Bond Index, provided that the
aggregate obligations of the Trust in respect thereof, together with the
aggregate market value of all equity securities held by the Trust, shall not
exceed 60% of the aggregate value of the Trust Estate at any time.
(q) The Trust may acquire and hold investments of a type
not permitted under Subsections (b)-(l) or (p) above in an aggregate amount not
to exceed 5% of the aggregate value of the Trust Estate at any time.
4.4 Source of Payments. All Trust Expenses and payments in
respect of Class Member Claims and Third Party Claims shall be payable solely
out of the Trust Estate. Neither the Trustees nor any officer, agent or
employee of the Trust nor any of the Trustors nor any of their Subsidiaries nor
any Affiliate, director, officer, employee or agent of the Trustors or any of
their Subsidiaries nor any member of the SCB shall be liable for the payment of
any Trust Expense, Class Member Claim or Third Party Claim or other liability
of or on account of the Trust, and no Person shall look to any of the foregoing
Persons for payment of any such expense or liability.
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ARTICLE V
TRUSTEES
5.1 Number. Prior to the appointment of the Trustees
hereunder, the provisions of Section 7.18 shall govern. Thereafter, there
shall be three Trustees at all times (other than during the period contemplated
by Section 5.3(b)), described as the Class A, B and C Trustees. Each Trustee
shall be an individual who has substantial professional experience related to
one or more of the purposes of the Trust and who is able to devote the
necessary time and resources to his or her duties hereunder, it being
understood that whenever possible any person named to serve as a Trustee will
have experience concerning asbestos litigation, although failure to have such
experience will not in and of itself disqualify any Person from service as a
Trustee. No Trustee may simultaneously hold another office or position in the
Trust.
5.2 Term of Service.
(a) The initial term of the Class A, B and C Trustees are
four, five and six years, respectively. Thereafter, each Trustee shall serve a
five-year term. In each case the term of the Trustee shall be terminated upon
death, resignation pursuant to Subsection (b) below or removal pursuant to
Subsection (c) below.
(b) Any Trustee may resign at any time by written notice
to each of the remaining Trustees. Such notice shall specify a date when such
resignation shall take effect, which shall not be less than 90 days after the
date such notice is given unless all of the Persons entitled to appoint the
resigning Trustee's successor under Section 5.3(a) consent to a different date.
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(c) Any Trustee may be removed for cause by the Court
upon application of any of the Trustors or a majority of the SCB.
(d) Any Trustee may be reappointed for additional terms.
(e) Any successor Trustee filling an unexpired term shall
serve until the end of such term.
5.3 Appointment of Successor Trustees.
(a) In the event of a vacancy in the position of a
Trustee, the vacancy shall be filled by the SCB in the case of a Class A or
Class B Trustee or by the Trustors in the case of the Class C Trustee.
(b) If the SCB or the Trustors, as the case may be, fail
to appoint a successor Trustee pursuant to Subsection (a) above who accepts
such appointment in writing within 90 days after the occurrence of the vacancy
in the position of a Trustee, the remaining Trustees shall apply to the Court,
which shall appoint a successor Trustee or successor Trustees. For a period of
10 days after the occurrence of the vacancy in the position of a Trustee, no
vote on any action requiring the unanimous consent of the Trustees shall be
permitted to occur.
(c) Immediately upon the appointment of any successor
Trustee, all rights, titles, duties, powers and authority of the predecessor
Trustee hereunder shall be vested in and undertaken by the successor Trustee
without any further act. No successor Trustee shall be liable personally for
any act or omission of his or her predecessor, or for any Trust act or omission
which occurred prior to his or her
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appointment, unless such act or omission is expressly ratified by the successor
Trustee after his or her appointment.
5.4 Liability of Trustees, Officers and Employees. No Trustee,
officer or employee of the Trust shall be liable to the Trust, any Beneficiary
or any other Person except for his own gross negligence or willful misconduct.
No Trustee, officer or employee of the Trust shall be liable for any act or
omission of any other officer, agent or employee of the Trust unless the
Trustee, officer or employee acted with gross negligence or willful misconduct
in the selection or retention of such officer, agent or employee.
5.5 Compensation and Expenses of Trustees.
(a) Each of the Trustees shall receive compensation from
the Trust for his or her services as Trustee in the amount of $100,000 per
annum plus, after the first 12 days during which the Trustee has performed the
services described below in this sentence, $1,000 per diem for each meeting of
the Trustees or any committee or subcommittee thereof attended by such Trustee,
reduced proportionately to account for any fraction of a day spent on such
duties in the case of any such meeting not attended in person, or for special
duties performed by such Trustee on behalf of the Trust, reduced
proportionately to account for any fraction of a day spent on such duties, and
$500 for each day of substantial travel in connection with attendance at any
such meeting or performance of any such special duties. Such compensation
amounts shall be increased or decreased annually at the rate of the Consumer
Price Index for urban wage earners and clerical workers (U.S. City Average)
unadjusted for seasonal variation,
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published by the Bureau of Labor Statistics of the United States Department of
Labor, or otherwise by the Trustees with the approval of the Court. In the
event that at any time the Trustees determine that the amount of time required
to perform their duties as Trustees has substantially decreased, they shall in
good faith determine whether a reduction in their compensation is warranted.
(b) All reasonable out-of-pocket costs and expenses
incurred by the Trustees in connection with the performance of their duties
hereunder shall be paid by the Trust or, if paid by a Trustee, shall be
promptly reimbursed to such Trustee by the Trust.
5.6 Indemnification of Trustees, Officers and Employees. The
Trustees, officers and employees of the Trust shall be indemnified by the Trust
to the fullest extent permitted under applicable law against any and all
liabilities, expenses, claims, damages or losses incurred by them in the
performance of their duties hereunder, except any liability, expense, claim,
damage or loss as to which they are liable under Section 5.4. The Trustees,
officers and employees of the Trust shall be entitled to advancement of
attorneys' fees and expenses from the Trust for the purposes set forth in this
Section 5.6 to the fullest extent permitted under applicable law.
5.7 Trustees' Employment of Experts. The Trustees may, but
shall not be required to, consult with independent, outside counsel,
accountants, appraisers, investment bankers and other parties reasonably
selected and determined in good faith by the Trustees to be qualified as
experts on the matters submitted to them, except as otherwise expressly
provided in this Trust Agreement, and the opinion of any such
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parties on any matters submitted to them by the Trustees shall be full and
complete justification for any action taken or not taken by the Trustees
hereunder in good faith and in reasonable reliance upon the written opinion of
any such expert.
ARTICLE VI
SELECT COUNSEL FOR THE BENEFICIARIES
6.1 Formation: Duties. The SCB shall consist of five lawyers
chosen to represent the interests of the Beneficiaries, and the initial four
SCB lawyers shall be Joseph Rice; Joseph Cox; Harry Wartnick; and Steven Kazan.
The fifth SCB lawyer shall be selected unanimously by the initial four lawyers
on or before January 14, 1994. If the initial four SCB members are unable to
reach unanimous agreement on the identity of the fifth SCB member, the four SCB
members shall appear in Court on January 17, 1994, and with the assistance of
the Court, work day to day until agreement is reached. In giving their
approval or in acting pursuant to this Agreement the members of the SCB shall
act in the best interests of the Beneficiaries and consistent with the purposes
of the Trust. The SCB shall hold an annual meeting to which all lawyers who
have submitted a Class Member Claim to the Trust during the past five years
shall be invited and be entitled to be present. The SCB shall give a report to
the annual meeting describing the activities of the Trust for the prior year,
including any approvals given by the SCB pursuant to this Agreement and/or the
Trust Distribution Process and all matters on which the Trustees have indicated
that they intend to seek the approval of the SCB during the following year. In
giving approval to the Trustees, the SCB shall
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consider in good faith all recommendations made at such annual meeting. The
Trustees shall consult with the SCB on the implementation and administration of
the Trust Distribution Process. The Trustees may consult with the SCB on any
matter affecting the Trust, and, as provided in Section 3.1(a), certain actions
by the Trustees shall require the prior approval of the SCB. All approvals of
the SCB shall be by majority vote.
6.2 Term of Office.
(a) Each member of the SCB shall serve for the duration
of the Trust, subject to the earlier of his or her death, resignation, or
removal.
(b) Subject to section 6.3(a) hereof, any member of the
SCB may resign at any time by written notice to each of the remaining members
specifying the date when such resignation shall become effective.
(c) Any member of the SCB may be removed for cause by the
Court upon joint application of all of the other SCB members.
6.3 Appointment of Successor.
(a) A vacancy in the SCB caused by the resignation of an
SCB member shall be filled with an individual nominated by the resigning SCB
member and approved by the unanimous vote of all SCB members. The resigning
SCB member's resignation shall not be effective until such approval is obtained
and the successor SCB member has accepted the appointment.
(b) In the event of a vacancy in the membership of the
SCB other than one caused by resignation as aforesaid, the vacancy shall be
filled by the unanimous vote of the remaining member(s) of the SCB.
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6.4 Compensation Expenses and Liability of SCB Members.
(a) Each member of the SCB shall receive compensation
from the Trust for his or her services in the amount of $1,000 per diem for
travel related to and attendance at the SCB meetings attended in person by such
member, and $1,000 per diem (adjusted proportionately to account for any
fraction of a day spent on, or in travel in connection with, such duties) for
work done by the members of the SCB (other than attending SCB meetings in
person) in carrying out their duties and responsibilities under the Trust
Agreement. Such compensation shall be payable as determined the Trustees, but
not less frequently than quarterly. Such per diem amount shall be increased or
decreased annually pro rata with the amount that the per diem for meetings paid
to the Trustees is increased or decreased pursuant to Section 5.5.
(b) The reasonable out-of-pocket costs and expenses
incurred by SCB members in connection with the performance of their duties
hereunder, together with the reasonable fees and expenses of their counsel,
shall be paid by the Trust or, if paid by a member of the SCB, shall be
promptly reimbursed to such member by the Trust.
(c) Liability of SCB. No present or former member of the
SCB shall be liable to the Trust, any Beneficiary or any other Person except
for his own gross negligence or willful misconduct. All present or former
members of the SCB shall be indemnified by the Trust to the fullest extent
permitted under applicable law against any and all liabilities, expenses,
claims, damages or losses incurred by them in the performance of their duties
hereunder or in serving as Class Counsel, except any liability,
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expense, claim, damage or loss as to which they are liable under this Section.
No present or former member of the SCB shall be liable personally for any act
or omission of his or her predecessor, or for any act or omission of the SCB
which occurred prior to his or her appointment, unless such act or omission is
expressly ratified by such person after his or her appointment. The present
and former members of the SCB shall be entitled to advancement of attorneys'
fees and expenses from the Trust for the purposes set forth in this subsection
(c) to the fullest extent permitted under applicable law.
6.5 Resolution of Disputes Involving Approval of the Select
Counsel for the Beneficiaries.
(a) Approval Procedures. In any circumstance arising
under this Trust Agreement or the Trust Distribution Process where the Trust
makes a decision with respect to matters which require the approval of the SCB,
the Trust shall:
(i) provide the SCB with reasonable access to
experts retained by the Trust and to Trust staff during such time
as the decision is being made;
(ii) bring the proposed decision to the attention
of the SCB; and
(iii) unless the circumstances prevent, provide the
SCB no fewer than 10 days to comment with respect to such proposed
decision.
In the event the SCB disagree with the Trust's decision, they
shall express their view as fully as possible to the Trust and make such
counterproposal as may be appropriate. The Trust and the SCB shall thereupon
consult in an effort to reach agreement.
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(b) Approval in Writing. The approval of the SCB, when
required under the Trust Agreement or the Trust Distribution Process, must be
in writing to be effective; provided, however, that in the event the SCB fails
to approve or disapprove an action requiring SCB approval pursuant to Section
3.1(a) within 30 days of notice of proposed action by the Trust, the SCB shall
be deemed to have approved such action.
(c) Access to Financial Information. Subject to entry
into an appropriate confidentiality agreement where applicable, the Trust shall
make available to the SCB any investment banking or other financial, accounting
or statistical information available to the Trust relating to issues to be
discussed and/or as to which the approval of the SCB is required.
ARTICLE VII
GENERAL PROVISIONS
7.1 Irrevocability. The Trust is irrevocable.
7.2 Termination.
(a) The Trust shall terminate on the date (the
"Termination Date") which is the earlier of (1) the first date on which all
Class Member Claims and Third Party Claims filed with or against the Trust have
been resolved, 24 consecutive months have elapsed during which no such claim
has been filed with the Trust and approval of such termination by the Court has
been obtained upon joint application of all of the Trustees and a majority of
the SCB; or (2) 21 years less 91 days pass after the
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death of the last survivor of any of the descendants of Joseph P. Kennedy
living on the date hereof.
(b) On the Termination Date, after payment of all
liabilities of the Trust have been provided for, the Trust shall be dissolved,
and all of the Trust's assets shall be applied to such charitable purposes as
the Trustees in their reasonable discretion, after consultation with the SCB,
shall determine, which charitable purposes, if practicable, shall relate to
occupational health.
7.3 Amendments.
(a) This Trust Agreement may only be amended or waived as
provided in Section 3.1(a). Thirty days' advance written notice of any
proposed amendment or waiver shall be given to the SCB and the Trustors.
(b) The Trust Distribution Process may only be amended or
waived as provided in Section 3.1(a) of this Trust Agreement and, where
applicable, Section H.7 of the Trust Distribution Process. Thirty days' advance
written notice of any proposed amendment or waiver of the Trust Distribution
Process shall be given to the SCB, the Trustors and, where appropriate,the
Representative Defendant.
(c) The definitions used in this Trust Agreement or in
the Trust Distribution Process and contained in the Glossary may be amended or
waived only if and in the same manner as the Section of this Trust Agreement or
the Trust Distribution Process in which such definition is used may be amended
or waived.
7.4 Severability. Should any provision of this Trust Agreement
or the Trust Distribution Process be determined to be unenforceable, such
determination shall
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in no way limit or affect the enforceability and operative effect of any and
all other provisions of this Trust Agreement or the Trust Distribution Process.
7.5 Notices. Notices to Persons asserting claims shall be
given at the address of such Person, or, where applicable, such Person's legal
representative, in each case as provided on such Person's proof of claim. Any
notices or other communications required or permitted hereunder shall be in
writing and (a) delivered at, or sent by telex or telecopy to, the addresses
designated in Section 8.13 of the Global Settlement Agreement or, in the case
of the Trustees, the addresses provided by the Trustees to the Trust, the SCB
and the Trustors, or (b) mailed by registered or certified mail, return receipt
requested, postage prepaid, addressed as aforesaid, or to such other address or
addresses as may hereafter be furnished by any of the Trustors, the Trust or
the Trustees or the SCB to the others.
All such notices and communications shall be effective when
delivered at the designated addresses or when the telex or telecopy
communication is received at the designated addresses and confirmed by the
recipient by return telex or telecopy in conformity with the provisions hereof.
7.6 Counterparts. This Trust Agreement may be executed in any
number of counterparts, each of which shall constitute an original, but such
counterparts shall together constitute but one and the same instrument.
7.7 Successors and Assigns. The provisions of this Trust
Agreement shall be binding upon and inure to the benefit of the Trustors, the
Trust, the Trustees, the SCB and their respective successors and assigns,
except that neither the Trustors nor
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the Trust nor any Trustee, nor the SCB members may assign or otherwise transfer
any of its, his or her rights or obligations under this Trust Agreement except,
in the case of the Trust and the Trustees, as contemplated by Section 7.2.
7.8 No Waiver. No failure to exercise or delay in exercising
any right, power or privilege hereunder or under the Trust Distribution Process
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder or under the Trust Distribution Process
preclude any further exercise thereof or any other right, power or privilege.
The rights and remedies provided herein or in the Trust Distribution Process
are cumulative and are not exclusive of rights under law or in equity.
7.9 Headings: Section References. The headings used in this
Trust Agreement and in the Trust Distribution Process are inserted for
convenience only and neither constitute a portion of this Trust Agreement or
the Trust Distribution Process nor in any manner affect the construction of the
provisions of this Trust Agreement or the Trust Distribution Process. All
references in this Trust Agreement or in the Trust Distribution Process to
"Sections," unless otherwise expressly indicated, shall be deemed to refer to
sections of the document in which such reference appears.
7.10 Governing Law. This Trust Agreement and the Trust
Distribution Process shall be governed by, administered under and construed in
accordance with, the laws of the State of Texas.
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7.11 Dispute Resolution. Any disputes which arise under this
Trust Agreement or the Trust Distribution Process shall be resolved by the
Court, except as otherwise provided herein or in the Trust Distribution Process.
7.12 Enforcement and Administration. The provisions of this
Trust Agreement and the Trust Distribution Process shall be enforced and
administered by the Court.
7.13 Settlement of Trustees' Accounts. Notwithstanding any
state law to the contrary, the Court shall have exclusive jurisdiction over the
settlement of the accounts of the Trustees, whether such account is rendered by
the Trustees themselves or is sought by any Beneficiary or other Person. The
Trustees shall render successive accounts covering periods of not more than one
Fiscal Year, commencing on the first completed Fiscal Year of the Trust or the
last day of the prior accounting period, as the case may be, except that an
account shall be rendered for the period ending on the date of the death,
resignation, removal or retirement of any Trustee. Upon the acceptance of any
such account by the Court after hearing on notice to the SCB, the Trustors and
such other parties as the Court shall designate, the Trustees shall be
discharged from any further liability or responsibility to any Beneficiary or
other Person as to all matters embraced in such account.
7.14 No Bond Required. Notwithstanding any state law to the
contrary, each Trustee (including any successor Trustee) shall be exempt from
giving any bond or other security in any jurisdiction.
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7.15 Service of Process. Service of process upon any of the
Trustees in an action or proceeding under Sections 7.11, 7.12 or 7.13 shall be
effective upon delivery to the address set forth in Section 7.5. Successor
Trustees, by acceptance of their appointment as such, shall be deemed to have
approved this method of service.
7.16 Lawsuits Against Trustors. Except as provided in Section
2.4(a) of the Global Settlement Agreement as to Fibreboard Corporation, the
Trust shall defend and indemnify the Fibreboard, Continental and Pacific
Releases against and hold them harmless from any costs, fees, claims,
liabilities, settlements or judgements incurred or occurring after Global
Approval Judgement and resulting, directly or indirectly, from the assertion
against any of them of any Class Member Claim or Third Party Claim. This
obligation shall include without limitation any such claim to the extent that,
after Global Approval Judgment, that claim attacks the validity or
enforceability of the Global Approval Judgment, but shall exclude any
Additional Policy Claims or Express Indemnity Claims that are the subject of a
waiver by the Insurers or Fibreboard under Section 6.3(C) of the Global
Settlement Agreement. The defense of any such lawsuit will be tendered to the
Trust and any defense costs or indemnity obligation will be paid by the Trust
for so long as funds remain in Funds I, II and III. The Trustors may, at their
own expense, elect to participate with the Trust in the defense of any such
action or claim. Amounts paid to or on behalf of the Fibreboard, Continental
and Pacific Releasees pursuant to this Section shall not be limited in any
manner, including by the provisions of Section E of the Trust Distribution
Process. The provisions of this
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Section 7.16 shall only be applicable after Global Approval Judgment, subject
to Section 2.7(B) of the Global Settlement Agreement.
7.17 No Disqualification of SCB. No member of the SCB shall be
disqualified solely by reason of his or her service as an SCB member from
serving as counsel for any Class Member in connection with submission of any
Class Member Claim to the Trust, nor shall service as such counsel be deemed to
create a conflict of interest with respect to service to the Trust as an SCB
member. No SCB member shall take any action in his or her capacity as such
that would prefer the interests of his or her clients over the interests of
similarly situated Beneficiaries generally.
7.18 Initial Trustee; Powers. In the event that as of the date
of execution of the Global Settlement Agreement, the Trustees have not been
selected, then:
(a) On that date, the Trustors shall contribute $100 to
the Trust. Francis McGovern shall be the sole initial trustee ("Initial
Trustee"). The Initial Trustee shall have only the power to take those
ministerial and administrative actions necessary or desirable to apply for a
letter ruling from the Internal Revenue Service pursuant to Section 8.1 of the
Global Settlement Agreement and preserve the existence of the Trust until
Trustees are appointed hereunder. The Initial Trustee shall not have authority
to make any discretionary decisions, waivers or amendments to the Trust
Agreement.
(b) No later than January 14, 1994, the Trustors and the
Class Counsel (as defined in the Global Settlement Agreement) shall select
three trustees, who shall be the original Class A, Class B and Class C Trustees
(such persons, and their successors appointed pursuant to Section 5.3, being
referred to as the "Trustees").
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Trustors and Class Counsel have agreed to confer to attempt to reach joint
agreement as to the selection of all three original Trustees. If Trustors and
Class Counsel cannot agree, Class Counsel will unanimously select the Class A
and B Trustees and Trustors will unanimously select the Class C Trustee.
Absent agreement among Class Counsel as to the selection of the Class A and B
Trustees, or among Trustors as to the selection of the Class C Trustee, all
Class Counsel and/or all Trustors agree to appear in Court on January 17, 1994,
and with the assistance of the Court, to work from day to day until agreement
on the selection of the Trustee(s) for whom they are responsible is reached.
Upon acceptance of this Trust Agreement by the original Class A, Class B and
Class C Trustees, the Initial Trustee shall resign.
IN WITNESS WHEREOF, the parties have executed this Trust Agreement
on this 23rd day of December, 1993.
TRUSTORS:
FIBREBOARD CORPORATION
By: /s/ MICHAEL R. DOUGLAS
----------------------------------------
Title: Senior Vice President & General Counsel
----------------------------------------
COLUMBIA CASUALTY COMPANY
By: /s/ LAURENS F. TERRY
----------------------------------------
Title: Vice President
----------------------------------------
CONTINENTAL CASUALTY COMPANY
By: /s/ LAURENS F. TERRY
----------------------------------------
Title: Vice President
----------------------------------------
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CNA CASUALTY COMPANY OF
CALIFORNIA
By: /s/ LAURENS F. TERRY
----------------------------------------
Title: Vice President
----------------------------------------
PACIFIC INDEMNITY COMPANY
By: /s/ JOHN J. DEGNAN
----------------------------------------
Title: Senior Vice President
----------------------------------------
INITIAL TRUSTEE:
/s/ M. IWEN
-------------------------------------------------
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TRUST DISTRIBUTION PROCESS
ANNEX A TO THE TRUST AGREEMENT
131
TABLE OF CONTENTS
Page
----
A. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B. The Claim Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1. Submitting a Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Expedited Review Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Ordering of Claims for Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Initial Evaluation of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. Further Claims Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6. Second (Malignant) Injury Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7. Audit Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. Exigent Health and Extreme Hardship Claims . . . . . . . . . . . . . . . . . . . . . . . . 9
9. Withdrawal of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
C. ADR Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1. Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3. Location for ADR Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
D. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1. Mandatory Settlement Conference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2. Procedural Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
E. Funds for Payment of Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1. Fund I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
a. Commencement of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
b. Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
c. Distribution of Remaining Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2. Fund II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
a. Commencement of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
b. Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
c. Distribution of Remaining Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3. Fund III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
a. Commencement of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
b. Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
c. Distribution of Remaining Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4. Determination of Distributable Amount for Each Fund . . . . . . . . . . . . . . . . . . . 22
F. Order, Timing and Limitations on Payments of Claims . . . . . . . . . . . . . . . . . . . . . 22
1. Eligibility for Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2. Order of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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3. Terms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
a. Claims Resolved Outside the Tort System . . . . . . . . . . . . . . . . . . . . . . . 25
b. Claims Resolved in the Tort System . . . . . . . . . . . . . . . . . . . . . . . . . 25
4. Deferral of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5. Limitation on Payment of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
G. All Claims Resolved Pursuant to the Trust Distribution Process . . . . . . . . . . . . . . . 27
H. Defendant Class Member Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1. Claims Liquidated Before Judgment Against Defendant Class Members . . . . . . . . . . . . 29
a. Calculation of Set-Off Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
b. Status of the Trust at Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
c. Discovery and Informational Issues . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2. Claims Not Liquidated When Verdict or Judgment Obtained Against Defendant Class Members . 31
a. Effect of Verdict or Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
b. Retention of Several Liability Claim . . . . . . . . . . . . . . . . . . . . . . . . . 32
c. Payment of Verdict or Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3. Tort System Claims Against the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4. Litigation Between Defendant Class Members and Settlement Class Members . . . . . . . . . 34
5. Pursuit of Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
a. Defendant Class Member to Stand in Settlement Class Members' Stead . . . . . . . . . . 35
b. Resolution of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
c. Processing and Payment of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
d. Multiple Claims or Multiple Third Party Claims . . . . . . . . . . . . . . . . . . . . 37
6. Cooperation for Court Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7. No Modification Without Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
I. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
J. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
APPENDIX 1 TO THE TRUST DISTRIBUTION PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
SCHEDULE A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
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TRUST DISTRIBUTION PROCESS
ANNEX A TO THE TRUST AGREEMENT
This Trust Distribution Process creates the procedures for
submitting, processing and paying Class Member Claims and Third Party Claims.
Capitalized terms used in this Trust Distribution Process are defined herein or
in the Glossary.
A. OVERVIEW.
The primary goal of the Trust is fair and equitable treatment for
all Beneficiaries consistent with Trust resources. This Trust Distribution
Process furthers that goal by establishing procedures that are intended to
process and evaluate Class Member Claims of Beneficiaries impartially, pay all
Class Member Claims over time, and maintain reasonable reserves for any Class
Member Claims in excess of projections. The Trustees shall implement and
administer this Trust Distribution Process in accordance with their duties
under the Trust Agreement.
The claims resolution process begins with a proof of claim. The
Trust then makes a determination whether the claim meets the criteria for any
of the five Scheduled Diseases: Mesothelioma, Lung Cancer, Other Cancer,
Asbestos Lung Disease I ("ALD-1") and Asbestos Lung Disease II ("ALD-2"). If
the claim meets the criteria for a Scheduled Disease, it will be evaluated
based on factors that have significance in the resolution of similar claims by
settlement or trial, including but not limited to the factors set forth in
Schedule A hereto. If the claim does not meet the criteria for one of the
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Scheduled Diseases, the Trust will evaluate whether it nonetheless asserts a
compensable claim for an asbestos-related injury.
After evaluation, the Trust will make a good faith settlement offer
or advise the Beneficiary of the reasons for rejecting the claim. The
Beneficiary may either accept or reject that offer or negotiate further with
the Trust. If the Beneficiary rejects the Trust's offer, he or she may submit
supplemental information to the Trust and have his or her claim reevaluated by
the Trust and/or negotiate further with the Trust. If negotiation with the
Trust fails, the Beneficiary shall, if he or she wishes to pursue the claim,
proceed to mediation and then to binding or nonbinding arbitration.
Beneficiaries may bring an action against the Trust in the tort system only
after they have participated in good faith in both mediation and nonbinding
arbitration and have rejected the award in a nonbinding arbitration.
Beneficiaries must also appear at a mandatory settlement conference
under the auspices of the Court before proceeding to the tort system. If a
Beneficiary rejects settlement following the settlement conference, he or she
may elect immediate binding arbitration or exit to the tort system. No
punitive damages, pre-judgment or post-judgement interest, damages for risk of
cancer, or compensatory damages beyond Fibreboard's own share will be allowable
in the tort system. Judgments may be collected only as provided in this Trust
Distribution Process.
Similar claims-handling procedures (described in Section H below)
apply to certain Third Party Claims including those of Defendant Class Members
who succeed to Class Member Claims.
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Class Member Claims and Third Party Claims will be eligible for
payment once they are Liquidated, whether by settlement, arbitration, or
judgment. Judgments or claims settled after exit to the tort system will
normally be paid out over a five-year period, while claims resolved without
resort to the tort system will normally be paid out over a three-year period.
Total payments from the Trust in each year for Trust Expenses, Class Member
Claims and Third Party Claims are limited to the amounts set forth in Section
E. While the Trust is expected to be able to pay all claims as Liquidated
yearly, if amounts available are insufficient to make all payments due on
Liquidated claims in any year, claims for Mesothelioma and Lung Cancer will be
paid first, then Other Cancer and ALD-1 claims, then ALD-2 claims, and then
Residual Claims, whether any such claims have been Liquidated by settlement,
arbitration or judgment. Within each of those categories, claims will be paid
in the order of the date on which a release is received by the Trust (for
settled claims), an arbitration ruling is rendered (for claims resolved through
arbitration) or a judgment becomes final (for claims resolved in the tort
system). Class Member Claims and Third Party Claims which cannot be paid
because the amount available for that year is insufficient to make all payments
due on such claims will be deferred for payment (FIFO within their payment
categories) until the following year.
B. THE CLAIM PROCEDURE.
1. SUBMITTING A CLAIM. Other than Interim Claims submitted pursuant
to Article 7 of the Global Settlement Agreement, commencing on February 14,
1994, any Beneficiary may submit a claim to the Trust. To do so, the
Beneficiary shall provide to
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the Trust, on forms approved by the Trustees and the SCB, a proof of claim
including at least the following information concerning the Exposed Person:
name, address, social security number, date of birth, date of death (if
applicable), marital status and number and age of dependents, spouse's name and
social security number, occupation, smoking history, year of first exposure to
any asbestos or asbestos-containing products, identification and source of
identification of asbestos-containing products manufactured or supplied by
Fibreboard to which the Exposed Person was exposed, the work sites where the
Exposed Person was exposed to asbestos or to Fibreboard asbestos, the years of
such exposures including specific descriptive comments concerning the duration
and intensity of such exposure, the status of related workers compensation or
civil litigation regarding asbestos exposure, and the Scheduled Disease, if
any, for which the Beneficiary believes the claim qualifies or a statement of
the disease or injury the Beneficiary asserts he or she has if he or she does
not believe he or she qualifies for a Scheduled Disease. In addition, the
Beneficiary shall provide the Trust with a Medical Report, a PFT Report and a
B-reader Report, and, in Malignancy Claims, a pathology report (where
available).
2. EXPEDITED REVIEW OPTION. The Trust may establish a process for
expedited review of ALD-2 claims by persons desiring an accelerated settlement
of their claim at a fixed amount ("Expedited Review Claims"). A Beneficiary
seeking such expedited review shall submit an abbreviated proof of claim for
expedited review by the Trust. The abbreviated proof of claim shall provide
the following information concerning the Exposed Person: name, address, social
security number, date of birth, date of death (if applicable), marital status,
spouse's name and social security number, occupation, the
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Scheduled Disease for which the Beneficiary believes the claim qualifies, the
work sites where the Exposed Person was exposed to asbestos or to Fibreboard
asbestos and such information requested by the Trust that adequately
demonstrates exposure to asbestos or asbestos-containing products and to
Fibreboard asbestos or asbestos-containing products. In addition, the
Beneficiary shall supply the Trust with a Medical Report. The Trust will
expeditiously review the abbreviated proof of claim and may, but is not
required to, offer to settle such Expedited Review Claims for a single fixed
cash payment of an amount and on a time schedule established from time to time
by the Trust. If the Trust determines not to offer to settle an Expedited
Review Claim, the Beneficiary may submit a proof of claim as set forth in
Section B.1.
The Trust may establish additional categories of Expedited Review
Claims with differing fixed cash payments and differing information
requirements. In addition, the Trust may eliminate or suspend the Expedited
Review Claim option for one or more categories of Class Member Claims if it
determines that such option is encouraging the filing of claims that would not
otherwise be eligible for payment under these procedures or is using a
disproportionate share of the Trust's assets.
3. ORDERING OF CLAIMS FOR PROCESSING. Claims shall be ordered for
processing by the Trust in the manner described in this Section. As a general
practice, the Trust shall review its claims files on a regular basis and notify
all Beneficiaries whose claims are likely to be processed in the near future.
A Beneficiary's position in the FIFO queue for processing will be determined by
the date of receipt by the Trust of a properly completed proof of claim form,
and among claims received the same day, by the date of
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diagnosis of the disease on which the claim is based. Where the Beneficiary
has filed an incomplete proof of claim, the Trust shall notify the Beneficiary
of the need for additional information and shall not process the claim until
the file is complete. A Beneficiary shall not receive a position in the FIFO
processing queue until his or her proof of claim is properly completed.
4. INITIAL EVALUATION OF CLAIMS. As a proof of claim is reached in
the FIFO queue, the Trust shall evaluate it to determine whether the claim
qualifies as one of the five Scheduled Diseases. A Beneficiary's right to
assert a valid claim for an asbestos-related injury or disease is in no way
prejudiced by failure of his or her asbestos-related injury or disease to
qualify as one of the Scheduled Diseases. If a Scheduled Disease is determined
to exist, the Trust shall evaluate the Beneficiary's claim using factors
relevant to the resolution of asbestos claims for that Scheduled Disease by
settlement or trial, including the factors set forth in Schedule A hereto. If
the Trust concludes that the Beneficiary's injury or disease does not meet the
criteria for a Scheduled Disease, it shall determine whether the Beneficiary
nonetheless asserts a meritorious claim for an asbestos-related injury or
disease and shall evaluate the claim using factors relevant to the resolution
of similar claims by settlement or trial. If the Trust accepts for disposition
a claim with respect to a disease which is not a Scheduled Disease, the Trust
shall place it in a Schedule Category based on which Scheduled Disease it most
closely resembles.
In addition to the medical evidence which Beneficiaries are
required to submit with initial proof of claim or submit as part of any
supplemental information
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provided to the Trust, the Trust may require that additional kinds of medical
evidence be provided. The Trust may obtain additional medical evidence which
it believes necessary to evaluate any claim.
Once its evaluation is completed, the Trust shall make a written
good faith offer of settlement based upon such evaluation or advise the
Beneficiary of the reasons for rejecting the claim. Such responses shall be
sent to the Beneficiary's counsel or representative, if any, or to the
Beneficiary. The claim shall not be processed further until the Trust receives
a response from the Beneficiary. The Beneficiary and the Trust shall then
negotiate in good faith toward a resolution of the claim. Once the Trust
receives confirmation of resolution of the claim, it shall forward an
appropriate form of release approved by the Trust to the Beneficiary's counsel
or representative, or to the Beneficiary. The claim's eligibility for payment
under Section F shall be based on the date the executed release with respect to
a resolved claim is received by the Trust.
5. FURTHER CLAIMS PROCESSING. If the Beneficiary rejects the Trust's
initial offer, he or she may elect to negotiate further with the Trust and may
submit additional information to the Trust in support of the claim.
Alternatively, he or she may proceed to mediation as set forth below. The
Trust shall evaluate claims based on the medical evidence submitted to the
Trust as part of the Beneficiary's proof of claim. A Beneficiary may, but need
not, supplement this information from time to time with additional medical
evidence. If he or she does so, the Beneficiary's legal representative or, if
he or she has no legal representative, the Beneficiary shall submit an
affidavit or declaration under penalty of perjury, in a form acceptable to the
Trust, stating that he or
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she has submitted to the Trust all medical reports relating to any alleged
asbestos-related condition other than those subject to attorney work product
privilege. If the Beneficiary submits supplemental information to the Trust,
the Trust shall reevaluate the claim and either make a written good faith
settlement offer or reject the claim. The Beneficiary shall then reject or
accept any offer based on reevaluation using the procedures outlined above for
rejection or acceptance of the Trust's initial offer. If the Beneficiary
rejects such offer, he or she may elect to negotiate further with the Trust or
shall proceed to mediation.
6. SECOND (MALIGNANT) INJURY CLAIMS. The Trust shall offer to settle
Non-Malignancy Claims on two alternative bases: 1) in exchange for a general
release; or 2) in exchange for a limited release covering all asbestos-related
personal injury claims other than subsequent Malignancy Claims. The Trust's
settlement offer for a limited release shall be for the amount of its offer for
the general release minus the lesser of: 1) half of its settlement offer for
the general release; and 2) $1,750. If a Beneficiary accepts the Trust's offer
of a limited release, the Trust shall account for the monetary difference
between its settlement offer for the general release and its settlement offer
for the limited release in a separate account. A Second Injury Claim shall be
ordered in the FIFO queue for processing based upon the date of receipt by the
Trust of the Second Injury Claim, and shall be treated as a new claim under
this Trust Distribution Process.
7. AUDIT PROCEDURES. In all cases, the Trust may require that medical
x-rays, tests, laboratory examinations and other medical evidence comply with
recognized medical standards regarding equipment, testing methods, and
procedures to assure that
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such evidence is reliable. The Trust may develop methods for auditing the
reliability of all data submitted in support of claims, including product
identification and medical evidence, and may require independent interpretation
of CT scans, X-rays, pathology specimens or other physical evidence. If its
audits show an unacceptable level of reliability for evidence submitted from
specific individuals or institutions, the Trust may refuse to accept evidence
from them. In addition, the Trust may develop methods for auditing other types
of evidence necessary to support a claim.
8. EXIGENT HEALTH AND EXTREME HARDSHIP CLAIMS. Notwithstanding the
FIFO order processing rules described in Sections B.2 through B.4, the Trust
may process and Liquidate Extreme Hardship Claims and Exigent Health Claims at
any time.
The Trust shall establish procedures to expedite its processing,
evaluation and negotiation of Exigent Health Claims and Extreme Hardship Claims
as well as the ADR procedures the Beneficiary asserting such a claim shall be
required to follow under Section C. Such expedited procedures shall be
designed to allow all Exigent Health Claims to be Liquidated within six months
of presentation of a properly completed proof of claim to the Trust, and to
ensure, to the maximum extent practicable, that in jurisdictions in which
Beneficiaries can obtain accelerated trial dates for Exigent Health Claims, the
Trust's negotiation process and the ADR procedures can be completed before a
trial of an Exigent Health claimant's case against Defendant Class Members.
If the Trust determines, in its sole discretion, that a Beneficiary
asserting an Extreme Hardship Claim needs greater financial assistance than
would be afforded by the payout scheme set forth in Section F.3, the Trust may
accelerate payment to the
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Beneficiary of part or all of the amount for which that claim has been
Liquidated as the Trust deems appropriate. Payments with respect to Exigent
Health Claims shall be made only in accordance with the payout scheme set forth
in Section F.3.
9. WITHDRAWAL OF CLAIMS. If the Beneficiary does not respond to the
Trust's offer on initial evaluation or reevaluation within 30 days, the Trust's
offer and the claim shall be deemed to be withdrawn without prejudice unless
the Beneficiary has requested in writing one or more extensions of time, not to
exceed six months in the aggregate, within which to respond to the offer. If
the Beneficiary still has not responded to the Trust's offer at the end of the
extension period, the Trust's offer and the claim shall then be deemed to be
withdrawn without prejudice. A Beneficiary may also elect to withdraw a claim
at any time without prejudice. A claim that is withdrawn or deemed to have
been withdrawn may be resubmitted at any time, and shall be reordered in the
FIFO queue for processing based on the date of receipt by the Trust of a
properly completed proof of claim with respect to the refiled claim.
C. ADR PROCEDURES.
1. MEDIATION. If the Beneficiary chooses not to submit supplemental
information or rejects the Trust's offer based on its evaluation of such
supplemental information and elects not to negotiate further with the Trust,
the Beneficiary's claim shall be referred to mediation. The Trust shall
establish and maintain a list of Qualified Mediators, compensated by the Trust.
The Trust shall refer claims to Qualified Mediators from the list in rotation
as soon as practicable after being notified by the claimant that he wishes to
proceed to mediation.
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Claims shall be handled by each mediator in the order received by
him or her, to the extent practicable. Any party may be represented by legal
counsel. The mediator shall confer with the parties and/or their legal
representatives, individually and jointly. Such conference may be in person
or by telephone, at the claimant's election. The Beneficiary and a
representative of the Trust with settlement authority must personally
participate in the conference unless, in the judgment of the mediator, the
Beneficiary's physical or psychological condition precludes such participation.
Such conference shall be in the nature of a settlement conference. The
mediator shall review the claim and the positions of the parties, the prior
negotiations between the parties, the offer(s) and demand(s), such information
as the parties may wish to submit as to a fair and equitable settlement, and
all documents and medical reports relevant to the claim. At least five days
prior to the mediation conference, Beneficiary and the Trust shall each submit
to the mediator a concise, confidential statement outlining the Beneficiary's
medical condition, exposure to Fibreboard products and each party's position on
settlement value. The mediator shall work with both sides toward reaching an
acceptable, reasonable settlement. The mediator does not have the authority to
impose a settlement on the parties.
2. ARBITRATION. If the Beneficiary is unable to settle his or her
claim with the Trust within 30 days of the mediation conference, the
Beneficiary shall, if he or she wishes to pursue the claim, proceed to
arbitration of the claim. The arbitration shall be commenced by a written
demand for arbitration by the Beneficiary served on the Trust within 45 days of
the mediation conference. Such arbitration shall be binding or
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nonbinding at the election of the Beneficiary, which election must be made in
the Beneficiary's written demand for arbitration. The Trust and the
Beneficiary shall bear their own fees and costs, except that the Trust shall
pay the administrative fees and costs of conducting the arbitration unless the
arbitrator in his or her sole discretion assesses such administrative fees and
costs against any Beneficiary for delaying or abusing the arbitration
procedures.
The Trust shall maintain a list of Qualified Arbitrators.
Arbitrations shall be conducted by a single Qualified Arbitrator. The
Beneficiary and the Trust shall attempt to agree on a Qualified Arbitrator who
will preferably, but not necessarily, be selected from the list maintained by
the Trust. If the parties cannot agree on a Qualified Arbitrator, a Qualified
Arbitrator shall be selected pursuant to the procedures of an independent
arbitration facility to be selected by the Trust or by such other procedures as
may be adopted by the Trust. The parties shall provide the Qualified
Arbitrator and each other with copies of all relevant materials concerning the
claim and any supplementary information they wish the Qualified Arbitrator to
consider not less than 30 days prior to the date of the arbitration hearing.
The Qualified Arbitrator may require the parties to submit such additional
information as he or she deems necessary. The Qualified Arbitrator shall
conduct a hearing on the claim at which testimony may be offered, unless both
parties agree to waive such hearing. In nonbinding arbitrations, the
Beneficiary must attend the hearing in person, unless in the judgment of the
Qualified Arbitrator his or her physical or psychological condition makes such
attendance impossible. The Qualified Arbitrator shall issue an award promptly
but in no event later
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than 120 days from the date on which he or she receives the last submission of
information from either of the parties relevant to the claim, unless the
parties agree to extend such time. The Award shall be based on the same
factors used by the Trust in evaluating claims.
If the Beneficiary elected binding arbitration at the time of the
demand, neither party shall have the right to appeal the award other than on
grounds set forth in the Federal Arbitration Act. If the Beneficiary elected
nonbinding arbitration at the time of the demand, the award shall become final
and binding if the Beneficiary does not reject the award by so notifying the
Trust in writing within 30 days after receipt of the award. If the Beneficiary
does not reject the award as provided above, he or she shall be deemed to have
accepted it. If the Beneficiary rejects the award, the award shall not be
binding on either party and the Beneficiary may proceed to the tort system
under the procedures set forth below.
3. LOCATION FOR ADR PROCEDURES. The Trust shall establish procedures
to conduct mediations and arbitrations at scheduled intervals at such locations
around the United States as the Trust determines will be convenient to the
largest numbers of claimants and will not impose undue burden on the Trust.
D. LITIGATION.
A Beneficiary may not proceed to litigate his or her claim against
the Trust in the tort system unless he or she has in good faith: (1) submitted
a proof of claim and rejected the resulting settlement offer from the Trust;
(2) participated in a mediation conference and failed to settle his or her
claim; (3) participated in nonbinding arbitration
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and rejected the resulting arbitration award; and (4) participated in a
mandatory settlement conference as described below. The following procedures
shall govern any Beneficiary who elects to litigate in the tort system his or
her claim against the Trust.
1. MANDATORY SETTLEMENT CONFERENCE. Before any Beneficiary may proceed
to the tort system, the Beneficiary must request the Court to conduct a
mandatory settlement conference with respect to the claim. This mandatory
settlement conference may be conducted by the Court, or by another judge or a
neutral special master designated by the Court, or, if both the Beneficiary and
the Trust agree, by a mutually selected, neutral third party other than the
Court (the "Settlement Conference Designee"). The settlement conference may be
conducted by telephone unless the Court or the Settlement Conference Designee
determines, on application by the Trust or the Beneficiary, that the conference
should be conducted in person. If the Court or the Settlement Conference
Designee so determines, the settlement conference must be attended in person by
the Beneficiary, unless in the judgement of the Court or the Settlement
Conference Designee his or her physical or psychological condition makes such
attendance impossible, and by a representative of the Trust with settlement
authority at such location as the Court or the Settlement Conference Designee
shall determine. If no settlement is reached within 30 days of the mandatory
settlement conference, the Beneficiary and the Trust shall submit to each other
on that date a written settlement offer that will remain in effect for an
additional 30 days. If neither party accepts the other party's settlement
offer during this period, then the Beneficiary may, upon certification from the
Court or the Settlement Conference Designee that the
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Beneficiary has completed the settlement conference process and otherwise has
complied with the requirements of the preceding paragraph of this Section D,
commence a lawsuit against the Trust in the tort system or elect binding
arbitration.
2. PROCEDURAL RULES.
a. Any Beneficiary who elects binding arbitration following the
mandatory settlement conference shall follow the procedures set forth in
Section C.2 above. Payment of any resulting award shall, however, be governed
by Section F of this Trust Distribution Process.
b. Any Beneficiary who elects to resolve a claim through the
tort system may pursue the claim in any appropriate forum, subject to the
procedures set forth herein. Payment of any resulting judgment shall, however,
be governed by Section F of this Trust Distribution Process.
c. The Trust may assert any and all defenses available to it or
which would have been available to any Trustor against which the claim could
have been asserted absent Global Approval Judgment with respect to
Beneficiaries who elect to resolve their claims through the tort system.
d. In no event shall a Beneficiary be permitted to seek or
recover from the Trust in a lawsuit in the tort system any punitive or
exemplary damages of any sort. Nor may any claimant seek or recover
compensatory damages in excess of Fibreboard's actual share of responsibility
or for the actual percentage risk of contracting cancer. Finally, no
Beneficiary may seek or recover pre-judgement interest in a suit in the tort
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system. Any other damages available under the applicable law shall remain
recoverable except as provided in Section D.2.e below.
e. In no event shall the Trust or any other Person be
required to post a bond to stay collection of a judgment in the tort system.
Judgments shall be paid by the Trust in the order set forth in Section F below,
and no Beneficiary shall be permitted to take any steps to collect a judgment
from the Trust except as set forth in this Trust Distribution Process. The
Trust shall not be responsible to pay post-judgment interest; in lieu thereof,
the procedures set forth in the last sentence of Section F.1 shall apply.
f. (i) The death of a Beneficiary after he or she has filed a
proof of claim with the Trust shall not eliminate compensable elements of his
or her claim accruing prior to the date of death, by, for example, eliminating
any claim for damages for pain and suffering occurring prior to the date of
death or by creating an offset to a lost earnings award for personal
consumption occurring prior to the date of death, notwithstanding applicable
state law to the contrary. (ii) However, such compensable elements may not be
recovered after exit to the tort system unless the Beneficiary shows that he or
she could have recovered such damages absent compliance with the requirements
of the Trust Distribution Process.
g. At trial the defendant shall be the Trust and the Trust and
Beneficiary shall jointly request that the Trust be introduced to the trier of
fact (judge or jury as the case may be) in the following fashion or in another
substantially similar fashion as the trial court may direct, in addition to any
other evidence permitted by the Court about the Trust's identity, goals and
operations:
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Members of the jury, this is an action for damages for
[personal injury/wrongful death] brought by the plaintiff[s]
against [various defendants, including] the Fibreboard Asbestos
Compensation Trust.
The Fibreboard Asbestos Compensation Trust was created by
Order of a United States District Court to provide fair and
equitable treatment for persons with asbestos injury for which
Fibreboard Corporation might bear legal liability. The Trust has a
fixed amount of money with which to compensate all persons with an
asbestos injury to whom Fibreboard is found to be legally liable.
This sum of money must cover all victims, past and future. Under
no circumstances may you award any sum designed or intended to
punish or make an example of Fibreboard or the Trust.
If you should find that Fibreboard or products manufactured
by Fibreboard were a legal cause of injury to plaintiff[s], any
payment of damages awarded with respect to Fibreboard's products
will be made by the Trust, not by Fibreboard itself. The fact that
a trust exists is in no way an indication that you should impose
any liability on the Trust. No sum you might award will be paid by
either Fibreboard or by insurance; any award will be paid only by
the Trust.
h. Any Beneficiary who elects to resolve a claim through the
tort system shall provide the Trust (without cost to the Trust) with copies of
all pleadings, discovery materials, evaluations, and other similar
nonprivileged documentation requested by the Trust in connection with its
defense of the claim in the tort system, so that the Trust may effectively and
economically prepare for trial.
E. FUNDS FOR PAYMENT OF CLAIMS.
As set forth in the Trust Agreement, the Trust shall administer
three funds, for payment of Trust Expenses, Class Member Claims and Third Party
Claims, to be known as "Fund I," "Fund II," and "Fund III." Fund I is
primarily intended to pay expenses of, and claims against, the Trust during the
first 25 years after Global Approval
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Judgment. Fund II is primarily intended to pay expenses of, and claims
against, the Trust commencing 26 years after Global Approval Judgment,
although it is available to pay expenses and claims commencing 21 years after
Global Approval Judgment, if Fund I is insufficient for that purpose. Fund III
is primarily intended to pay any expenses and claims not paid from Fund I or
Fund II, commencing 46 years after Global Approval Judgment, although it is
available to pay expenses and claims commencing 41 years after Global Approval
Judgment if Fund II is exhausted prior to 46 years after Global Approval
Judgment.
In order to assure that, to the maximum extent feasible, Trust
resources are preserved and fairly allocated among all Beneficiaries (i.e.,
those who now will have claims in the future as well as those who have claims
now) Appendix 1 describes in detail how Trust surpluses realized in any Fiscal
Year are to be preserved and limits amounts that can be spent in any Fiscal
Year to pay claims from Funds I, II or III. In general, Appendix 1 specifies
that payments for Trust Expenses, Class Member Claims and Third Party Claims
may not exceed annual earnings on the assets within the relevant Fund plus a
portion of the remaining principal (calculated by allocating remaining Fund
principal equally over the years remaining in the Fund then in use). If any
Surplus remains after payment of all Trust Expenses, Class Member Claims and
Third Party Claims and certain indemnity expenses for a Fiscal Year (and after
restoration of any increases in Principal Amount used in prior years as
described below), such Surplus will either increase the Reserve Account or
build Trust principal. This Reserve Account will be used to pay expenses or
claims for any later year before Trustees may access any
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Increased Principal Amount to be used in that year. If, however, in any of the
Fiscal Years 3 through 12 or 16 through 20 after Global Approval Judgment, the
Earnings Amount and Principal Amount together with the funds contained in the
Reserve Account in excess of $10,000,000 are not sufficient to pay Trust
Expenses and to make all payments with respect to Class Member Claims or Third
Party Claims for the first two Schedule Categories that are due or all payments
with respect to Class Member Claims or Third Party Claims for the third
Schedule Category that were due and unpaid on four consecutive prior
Distribution Dates, the Trust may increase the usable portion of the Fund
principal by up to 25% for any of Fiscal Years 3 through 12 after Global
Approval Judgment or 12.5% for any of Fiscal Years 16 through 20 after Global
Approval Judgment.
1. FUND I.
a. COMMENCEMENT OF PAYMENTS. The Trust shall not pay any Class
Member Claim or Third Party Claim (other than Extreme Hardship Claims and
Expedited Review Claims) from Fund I until the Distribution Date first
occurring after the end of the first Fiscal Year after Global Approval
Judgment.
b. DISTRIBUTABLE AMOUNT. Total payments for Trust Expenses,
Class Member Claims and Third Party Claims made from Fund I for any Fiscal Year
(i.e., payments for Trust Expenses, Extreme Hardship Claims and Expedited
Review Claims made during that Fiscal Year, together with payments for Class
Member Claims and Third Party Claims for that Fiscal Year made on the
Distribution Date immediately following that Fiscal Year)(other than any
payments made from the Reserve Account)
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shall not exceed the Distributable Amount for the Fiscal Year. For the first
Fiscal Year after Global Approval Judgment the Earnings Amount for Fund I shall
be calculated from the date of Global Approval Judgment.
c. DISTRIBUTION OF REMAINING BALANCE. The transfer from Fund I to
Fund II of any remaining balance in Fund I shall occur on the earlier of (i)
the day after the Distribution Date for the twenty-fifth Fiscal Year after
Global Approval Judgment, or (ii) the day before the Distribution Date for the
first Fiscal Year occurring after the twentieth Fiscal Year after Global
Approval Judgment in which the maximum possible Distributable Amount is less
than the Earnings Amount and the Principal Amount that were in effect for Fund
I for the twentieth Fiscal Year after Global Approval Judgment, the Trust shall
transfer such remaining balance and the remaining balance of the Reserve
Account to Fund II, at which time payments out of Fund II shall commence as
provided in Section E.2.
2. FUND II.
a. COMMENCEMENT OF PAYMENTS. No payments shall be made from
Fund II until the Distribution Date for the twenty-first Fiscal Year after
Global Approval Judgment. If at that time Fund I still has money left to pay
Trust Expenses, Class Member Claims or Third Party Claims, no payments shall be
made from Fund II until the earlier of: (1) the day after the Distribution
Date for the twenty-fifth Fiscal Year after Global Approval Judgment; or (2)
the Fiscal Year in which the Distribution Date referred to in section
E.1.c.(ii) occurs.
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b. DISTRIBUTABLE AMOUNT. The total amount of payments for Trust
Expenses, Class Member Claims and Third Party Claims made from Fund II for any
Fiscal Year is limited to the Distributable Amount for the Fiscal Year.
c. DISTRIBUTION OF REMAINING BALANCE. The transfer from Fund II
to Fund III of any remaining balance in Fund II shall occur on (i) the day
after the Distribution Date for the twentieth Fiscal Year after the transfer of
the balance in Fund I to Fund II pursuant to Section E.1.c, or (ii) such later
date as the Trustees determine would be in the best interests of all
Beneficiaries, both present and future (but in no event later than the day
after the Distribution Date for the forty-fifth Fiscal Year after Global
Approval Judgment); at which time payments out of Fund III shall commence as
provided in Section E.3.
3. FUND III
a. COMMENCEMENT OF PAYMENTS. No payments shall be made from
Fund III until the Distribution Date for the forty-first Fiscal Year after
Global Approval Judgment. If at that time Fund II still has money left to pay
Trust Expenses, Class Member Claims or Third Party Claims, no payments shall be
made from Fund III until the date Fund II is exhausted or the balance of Fund
II has been transferred into Fund III pursuant to Section E.2.c.
b. DISTRIBUTABLE AMOUNT. The total amount of payments for Trust
Expenses, Class Member Claims and Third Party Claims made from Fund III for any
Fiscal Year is limited to the Distributable Amount for the Fiscal Year.
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c. DISTRIBUTION OF REMAINING BALANCE. If there is a remaining
balance in Fund III on the day after the Distribution Date for the sixty-first
Fiscal Year after Global Approval Judgment, and there are then, or are
anticipated by the Trustees to be in the future, any Trust Expenses, Class
Member Claims, Third Party Claims and other obligations of the Trust which have
not yet been liquidated and/or fully paid, the Trust shall use the remaining
balance of Fund III to pay such Trust Expenses, Class Member Claims, Third Party
Claims and other obligations of the Trust. Upon the occurrence of the
Termination Date, the Trust shall apply any remaining balance of Fund III to
such charitable purposes as the Trustees in their reasonable discretion, after
consultation with the SCB, shall determine, which charitable purposes, if
practicable, shall be related to occupational health.
4. DETERMINATION OF DISTRIBUTABLE AMOUNT FOR EACH FUND. Within 90
days following the end of each Fiscal Year after Global Approval Judgment, the
Trust shall determine the Distributable Amount for such Fiscal Year, which
Distributable Amount (after payment of Trust Expenses, Extreme Hardship Claims
and Expedited Review Claims for such Fiscal Year) shall be distributed to pay
Class Member Claims and Third Party Claims, in the order set forth in Section
F.2, on a date, no later than 120 days following the end of each such Fiscal
Year, chosen by the Trust (the "Distribution Date").
F. ORDER, TIMING AND LIMITATIONS ON PAYMENTS OF CLAIMS.
1. ELIGIBILITY FOR PAYMENT. All Class Member Claims and Third Party
Claims become eligible to begin receiving payments from the Trust on the
Distribution Date
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immediately following the Fiscal Year in which such Class Member Claims or
Third Party Claims are Liquidated, provided that in the case of settled Class
Member Claims the Trust has received the release required by Section B.4.
Judgments obtained in the tort system shall be eligible for payment in the same
order as Claims Liquidated by settlement or arbitration, except as provided in
Section F.3.b, and shall be treated as having been Liquidated on the date the
claimant obtains a final, nonappealable judgment, except that upon an
unsuccessful appeal by the Trust, the date of Liquidation shall be the date of
the trial court judgment.
2. ORDER OF PAYMENT. On each Distribution Date, the Trust shall make
payments on Liquidated Class Member Claims and Third Party Claims in the
following order: (1) claims for Mesothelioma and Lung Cancer; (2) claims for
Other Cancer and Asbestos Lung Disease I; (3) the first payment on claims for
Asbestos Lung Disease II which was due and unpaid on four or more consecutive
prior Distribution Dates, (4) the second payment on claims for Asbestos Lung
Disease II which was originally due and unpaid on four or more consecutive
prior Distribution Dates; (5) the third payment for claims on Asbestos Lung
Disease II which was originally due and unpaid on four or more consecutive
prior Distribution Dates; (6) any other payments on claims for Asbestos Lung
Disease II; and (7) Residual Claims. While it is anticipated that the Trust
will be able to pay all Liquidated Class Member Claims and Third Party Claims
on each Distribution Date, all payments due on Liquidated claims for
Mesothelioma and Lung Cancer must be made before any payments due on Liquidated
claims for Asbestos Lung Disease I and Other Cancer may be made, all payments
due on Liquidated claims
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for Asbestos Lung Disease I and Other Cancer must be made before any payments
due on Liquidated claims for Asbestos Lung Disease II may be made, the first
payment on Liquidated claims for Asbestos Lung Disease II which was due and
unpaid on four or more consecutive prior Distribution Dates must be made before
any other payments for other Liquidated claims for Asbestos Lung Disease II may
be made, the second payment on Liquidated claims for Asbestos Lung Disease II
which was originally due and unpaid on four or more consecutive prior
Distribution Dates must be made before any other payments for other Liquidated
claims for Asbestos Lung Disease II may be made, the third payment on
Liquidated claims for Asbestos Lung Disease II which was originally due and
unpaid on four or more consecutive prior Distribution Dates must be made before
any other payments for other Liquidated claims for Asbestos Lung Disease II
and all other payments due on Liquidated claims for Asbestos Lung Disease II
must be made before any payments due on Liquidated Residual Claims may be made.
Within each of the seven categories, payments due on Class Member Claims and
Third Party Claims shall be made in FIFO order based on when the Class Member
Claims and Third Party Claims were Liquidated, whether by settlement,
arbitration or judgment, except that settled Class Member Claims shall be
ordered within each such category according to when the release required by
Section B.4 is received by the Trust. Other than by virtue of subrogation to a
Class Member Claim pursuant to Section H.5.a, no contribution claim brought by
a Defendant Class Member shall be paid inasmuch as resolution of a Class Member
Claim against the Trust gives rise to a right of set-off or reduction under
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Section H.1.a of the Trust Distribution Process sufficient to satisfy, and bar
the assertion of, any such contribution claim against the Trust.
3. TERMS OF PAYMENT
a. CLAIMS RESOLVED OUTSIDE THE TORT SYSTEM. Class Member Claims
resolved without filing an action against the Trust in the tort system and all
Third Party Claims shall be eligible for payment over a three-year period, 40%
due on the Distribution Date immediately following the Fiscal Year in which
such claim was Liquidated and 30% due on each of the next two Distribution
Dates, except for Expedited Review Claims paid pursuant to Section B.2 and
Extreme Hardship Claims paid pursuant to Section B.8 of this Trust Distribution
Process.
b. CLAIMS RESOLVED IN THE TORT SYSTEM.
(i) Class Member Claims resolved after the filing of an
action against the Trust in the tort system shall be eligible for payment on
the following schedule. On the Distribution Date following the Fiscal Year in
which such claim was Liquidated, the Beneficiary shall be eligible to receive
the lesser of: (1) 100% of the last settlement offer made by the Trust before
the Beneficiary filed an action against the Trust in the tort system, or 100%
of the proposed Award in nonbinding arbitration with the Trust pursuant to
Section C, whichever is greater; and (2) 40% of the amount of the judgment or
settlement after the action was filed. The remaining balance of the judgment
or settlement shall be eligible for payment on the Distribution Dates following
the next four Fiscal Years in equal installments so long as each such
installment does not exceed $50,000. In the event that each such installment
would exceed $50,000, the
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Beneficiary shall be eligible to receive $50,000 per year until the Class
Member Claim is fully paid. In the event that any resulting judgment is less
that the proposed Award in nonbinding arbitration with the Trust pursuant to
Section C, the Trust shall be entitled to recover as a cost of litigation and
deduct from the judgment its cost of mediation and arbitration pursuant to the
procedures set forth in Section C.
(ii) Notwithstanding the foregoing, in order to prevent
evasion or abuse of the ADR provisions of this Trust Distribution Process, to
conserve the assets of the Trust for the benefit of all Beneficiaries, and to
manage prudently the cash flow of the Trust in a manner consistent with Section
E of this Trust Distribution Process, the Trustees shall have the discretion,
in any instance in which the Beneficiaries' judgments against the Trust result
from a trial of the claims of more than 15 such Beneficiaries, to pay such
judgments in such manner and over such a longer time period (not to exceed 10
years) as the Trustees shall determine is in the best interests of the Trust
and of all Beneficiaries.
4. DEFERRAL OF PAYMENTS. All Class Member Claims or Third Party
Claims eligible for a payment on a Distribution Date which do not receive that
payment on that Date because the Distributable Amount for the Fiscal Year has
been exhausted shall have that payment deferred until the following
Distribution Date. Any payment obligation so deferred shall retain its
position in the FIFO queue as set forth in Section F.2 and shall be accorded
priority as set forth in Section F.2. Deferrals may continue from year to year
until the Distributable Amount is sufficient to make the payments due on
deferred obligations.
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5. LIMITATION ON PAYMENT CLAIMS. Aggregate payments on account of Class
Member Claims and Third Party Claims arising from any one individual's exposure
to asbestos shall not total more than $500,000, whether the Class Member Claim
or Third Party Claim is Liquidated through settlement, mediation, arbitration
or in the tort system. Any individual with asbestos-related disease shall be
deemed to be a separate exposure for purposes of this section.
G. ALL CLAIMS RESOLVED PURSUANT TO THE TRUST DISTRIBUTION PROCESS.
In order to conserve the assets of the Trust, all Claimants are
enjoined from filing future litigation based on or arising out of a Class
Member Claim or Third Party Claim against the Fibreboard, Continental or
Pacific Releasees. Any such claim may only be pursued against the Trust as
provided in this Trust Distribution Process.
H. DEFENDANT CLASS MEMBER PROCEDURES.
Pursuant to the Defendant Class Settlement Agreement, and except as
otherwise provided herein, (a) Defendant Class Members are releasing Third
Party Claims against the Trust, Fibreboard Releasees, Continental Releasees and
Pacific Releasees (except that nothing in this Trust Distribution Process or
the Defendant Class Settlement Agreement shall be read as releasing, or be
deemed to release, any claims whatsoever Defendant Class Members may have
against the Continental Releasees and Pacific Releasees other than those
arising out of, or in any way predicated upon obligations created by, the
Insurance Policies); (b) Fibreboard Corporation and the Trust are releasing
contribution and indemnity claims arising out of Class Member Claims; and (c)
the Continental Releasees and Pacific Releasees are releasing any claims
(except for
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reinsurance claims) arising out of Class Member Claims they may have against
Defendant Class Members; provided, however, that Defendant Class Members shall
have rights against the Trust and the Trust shall succeed to Fibreboard's rights
against Defendant Class Members to the extent provided for under them by this
Trust Distribution Process. Without enlarging any substantive rights accorded
them by this Trust Distribution Process, Defendant Class Members shall have
such procedural rights (relating to procedural issues not expressly dealt with
by this Trust Distribution Process) reasonably necessary to pursue or defend
rights accorded them by this Trust Distribution Process. Class Member Claims
against the Trust to which Defendant Class Members succeed shall be governed by
this Section H of the Trust Distribution Process. Settlement Class Members,
Fibreboard Corporation, Continental, Pacific and the Trust are bound by the
terms of this Section and must abide by the following procedures in connection
with suits by Settlement Class Members for asbestos-related injury or disease
against Defendant Class Members.
1. CLAIMS LIQUIDATED BEFORE JUDGMENT AGAINST DEFENDANT CLASS MEMBERS.
a. CALCULATION OF SET-OFF AMOUNT. If a Settlement Class Member
Liquidates his or her Class Member Claim against the Trust before judgment is
rendered in litigation between the Settlement Class Member and Defendant Class
Member(s), the Trust (itself or in Fibreboard Corporation's stead) shall be
deemed, in such ongoing litigation, to be (i) a settled defendant within the
meaning of the law which governs the judgment entered by the trial court (or
any underlying verdict) (the "Judgment Forum Law") and (ii) a legally
responsible joint tortfeasor under Judgment Forum Law, without
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introduction of further proof. Any judgment obtained by a Settlement Class
Member against Defendant Class Member(s) shall be reduced or set off to reflect
the Settlement Class Member's settlement with the Trust in the manner (whether
pro tanto, pro rata, jury allocation or apportionment or otherwise), and in the
amount provided for under Judgment Forum Law. Where the dollar amount of the
settlement between the Trust and the Settlement Class Member is relevant to the
calculation of any such reduction or set off, that dollar amount shall be the
total amount agreed to by the Settlement Class Member and the Trust in
settlement of the Class Member Claim, including all sums paid and agreed to be
paid, without any reduction to present value for claims paid or to be paid
within three years of Liquidation. For that portion of any claim not to be paid
within three years of Liquidation, the amount of reduction or set off will be
calculated at present value as of the end of that three year period. Trust
estimates as to the length of time likely to elapse before future payments will
be made will be binding on Defendant Class Members and Settlement Class Members
alike. Where the judgment against the Defendant Class Member(s) resolves only
a portion of the Class Member Claim or potential Class Member Claim that the
Class Member has settled with the Trust (for example, personal injury as
distinct from wrongful death claims), the dollar amount of the settlement
between the Trust and the Settlement Class Member used in calculation of any
reduction or set off shall reflect any apportionment made by the Trust and the
Settlement Class Member reasonably and in good faith with regard to rights of
the Defendant Class Members under this Trust Distribution Process, provided (i)
that Defendant Class Members shall retain any rights available to them under
Judgment
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death of the last survivor of any of the descendants of Joseph P. Kennedy
living on the date hereof.
(b) On the Termination Date, after payment of all
liabilities of the Trust have been provided for, the Trust shall be dissolved,
and all of the Trust's assets shall be applied to such charitable purposes as
the Trustees in their reasonable discretion, after consultation with the SCB,
shall determine, which charitable purposes, if practicable, shall relate to
occupational health.
7.3 Amendments.
(a) This Trust Agreement may only be amended or waived as
provided in Section 3.1(a). Thirty days' advance written notice of any
proposed amendment or waiver shall be given to the SCB and the Trustors.
(b) The Trust Distribution Process may only be amended or
waived as provided in Section 3.1(a) of this Trust Agreement and, where
applicable, Section H.7 of the Trust Distribution Process. Thirty days'
advance written notice of any proposed amendment or waiver of the Trust
Distribution Process shall be given to the SCB, the Trustors and, where
appropriate, the Representative Defendant.
(c) The definitions used in this Trust Agreement or in the
Trust Distribution Process and contained in the Glossary may be amended or
waived only if and in the same manner as the Section of this Trust Agreement or
the Trust Distribution Process in which such definition is used may be amended
or waived.
7.4 Severability. Should any provision of this Trust Agreement or
the Trust Distribution Process be determined to be unenforceable, such
determination shall
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to such Class Member Claim. In response to a Defendant Class Member request,
the Trust and the Settlement Class Member shall promptly verify, no later than
the start of jury selection in the trial of an action by the Settlement Class
Member against the Defendant Class Member, the fact of the settlement; and in
accordance with Judgment Forum Law, also shall provide information regarding
the amount and terms of any such settlement of a Class Member Claim. Without
waiver by the Trust or Settlement Class Members of their rights to object to
discovery of such information, neither product exposure nor disease information
provided pursuant to this Subsection H.1.c shall be considered inadmissible at
trial based on Rule 408 of the Federal Rules of Evidence or any of its state
law counterparts.
2. CLAIMS NOT LIQUIDATED WHEN VERDICT OR JUDGMENT OBTAINED AGAINST DEFENDANT
CLASS MEMBERS.
a. EFFECT OF VERDICT OR JUDGMENT. Except as provided in Section
H.2.b and Section H.3, if a Settlement Class Member goes to judgment or verdict
against one or more Defendant Class Members without having Liquidated his or
her Class Member Claim against the Trust, the Settlement Class Member forever
waives and releases that portion of his or her Class Member Claim against the
Trust which would have been determined (under principles of Judgment Forum Law
unaffected by Global Approval Judgment) by the verdict or judgment had the
Trust for itself or in Fibreboard Corporation's stead been a judgment
defendant.
b. RETENTION OF SEVERAL LIABILITY CLAIM. Notwithstanding any other
provision of Section H.2, where (under principles of Judgment Forum Law
unaffected by Global Approval Judgment) the Trust's liability to a Settlement
Class Member would be
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several only, or where the Trust's liability as to a particular category of
damages (for example, non-economic damages) would be several only, a Settlement
Class Member shall retain that several-only aspect of his or her claim against
the Trust, even if the Settlement Class Member goes to judgment or verdict
against a Defendant Class Member without having Liquidated his or her Class
Member Claim. However, no aspect of the Class Member Claim to which principles
of joint or joint and several liability would apply shall be so retained.
Should the Trust thereafter settle with the Settlement Class Member based only
on the Trust's several liability, the release shall state that Third Party
Claims based on joint, or joint and several, liability are not barred by virtue
of the several liability settlement and may be pursued in accordance with the
provisions of this Trust Distribution Process.
c. PAYMENT OF VERDICT OR JUDGMENT. Upon payment of a verdict or
judgment returned prior to Liquidation of the underlying Class Member Claim,
the Defendant Class Member(s) shall succeed in all respects to that portion of
the Class Member Claim against the Trust which would have been determined
(under principles of Judgment Forum Law unaffected by Global Approval Judgment)
by the judgment in the action against the Defendant Class Member had the Trust
for itself or Fibreboard Corporation's stead been a judgment defendant, except
to the extent provided in Sections H.2.b and H.5 hereof, and may pursue such
Class Member Claim in accordance with this Trust Distribution Process.
Notwithstanding any contrary provisions of Judgment Forum Law, a Class Member
Claim to which a Defendant Class Member may succeed under this subsection upon
payment of a verdict or judgment shall not be lost or extinguished
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7.11 Dispute Resolution. Any disputes which arise under this Trust
Agreement or the Trust Distribution Process shall be resolved by the Court,
except as otherwise provided herein or in the Trust Distribution Process.
7.12 Enforcement and Administration. The provisions of this Trust
Agreement and the Trust Distribution Process shall be enforced and
administered by the Court.
7.13 Settlement of Trustees' Accounts. Notwithstanding any state
law to the contrary, the Court shall have exclusive jurisdiction over the
settlement of the accounts of the Trustees, whether such account is rendered by
the Trustees themselves or is sought by any Beneficiary or other Person. The
Trustees shall render successive accounts covering periods of not more than one
Fiscal Year, commencing on the first completed Fiscal Year of the Trust or the
last day of the prior accounting period, as the case may be, except that an
account shall be rendered for the period ending on the date of the death,
resignation, removal or retirement of any Trustee. Upon the acceptance of any
such account by the Court after hearing on notice to the SCB, the Trustors and
such other parties as the Court shall designate, the Trustees shall be
discharged from any further liability or responsibility to any Beneficiary or
other Person as to all matters embraced in such account.
7.14 No Bond Required. Notwithstanding any state law to the
contrary, each Trustee (including any successor Trustee) shall be exempt from
giving any bond or other security in any jurisdiction.
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or indemnity against Fibreboard or the Trust. Nothing in this Section H.3 or
in Section H.2.a shall prevent the Settlement Class Member from liquidating and
collection pursuant to other provisions of Section D of this Trust Distribution
Process his or her claim against the Trust based on the verdict or judgment
referred to in this Section H.3.
4. LITIGATION BETWEEN DEFENDANT CLASS MEMBERS AND SETTLEMENT CLASS MEMBERS.
In any litigation between Defendant Class Members and Settlement Class
Members each shall retain their respective rights under Judgment Forum Law to
introduce evidence at trial.
Under no circumstances (other than the commencement by the Trust of
formal bankruptcy or insolvency proceedings) shall the Trust (or Fibreboard
Corporation) be treated as a bankrupt or insolvent defendant, nor shall the
Trust (or Fibreboard Corporation) be considered, for purposes of litigation
between Defendant Class Members and Settlement Class Members only, a Person who
cannot be made a party for lack of personal jurisdiction, or otherwise a party
over whom a Settlement Class Member is unable to obtain jurisdiction.
5. PURSUIT OF THIRD PARTY CLAIMS.
a. DEFENDANT CLASS MEMBER TO STAND IN SETTLEMENT CLASS MEMBERS' STEAD.
In pursuing any Class Member Claim against the Trust to which a
Defendant Class Member has succeeded under subsection H.2.c above, (i) the
Defendant Class Member shall stand in the stead of the Settlement Class Member
in respect of whose Class Member Claim the Defendant Class Member has
succeeded, (ii) such Class
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Member Claim shall be resolved by Defendant Class Members under this Trust
Distribution Process in the same manner as such Class Member Claim would have
been resolved had it been asserted by the Settlement Class Member, and (iii) it
shall be evaluated on the same basis as if the Settlement Class Member directly
presented his or her Class Member Claim to the Trust, without any enhancement,
discount or limitation because it is asserted by a Defendant Class Member.
Defendant Class Members must present evidence of such Class Member Claims in
the same manner as Settlement Class Members; provided, however, that Defendant
Class Members are not required to provide information unavailable to them
because such information is solely within the control of the Settlement Class
Member. In any event, however, Defendant Class Member Claims are to be
evaluated by the same standards as Class Member Claims. For the limited
purpose of pursuing Class Member Claims, or otherwise in respect of assertion
of other rights specifically granted under this Trust Distribution Process,
Defendant Class Members shall be treated as beneficiaries of the Trust;
provided, however, that under no circumstances shall Section H.6 below apply to
Class Member Claims to which Defendant Class Members have succeeded.
b. RESOLUTION OF CLAIMS. Notwithstanding any other provision of this
subsection, Class Member Claims to which Defendant Class Members have succeeded
under Section H.2.c hereof or Residual Claims shall be decided by binding
arbitration under Section C.2 of this Trust Distribution Process, if not
settled previously, and may not exit to the tort system. In such arbitrations
and in its negotiations with Defendant Class Members, the Trust shall not
assert any Fibreboard Corporation defenses based on
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the state of the art, or failure to show negligence or product defect (whether
based upon design, manufacture or failure to warn), except in those
circumstances under which the Trust would also have asserted those defenses
against the Settlement Class Member to whose Class Member Claim the Defendant
Class Member has succeeded. Moreover, the Trust shall not assert failure to
show negligence or product defect as a defense where a Class Member Claim to
which the Defendant Class Member has succeeded is brought by a former
manufacturer and/or distributor of asbestos-containing high-temperature pipe
and block insulation, if the issues of product defect or negligence (as the
case may be) covering such pipe and block insulation were fully litigated to an
adverse result against that Defendant Class Member at trial of the underlying
asbestos-related personal injury action. Under no other circumstances shall
the results of such trial be given preclusive effect in any such arbitration.
Any arbitration under this subsection shall be confidential, and no statement
made, or contention advanced, at such arbitration shall be introduced as
evidence or otherwise used against the maker or proponent of such statement or
contention in the course of any proceeding other than arbitrations under this
Trust Distribution Process.
c. PROCESSING AND PAYMENT OF CLAIMS. Class Member Claims to which
Defendant Class Members have succeeded shall be included in the FIFO queue
established pursuant to this Trust Distribution Process. For purposes of
processing, the position of a Class Member Claim to which a Defendant Class
Member has succeeded in the FIFO queue shall be determined by the earlier of
(a) the date the Settlement Class Member filed within the Trust the underlying
Class Member Claim or (b) the date on
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which the Defendant Class Member paid the Settlement Class Member with respect
to the judgment or verdict. For purposes of payment, a Class Member Claim to
which a Defendant Class Member has succeeded will be placed within the
appropriate Schedule Category set forth in Section F.2 and, within such
category, in FIFO order, based on the date on which the Defendant Class Member
paid the Settlement Class Member in respect to the judgment or verdict. Class
Member Claims to which Defendant Class Members have succeeded, shall be paid
under the terms set forth in Section F.3.a. Prior to receiving payment the
Defendant Class Member shall have provided a release as described in Section
B.4.
d. MULTIPLE CLAIMS OR MULTIPLE THIRD PARTY CLAIMS. Where Defendant
Class Members succeed to a portion of a Class Member Claim by virtue of payment
with respect to any verdict or judgment where a Beneficiary retains an interest
in the several liability aspect of the same Class Member Claim (regardless of
the number of Defendant Class Members who may have succeeded to portions of the
Class Member Claim) ("Partial Claims"), Settlement Class Members and Defendant
Class Members shall comply with procedures established by the Trust to ensure
that all persons with rights under this Trust Distribution Process in respect
of the same Class Member Claim coordinate their effort so that all such Partial
Claims can be processed and Liquidated in a single proceeding, designed to
resolve all the elements of such claims, whether malignancy or non-malignancy,
and all causes of action, whether for personal injury, death, loss of
consortium, or otherwise against the Trust; provided, however, that nothing in
the foregoing shall prevent the Trust, a Settlement Class Member or a Defendant
Class
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Member, as the case may be, from electing to give or take a limited,
non-malignancy release under this Trust Distribution Process. In evaluating
Partial Claims in the course of such a single proceeding, the Trust shall not
differentiate among the aspects of such claims based on whether the right to
payment is asserted by a Settlement Class Member or Defendant Class Member. In
those circumstances where different parties (whether Settlement Class Member
and Defendant Class Member(s), or more than one Defendant Class Member) assert
rights under this Trust Distribution Process in respect of the same Class
Member Claim, any disputes regarding such Class Member Claim shall be presented
in a single arbitration. Should more than one Defendant Class Member be
entitled to payment from a single settlement or award by the Trust, the
Defendant Class Members shall share such amount in the same proportion that
each made payments to the Settlement Class Member. Notwithstanding the above
or any other provision of this Trust Distribution Process, (i) a Settlement
Class Member shall not be entitled to take to the tort system a Class Member
Claim if any portion of that claim was resolved as to a Defendant Class Member
by settlement or in binding arbitration pursuant to Section H.5.b of this Trust
Distribution Process; and (ii) Settlement Class Members retain all rights to
resolve their Partial Claims with the Trust after the verdict or judgment
against the Defendant Class Member and before one or more Defendant Class
Member's related Partial Claim(s) is submitted to the Trust in writing for
resolution; provided, however, that the Settlement Class Member's resolution of
his or her Partial Claim shall not bind any Defendant Class Members or the
Trust with respect to any Defendant Class
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Member's related Partial Claim. The Trust shall settle Partial Claims only in
accordance with Section H.5.d-g.
e. If a Settlement Class Member resolves his or her Partial Claim
pursuant to Section H.5.d, the Trust or arbitrator will apportion the
settlement or award among all elements of the claims that are being resolved
(for example, personal injury, wrongful death, loss of consortium, etc.).
Until such time as the Partial Claim of a Defendant Class Member has been
Liquidated and paid or denied, the related Partial Claim of a Settlement Class
Member Liquidated under Section H.5.d(ii) shall only be entitled to payment of
(i) that portion of the Settlement Class Member's Partial Claim
allocated to resolved claims which were not included in the verdict or judgment
against the Defendant Class Member, plus
(ii) $500,000 minus the amount in (i) above, multiplied by the
ratio of (x) the several liability portion of the verdict or judgment against
the Defendant Class Member. Any award of punitive or exemplary damages will be
excluded from the verdict or judgment against the Defendant Class Member when
calculating (x) or (y).
f. The provisions of Section H.5.e shall not apply if the underlying
total verdict or judgment in favor of a Settlement Class Member against one or
more Defendant Class Members (excluding any award for punitive or exemplary
damages) is $500,000 or less.
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g. The provisions of Section H.5.e will cease to apply if the Partial
Claim of a Settlement Class Member plus the related Partial Claims of all
Defendant Class Members are Liquidated for a total of $500,000 or less.
h. The provisions of Section H.5.e will cease to apply as to any
Partial Claim of a Defendant Class Member which is not submitted to the Trust
and served on the Settlement Class Member, or his attorney, if any, within
three months of the date on which the underlying judgment against the Defendant
Class Member becomes final.
6. COOPERATION FOR COURT APPROVALS. Upon liquidation of his or her Class
Member Claim, each Beneficiary shall cooperate with the Trust in seeking any
needed trial court approval under Judgment Forum Law of the settlement.
7. NO MODIFICATION WITHOUT CONSENT. Neither the terms of this
Section H nor as they apply to Defendant Class Members the provisions of this
Trust Distribution Process as to arbitration may be modified without the
written concurrence of the Representative Defendant. Other provisions of the
First Distribution Process may be modified (after prior notice to the
Representative Defendant) without the concurrence of the Representative
Defendant unless the modification (i) has an adverse effect on Defendant Class
Members and (ii) discriminates against them vis-a-vis Settlement Class Members,
in which case the modification shall require the written concurrence of the
Representative Defendant.
I. ATTORNEYS' FEES.
Attorneys' fees payable in connection with Class Member Claims
Liquidated and paid through this Trust Distribution Process, whether as a
result of
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settlement, an arbitration award, or a judgment obtained in the tort system,
and whether or not calculated as a percentage of recovery, shall be the lower
of the fee provided in the contract between the Beneficiary and counsel and
25%. Costs related to the prosecution of the claim shall be subtracted from
the recovery before calculating the attorney's fee. Legal fees shall be paid
pro rata from the payments due to the Beneficiaries as such payments are made
by the Trust.
J. AMENDMENT.
No amendments or waivers of this Trust Distribution Process will be
permitted except as set forth in Section 3.1 of the Trust Agreement.
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APPENDIX 1 TO THE
TRUST DISTRIBUTION PROCESS
1. INCREASED PRINCIPAL AMOUNT. The Trustees may increase the Principal
Amount for any of the third Fiscal Year through the twelfth Fiscal Year after
Global Approval Judgment or the sixteenth Fiscal Year through the twentieth
Fiscal Year after Global Approval Judgment up to the Increased Principal Amount
for that year, if
(i) the Distributable Amount (if not increased as provided in this
sentence) for that Fiscal Year, plus the amount, if any, by which the balance
(on the last business day of that Fiscal Year) of the Reserve Account exceeds
$10 million, is insufficient to pay all Trust Expenses for such Fiscal Year
plus all Class Member Claims and Third Party Claims included in any of the
first two Schedule Categories due and payable on the Distribution Date
immediately following that Fiscal Year, or any payments with respect to Class
Member Claims or Third Party Claims included in the third Schedule Category
that were due and unpaid on four or more consecutive Distribution Dates prior
to the Distribution Date immediately following that Fiscal Year, and
(ii) the Trustees conclude that increasing the Principal Amount
would be in the best interests of all Beneficiaries, both present and future,
and that the sum of the Earnings Amount for Fund I, such amount in the Reserve
Account in excess of $10 million and the amount of the Increased Principal
Amount does not exceed the amount required to pay all such Trust Expenses and
Class Member Claims and Third Party Claims included in the first two Schedule
Categories and any payments with respect to
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Class Member Claims or Third Party Claims included in the third Schedule
Category that were due and unpaid on four or more consecutive Distribution
Dates prior to such Distribution Date.
2. RESERVE ACCOUNT. The Reserve Account shall initially be credited with
the full amount transferred to the Trust pursuant to Section 2.3(B) of the
Global Settlement Agreement, minus the sum of
(a) $1.340 billion of the starting balance of Fund I,
(b) $200 million, the starting balance of Fund II, and
(c) $10 million, the starting balance of Fund III.
The Reserve Account is part of Fund I.
The Reserve Account shall be increased on each Distribution Date by
(x) 100%, until the balance of the Reserve Account equals $25 million,
(y) 50%, after the balance of the Reserve Account equals $25 million
and until the balance of the Reserve Account equals the sum of the
Principal Amount and Earnings Amount for the prior Fiscal Year,
and
(z) 0%, after the balance of the Reserve Account equals the sum of the
Principal Amount and Earnings Amount for the prior Fiscal Year,
of either
(i) if the Unreimbursed Borrowings as of such date is zero or a
positive number, then the Surplus as of such date, or
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(ii) if the Unreimbursed Borrowings as of such date is a negative
number, but such Unreimbursed Borrowings plus the Surplus as
of such date is a positive number, then such positive
number, or
(iii) if Unreimbursed Borrowings as of such date plus the Surplus
as of such date is zero or a negative number, then zero (so
that this calculation shall not result in a decrease in the
Reserve Account).
The Reserve Account shall be used to pay all Trust Expenses, Class
Member Claims, Third Party Claims, and payments made pursuant to Section 7.16
of the Trust Agreement (it being understood that such payments pursuant to
Section 7.16 shall not be limited by the amounts in the Reserve Account) for
any Fiscal Year in which the Principal Amount and the Earnings Amount is
insufficient for such purpose; provided, that the provisions of this sentence
shall not be applied to require the reduction of the balance of the Reserve
Account below $10 million. Notwithstanding the foregoing, during the Fiscal
Year after Global Approval Judgment, the Trustees shall create and thereafter
maintain an appropriate reserve (to be taken out of the amounts otherwise
included in the Reserve Account) for required payments in later Fiscal Years
for Class Member Claims and Third Party Claims presented in such first Fiscal
Year or before, which reserve shall not be otherwise available for the purposes
of the immediately preceding sentence. The Trustees shall have the discretion
to utilize any
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and all amounts in the Reserve Account to pay Trust Expenses, Class Member
Claims, Third Party Claims and payments pursuant to Section 7.16 of the Trust
Agreement.
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SCHEDULE A
INJURY FACTOR
Mesothelioma Fibreboard share
age at diagnosis of mesothelioma
venue and status of litigation
amount of lost income
claimant alive or deceased
number of dependents
Lung Cancer Fibreboard share
year of diagnosis
venue and status of litigation
degree of functional impairment
industry of most significant exposure
amount of lost income
number of dependents
current or former smoker
ILO x-ray reading
Other Cancer Fibreboard share
age at diagnosis of cancer
venue and status of litigation
degree of functional impairment
time since first exposure
prior claim of less severe injury
employment status
number of minor dependents
Asbestos Lung
Disease I Fibreboard share
venue and status of litigation
degree of functional impairment
industry of most significant exposure
disputed claim
claimant alive or deceased
claimant housebound and sedentary
claim for lost wages
ILO x-ray reading
Asbestos Lung
Disease II Fibreboard share
venue and status of litigation
degree of functional impairment
ILO x-ray reading
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EXHIBIT C
DEFENDANT CLASS
SETTLEMENT AGREEMENT
This Defendant Class Settlement Agreement is made and entered into as
of December 22, 1993, by and among Owens-Illinois, Inc., a Delaware corporation
("Representative Defendant"), as representative of the Defendant Class, acting
by and through Defendant Class Counsel; Fibreboard Corporation, a Delaware
corporation; the Representative Plaintiffs as representatives of the Settlement
Class, acting by and through Class Counsel; Continental Casualty Company, an
Illinois corporation ("Continental"); CNA Casualty Company of California, a
California corporation ("CNA Casualty"); Columbia Casualty Company, an Illinois
corporation ("Columbia"); and Pacific Indemnity Company, a California
corporation ("Pacific"), together the "Parties."
RECITALS
A. On August 27, 1993, Class Counsel, Fibreboard Corporation,
Continental, CNA Casualty, Columbia, and Pacific announced an agreement in
principle to settle all future asbestos-related personal injury claims against
Fibreboard (the "Global Settlement"). The Global Settlement is set forth in
the transcript of a hearing before the Honorable Robert Parker, Chief Judge,
United States District Court for the Eastern District of Texas (the "Global
Court"). The Global Settlement, as announced, was subject to the execution of
definitive agreements and final court approval, among other conditions.
B. In connection with implementing the Global Settlement,
Representative Plaintiffs, on behalf of themselves and the Settlement Class,
filed the Class Action on
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180
September 9, 1993. On September 9, 1993, the Court provisionally certified the
Settlement Class as a mandatory, non-opt out class under Federal Rules of Civil
Procedure, Rule 23(b)(1)(B), and entered a temporary restraining order
preventing any member of the Settlement Class from initiating any
asbestos-related claims against Fibreboard. The relief afforded by the
temporary restraining order was extended by the entry of a preliminary
injunction on September 27, 1993, which shall remain in effect pending notice
to the Settlement Class and the hearing and determination of the fairness,
reasonableness, and adequacy of the proposed settlement of the Class Action.
C. In December, 1993 Representative Plaintiffs on behalf of
themselves and as representatives of the Settlement Class, Fibreboard
Corporation, Continental, CNA Casualty, Columbia, and Pacific, entered into a
definitive agreement to implement the Global Settlement (the "Global Settlement
Agreement"). A copy of the Global Settlement Agreement (including exhibits
thereto) is attached as Exhibit A hereto.
D. The expenditures necessary to process and resolve asbestos
lawsuits have contributed to more than ten major asbestos defendants filing for
bankruptcy reorganization. Because some of these defendants represented a
significant portion of the traditional liability share for asbestos personal
injury cases, and since many jurisdictions apply the principle of joint and
several liability, these bankruptcy filings have increased costs substantially
and have caused significant delays to plaintiffs. E. Claims for contribution
and/or indemnification are infrequently litigated in asbestos personal injury
cases. The vast majority of asbestos-related personal injury cases are settled
by all defendants before trial. In those cases where trials result in
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judgments against non-settling defendants, the law in most jurisdictions
protects settling defendants against claims for contribution and/or indemnity
by judgment debtors. Nevertheless, the potential remains for litigation of
contribution and/or indemnity claims. The parties to the Global Settlement
Agreement and the members of the Defendant Class all have strong and common
interests in preventing a Fibreboard Corporation insolvency, in Fibreboard
Corporation funding a Global Settlement, in Fibreboard Corporation paying its
unfunded settlement obligations and in resolving potential Third Party Claims
by Defendant Class Members without the delay, expense, and uncertainty of
litigating such claims. Although Defendant Class Members are numerous and
include, among others, manufacturers, distributors, shipowners, premises owners
and/or occupiers, and so-called "peripheral" defendants, any differing
interests that may exist among Defendant Class Members are outweighed by the
benefits to the Defendant Class as a whole afforded by the funds to be provided
by the success of the Global Settlement Agreement.
F. Fibreboard Corporation has been engaged in insurance coverage
litigation with Continental and Pacific for a number of years. Although
Fibreboard Corporation was awarded coverage under a trial court judgment, the
insurers appealed that judgment and the outcome of the appeal remains
uncertain. The interests of the Defendant Class are served by the Global
Settlement Agreement, which provides over $1.5 billion to compensate Settlement
Class members for asbestos-related personal injuries for which Fibreboard
Corporation may bear legal liability, while eliminating the risk that
Fibreboard Corporation may lose insurance coverage, and which also may enable
Fibreboard Corporation to fund existing unfunded settlement obligations
totalling over $1.0 billion.
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Absent the funds that will be made available by and as a result of the Global
Settlement Agreement, Defendant Class Members could bear a proportionately
greater share of the overall liability for asbestos-related personal injuries.
G. Representative Defendant adequately represents the interests of
the Defendant Class, in that Representative Defendant is a publicly held
corporation that has been sued in thousands of asbestos-related personal injury
lawsuits in jurisdictions throughout the country.
H. Defendant Class Counsel have extensive experience in
asbestos-related litigation. Defendant Class Counsel have reviewed the Global
Settlement Agreement (including the exhibits thereto) and have been advised of
the record to date in the Class Action, and have otherwise conducted a thorough
investigation of the facts and law relevant to the matters set forth herein.
Based upon this experience and investigation, Defendant Class Counsel have
determined that this Agreement is in the best interests of the Defendant Class.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the Parties hereby agree as follows:
I. DEFINITIONS
Capitalized terms used, and not otherwise defined, herein are defined
in the Glossary of Terms attached as Exhibit A to the Global Settlement
Agreement.
II. RESOLUTION OF DEFENDANT CLASS CLAIMS
A. Defendant Class Members hereby release the Released Parties from
any and all Third Party Claims and agree that the Global Approval Judgment
shall bar and
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enjoin permanently Defendant Class Members from prosecution of any Third Party
Claims against any of the Released Parties in any proceeding or court.
B. Fibreboard Corporation, Continental, CNA Casualty, Columbia,
Pacific and the Trust release contribution and\or indemnity claims against
Defendant Class Members set forth in the Trust Distribution Process.
C. Defendant Class Members shall have the rights described in Section
H of the Trust Distribution Process.
III. ACTIONS TO IMPLEMENT THIS AGREEMENT
A. Fibreboard Corporation shall commence, as a third-party claim or
other appropriate pleading in the Class Action, a mandatory, non-opt out class
action against the Defendant Class pursuant to Federal Rules of Civil
Procedure, Rule 23(b)(1) and (2) (the "Defendant Class Action").
B. The Parties shall join in motions, in form and substance
satisfactory to counsel for each of the Parties, to certify provisionally the
Defendant Class for settlement purposes only, to preliminarily enjoin the
prosecution of any Third Party Claim during the pendency of the Defendant Class
Action and for entry of the Defendant Class Order and Global Approval
Judgement. Should the motions to certify provisionally the Defendant Class for
settlement purposes only and to preliminarily enjoin the prosecution of any
Third Party Claims be granted, while the orders granting those motions are in
effect before entry of Global Approval Judgment, Section H of the Trust
Distribution Process and this Defendant Class Settlement Agreement shall govern
- -- as if they were fully operative -- the rights and liabilities of the Parties
with respect to claims of Defendant Class Members arising out of
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Interim Claims resolved under Section 7 of the Global Settlement Agreement;
provided that during the Interim Period Fibreboard, the Insurers, the Interim
Committee and the Escrow Fund shall have (as appropriate and consistent with
Section 7 of the Global Settlement Agreement) the rights and responsibilities
assigned to the Trust in Section H of the Trust Distribution Process. Should
Global Court Disapproval occur, Defendant Class Members shall be restored to
any rights they may have under applicable law to pursue claims otherwise
released under this Defendant Class Settlement Agreement.
C. Notice shall be given to the Defendant Class in form and substance
satisfactory to counsel for each of the Parties and approved by the Court.
Pursuant to such notice, a hearing shall be held pursuant to Federal Rules of
Civil Procedure, Rule 23(e), to determine the fairness and reasonableness of
the settlement contemplated by this Defendant Class Settlement Agreement.
D. The certification of the Defendant Class pursuant to this
Defendant Class Settlement Agreement shall be binding if Global Approval
Judgment is entered.
E. In the event either (i) Global Court Disapproval occurs; (ii)
Class Counsel move to convert the Class Action or the Defendant Class Action to
a litigation class action; (iii) either the Court or the Global Court enters an
order over objection by the Representative Defendant converting the Class
Action or the Defendant Class Action to a litigation class action; or (iv)
before Global Approval Judgment or Global Court Disapproval, the Trust
Distribution Process is amended without complying with Section H.7 of the Trust
Distribution Process, then the order certifying the Defendant Class shall be
vacated, and Fibreboard Corporation and Representative Defendant shall
stipulate to the
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dismissal of the Defendant Class Action without prejudice, and the Parties
shall return in all respects to the status quo ante, including, but not limited
to, the revocation of any releases given in this document or in the Trust
Distribution Process. The Defendant Class shall retain any and all rights to
object to the continued prosecution of such action as a litigation class action
under Rule 23. Neither this Defendant Class Settlement Agreement, nor its
exhibits, nor the settlement negotiations, nor the proceedings seeking
approval of the settlement, may be used in support of any application for a
determination that such action or any other action shall proceed as a class
action except for the purposes of the settlement in accordance with this
Defendant Class Settlement Agreement, or as evidence in any litigation or
proceeding against any of the Parties other than an action or proceeding to
enforce the provisions of this Defendant Class Settlement Agreement.
IV. MISCELLANEOUS
A. Amendments. No amendment of any provision of this Defendant Class
Settlement Agreement (or to Section H of the Trust Distribution Process) shall
be valid unless the same shall be in writing and signed by all Parties hereto
and, upon the request of any of them, approved by the Court.
B. Counterparts. This Defendant Class Settlement Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together will constitute one and the same instrument.
C. Further Actions. The parties shall take such reasonable actions
as may be necessary or appropriate to consummate or implement this Defendant
Class Settlement Agreement.
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D. The Representative Defendant shall not be responsible for any cost
or expenses (including the expense of any class notice) associated with
obtaining any necessary Court approvals of this Defendant Class Settlement
Agreement. In the event of Global Approval Judgment, Representative Defendant
may apply to the Court for approval of reimbursement of its own reasonable
costs and expenses, including the reasonable cost and expenses of its counsel,
in an amount not to exceed $250,000, incurred in connection with negotiating
and obtaining any necessary approvals of this Defendant Class Settlement
Agreement. In the event of Global Court Disapproval, Fibreboard and the
Insurers will negotiate in good faith with the Representative Defendant
regarding whether, and to what extent, reimbursement of Representative
Defendant's expenses is appropriate.
E. Defendant Class shall not change the identity of Representative
Defendant without consent of Class Counsel, Fibreboard Corporation, Continental
and Pacific without approval of the Court.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written by the Parties hereto, thereunto duly authorized.
ON BEHALF OF DEFENDANT CLASS
By /s/ PHILIP MCWEENY
-----------------------------
Philip McWeeny
FIBREBOARD CORPORATION
By /s/ MICHAEL R. DOUGLAS
-----------------------------
Title: Sr. Vice President and
General Counsel
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CONTINENTAL CASUALTY COMPANY
By /s/ LAURENS F. TERRY
--------------------------------
Title: Vice President
CNA CASUALTY COMPANY OF CALIFORNIA
By /s/ LAURENS F. TERRY
--------------------------------
Title: Vice President
COLUMBIA CASUALTY COMPANY
By /s/ LAURENS F. TERRY
--------------------------------
Title: Vice President Continental
Casualty Company
PACIFIC INDEMNITY COMPANY
By /s/ JOHN J. DEGNAN
--------------------------------
Title:
ON BEHALF OF SETTLEMENT CLASS
By /s/ JOSEPH F. RICE
--------------------------------
Joseph F. Rice, Esq.
By /s/ JOSEPH B. COX
--------------------------------
Joseph B. Cox, Jr., Esq.
By /s/ STEVEN KAZAN
--------------------------------
Steven Kazan, Esq.
By /s/ HARRY F. WARTNICK
--------------------------------
Harry F. Wartnick, Esq.
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EXHIBIT D
ESCROW AGREEMENT
ESCROW AGREEMENT made this 23rd day of December, 1993, by and among
Continental Casualty Company, an Illinois corporation ("Continental"), Pacific
Indemnity Company, a California corporation ("Pacific"), and The First National
Bank of Chicago (the "Escrow Agent").
WHEREAS, Continental, Pacific and Fibreboard Corporation, a Delaware
corporation, have entered into an Agreement dated as of October 12, 1993 (as
the same may be amended from time to time, the "Settlement Agreement") relating
to the settlement of lawsuits relating to questions of insurance coverage, all
as described in the Settlement Agreement;
WHEREAS, Fibreboard Corporation, Continental, Pacific, the
Representative Plaintiffs (acting by and through Class Counsel) (as such terms
are defined in the Glossary to the Global Settlement Agreement (as defined
below) as Exhibit A (the "Glossary")) entered into a Global Settlement
Agreement as of August 27, 1993 (as the same may be amended from time to time,
the "Global Settlement Agreement"), relating to the settlement, inter alia, of
personal injury lawsuits and lawsuits relating to questions of insurance
coverage, all as described in the Global Settlement Agreement;
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189
WHEREAS, the Global Settlement Agreement provides for payment of an
aggregate amount of $1,525,000,000 by Continental and Pacific into an escrow
account pending further distribution of such funds; and
WHEREAS, the parties desire to arrange for such escrow and appoint
Escrow Agent as the escrow agent in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. INTERPRETATION AND DEFINITIONS. This Escrow Agreement is being
executed and delivered pursuant to Section 2.3 of the Global Settlement
Agreement and the Escrow Account created pursuant to this Escrow Agreement is
the Escrow Fund referred to therein. The provisions of this Escrow Agreement
shall not in any event be construed so as to enlarge or diminish the rights of
any party under the Global Settlement Agreement. Capitalized terms used and
not defined herein have the meanings given to them in the Glossary.
2. APPOINTMENT AND COMPENSATION OF ESCROW AGENT. Escrow Agent is
hereby appointed to act as escrow agent in accordance with the terms hereof,
and
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Escrow Agent hereby accepts such appointment. Escrow Agent shall have all the
rights, powers, duties and obligations provided herein. All persons dealing
with the Escrow Agent are released from inquiry into the decision or authority
of the Escrow Agent and from seeing to the application of any monies,
securities or other property paid or delivered to the Escrow Fund. Escrow
Agent shall be entitled to charge the Escrow Account for its fees, as
determined in accordance with the fee letter attached hereto as Exhibit A, and
for reimbursement of reasonable costs and expenses suffered or incurred by
Escrow Agent in connection with the performance of its duties and obligations
hereunder including, but not limited to, any suit in interpleader brought by
Escrow Agent.
3. DEPOSIT AND INVESTMENT OF FUNDS. (a) On December 30, 1993,
Continental shall deliver $986,827,500, and Pacific shall deliver $538,172,500,
for an aggregate amount of $1,525,000,000 (collectively, the "Funds") to Escrow
Agent, by wire transfer of immediately available funds to such account of
Escrow Agent that Escrow Agent identifies in a writing delivered to Continental
and Pacific.
(b) On or before the date hereof, Escrow Agent shall establish at the
office of its corporate trust department in Chicago, Illinois and, at all times
thereafter until the escrow created by this Escrow Agreement shall have
terminated pursuant to Section 6 hereof (the "Escrow Termination Date"), shall
maintain a separate account entitled the "Fibreboard Asbestos Claimants Escrow
Account" (the "Escrow Account").
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All funds, securities and other property held by the Escrow Agent
(collectively, the "Escrow Assets") at any time pursuant to this Escrow
Agreement, including the Funds and all investments, interest, earnings and
proceeds thereof and thereon, shall be held in the Escrow Account. No property
other than the Escrow Assets shall be held in the Escrow Account. Escrow Agent
shall make and maintain, at all times until the Escrow Termination Date,
appropriate entries in its books and records to reflect that all of the Escrow
Assets existing from time to time are held in the Escrow Account.
(c) During the term of this Escrow Agreement, Escrow Agent shall
invest and reinvest the Escrow Assets from time to time in obligations backed
by the full faith and credit of the United States of America which have a
maturity date which is not more than three months from the date of acquisition
("Eligible Treasury Securities"); provided, however, that pending investment or
prompt distribution Escrow Agent may invest funds in an aggregate amount at any
time not exceeding the lesser of $10,000,000 or 5% of the amount of the Escrow
Assets in (i) a money market fund or funds sponsored by an Eligible Institution
(as defined below) or (ii) repurchase agreements with an Eligible Institution
with a term of not more than one day for Eligible Treasury Securities, with
respect to which such Eligible Treasury Securities are held by Escrow Agent in
its account with a Federal Reserve Bank and maintained on its books and records
in the Escrow Account. An Eligible Institution shall mean a commercial bank
having a combined capital and surplus of at least Five Hundred Million Dollars
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($500,000,000) and which is well capitalized or adequately capitalized (as such
terms are defined in applicable federal regulations).
The Escrow Agent shall liquidate investments in order to comply with
the provisions of this Escrow Agreement without liability for any resulting
losses. Any losses incurred from an investment shall be borne by the Escrow
Account.
4. ACCRUED INTEREST ON THE ESCROW ASSETS. All interest and earnings
of the Escrow Assets shall be added to and become part of the Escrow Assets,
and shall be held by Escrow Agent under this Escrow Agreement.
5. PAYMENTS OF AMOUNTS HELD IN ESCROW ACCOUNT. (a) Subject to
Sections 5(b) and 5(c) hereof, upon termination of the Escrow Agreement
pursuant to Section 6 hereof, Escrow Agent shall distribute all amounts held in
the Escrow Account pursuant to (i) written payment instructions executed by
each of Continental, Pacific, Fibreboard Corporation, Class Counsel (acting on
behalf of the Settlement Class), and, after appointment of the Trustees, the
Trustees or (ii) an order obtained after a hearing held on notice to each of
Continental, Pacific, Fibreboard Corporation and Class Counsel (a "Court
Order") of the United States District Court for the Eastern District of Texas.
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(b) At any time and from time to time during the term of this Escrow
Agreement, Escrow Agent shall (i) at the written direction of each of
Continental, Pacific, Fibreboard Corporation, Class Counsel, and, after
appointment of the Trustees, the Trustees distribute such amount or amounts to
such person or persons and at such time or times as each of Continental,
Pacific, Fibreboard Corporation, Class Counsel, and, after appointment of the
Trustees, the Trustees shall direct in an Interim Payment Direction or (ii) in
accordance with a Court Order, distribute such amount or amounts to such person
or persons and at such time or times as is specified in the Court Order. Any
payment instructions to the Escrow Agent shall include the mailing address and
taxpayer identification number of the person or persons receiving the
distribution hereunder.
(c) Notwithstanding any contrary provision of this Escrow Agreement,
within the 30-day period following the end of each calendar quarter, Escrow
Agent shall pay to Continental 64.71% and to Pacific 35.29% of 5% of the income
earned by the Escrow Account during such calendar quarter.
6. TERMINATION. Escrow Agent shall maintain the escrow Account and
hold the Escrow Assets in escrow pursuant to this Escrow Agreement until
receipt of written notice of termination from each of Continental, Pacific,
Fibreboard Corporation, Class Counsel, and, after appointment of the Trustees,
the Trustees.
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7. ESCROW AGENT QUALIFICATIONS. Escrow Agent shall at all times be
(i) a bank, savings and loan association or trust company in good standing,
organized and doing business under the laws of the United States or a state of
the United States or a United States branch of a foreign bank, (ii) have
combined capital and surplus of not less than Five Hundred Million Dollars
($500,000,000) and be well capitalized or adequately capitalized (as such terms
are defined in applicable federal regulations) and (iii) be authorized under
the laws governing its organization to exercise corporate trust powers and be
authorized under such laws to enter into and perform this Escrow Agreement. If
Escrow Agent shall at any time cease to have the foregoing qualifications,
Escrow Agent shall give notice of resignation to Continental and Pacific as
provided in Section 10 hereof and Continental and Pacific agree to thereupon
promptly appoint a qualified successor escrow agent in accordance with Section
11.
8. LIMITATIONS ON LIABILITY OF ESCROW AGENT.
(a) Escrow Agent may act upon any written notice, certificate,
instrument, request, waiver, consent, paper or other document that Escrow Agent
in good faith reasonably believes to be genuine and to have been made, sent,
signed, prescribed, or presented by the proper person or persons acting on
behalf of the parties named in paragraph 5(a) and 5(b). Escrow Agent shall not
be liable for any action taken or omitted by it in connection with the
performance of its duties and obligations hereunder, except for its own gross
negligence or willful misconduct. Escrow Agent shall be under no obligation to
institute or defend any action, suit or legal proceeding in connection
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with this escrow or this Escrow Agreement unless it is indemnified to its
satisfaction by the party or parties who desire that it undertake such action.
(b) Escrow Agent shall be under no obligation or liability for
failure to inform Continental, Pacific, Fibreboard Corporation or Class Counsel
regarding any transaction or facts within Escrow Agent's knowledge, even though
the same may concern the matters described herein, provided they do not prevent
or interfere with Escrow Agent's compliance with this Escrow Agreement, nor
shall Escrow Agent be liable for the sufficiency, correctness or genuineness as
to form, manner of execution or validity of any instrument deposited, nor as
to identity, authority, or rights of any person executing the same, except as
above provided.
(c) Should Escrow Agent during or after the term of the escrow
receive or become aware of any conflicting demands or claims with respect to
the Escrow Account, Escrow Assets or the rights of any of the parties hereto,
Fibreboard Corporation or Class Counsel, Escrow Agent shall have the right to
discontinue any or all further acts on its part until such conflict is resolved
to its satisfaction, and Escrow Agent shall have the further right to commence
or defend any action or proceeding for the determination of such conflict. In
the event Escrow Agent should file suit in interpleader and deposit the Escrow
Assets in dispute in a court of competent jurisdiction, it shall be fully
released and discharged from all further obligations under this Escrow
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Agreement with respect to such Escrow Assets (but such release and discharge
shall not relieve Escrow Agent from any liability incurred prior to such
event).
(d) Escrow Agent may consult with legal counsel satisfactory to it in
connection with any dispute, the construction of any provision of this Escrow
Agreement or the duties and obligations of Escrow Agent under this Escrow
Agreement.
9. ACCOUNT AND RELEASE OF ESCROW AGENT. (a) The retention and
distribution of the Escrow Assets in accordance with the terms and provisions
of this Escrow Agreement shall fully and completely release Escrow Agent from
any obligations or liabilities assumed under this Escrow Agreement with respect
to the Escrow Assets. Nothing in this Escrow Agreement shall be interpreted as
depriving the Escrow Agent, Continental, Pacific, Fibreboard Corporation or
Class Counsel of the right to have judicial settlement of the Escrow Agent's
accounts, and upon any proceeding for a judicial settlement of the Escrow
Agent's accounts or for instructions the only necessary parties thereto will be
the Escrow Agent, Continental, Pacific, Fibreboard Corporation and Class
Counsel.
(b) The Escrow Agent shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
done, including such specific records as shall be agreed upon in writing
between Continental, Pacific and the Escrow Agent. Within ten (10) days
following the close of each calendar
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month, the Escrow Agent shall deliver to Continental, Pacific, Fibreboard
Corporation and Class Counsel a written account of its administration of the
escrow during such month and cumulatively for the period from the date hereof
through the end of such month, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all investments purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or received being shown separately),
showing all cash, securities and other property held in the Escrow Account at
the end of such month and the book and fair market value of all Escrow Assets.
(c) All accounts, books and records maintained pursuant to this
Section shall be opened to inspection and audit at all reasonable times by
Continental, Pacific, Fibreboard Corporation and Class Counsel and their
respective representatives.
(d) The fair market value of the Escrow Assets shall be determined by
the Escrow Agent whenever required pursuant to the Escrow Agreement, but in any
event not less than monthly. The Escrow Agent may base such determination upon
such sources of information as it may deem reliable including, but not limited
to, information reported in (i) newspapers of general circulation, (ii)
standard financial periodicals or publications, (iii) statistical and valuation
services, (iv) the records of securities exchanges or brokerage firms deemed by
the Escrow Agent to be reliable, or any combination thereof. The Escrow Agent
shall promptly inform Continental, Pacific,
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Fibreboard Corporation and Class Counsel of any such valuation and provide them
with complete copies thereof.
10. RESIGNATION AND REMOVAL OF ESCROW AGENT. Escrow Agent may be
removed by the joint action of Continental and Pacific, with or without cause,
at any time upon 15 days' prior written notice to Escrow Agent, which notice
may be waived by Escrow Agent. Escrow Agent may resign at any time upon 60
days' prior written notice to Continental, Pacific, Fibreboard Corporation and
Class Counsel.
Notwithstanding any resignation or removal of Escrow Agent pursuant to
Section 7 hereof or this Section 10, such resignation or removal shall not be
effective and Escrow Agent shall continue to serve in its capacity as Escrow
Agent until (i) a successor escrow agent is appointed in accordance with the
provisions of Section 11 hereof and has accepted such appointment and (ii) the
Escrow Assets together with such records and documents as may be reasonably
required to enable the successor escrow agent to properly administer the Escrow
Fund have been transferred to and received by such successor escrow agent.
Continental and Pacific shall promptly take the necessary action to appoint a
successor escrow agent in accordance with the provisions of Section 11 hereof.
11. APPOINTMENT OF SUCCESSOR ESCROW AGENT. If at any time Escrow
Agent shall resign, be removed or otherwise become incapable of acting as
Escrow Agent
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pursuant to this Escrow Agreement, or if at any time a vacancy shall occur in
the office of Escrow Agent for any other cause, a successor Escrow Agent that
meets the qualifications set forth in Section 7 shall be appointed jointly by
Continental and Pacific by a written instrument delivered to the successor
Escrow Agent with a copy delivered to the Escrow Agent. If no successor Escrow
Agent is appointed (i) within 30 days after the time Escrow Agent becomes
incapable of acting or a vacancy occurred in the office of Escrow Agent or (ii)
within 60 days of Escrow Agent's giving notice of resignation, any party hereto
may petition a court of competent jurisdiction for an appointment of a
successor Escrow Agent. Upon the appointment and acceptance of any successor
Escrow Agent hereunder, Escrow Agent shall transfer the Escrow Assets to its
successor. Upon receipt by the successor Escrow Agent of the Escrow Assets,
Escrow Agent shall be discharged from any continuing duties or obligations
under this Escrow Agreement, but such discharge shall not relieve Escrow Agent
from any liability incurred prior to such event, and the successor Escrow Agent
shall be vested with all rights, powers, duties and obligations of Escrow Agent
under this Agreement.
12. IRS FILINGS AND EXAMINATIONS. (a) For federal income tax
purposes, the parties expect that Continental will be allocated 64.71% of the
income, gains and deductions of the Escrow Fund and that Pacific will be
allocated 35.29% of the income, gains and deductions of the Escrow Fund and
that Continental and Pacific will each be required to include those items of
taxable income, gains and deductions of the Escrow Fund which are attributable
to them in computing their separate taxable income and this
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Escrow Agreement shall be construed accordingly. Notwithstanding the
foregoing, Escrow Agent shall timely file such tax and other returns and
statements for the Escrow Account (collectively "Returns"), and shall provide
for and pay such taxes, as are required to comply with applicable provisions of
the Internal Revenue Code of 1986, as amended, and of any state or local law
and the regulations promulgated thereunder. The Escrow Agent shall provide all
completed Returns to Continental and Pacific at least 10 days in advance of the
due date for such Returns and shall obtain the consent of Continental and
Pacific to all Returns before they are filed. The Escrow Agent is authorized
to employ such agents and independent contractors as it deems necessary in its
best judgment in order to perform the federal and state tax reporting required
by this paragraph. Continental and Pacific will advise the Escrow Agent of the
party who will sign any required federal and state tax returns on behalf of the
Escrow Account.
(b) The Escrow Agent agrees that Continental and Pacific shall have
the sole and exclusive responsibility for handling any income tax examinations
relating to the Escrow Fund. All costs and expenses of any income tax
examination relating to potential tax liability of the Escrow Fund, including
the expense of defending any adjustments or proposed adjustments, shall be
charged to the Escrow Fund.
(c) Escrow Agent agrees that it will inform Continental and Pacific
promptly of all questions raised by agents conducting an income tax examination
of the Escrow Account and shall cooperate with accountants, tax advisers and
counsel retained
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by Continental and Pacific in working with the income tax agents and in
responding to any questions and proposed tax adjustments.
13. NOTICES. Any notice or other communication hereunder must be
given in writing and either (a) delivered in person, (b) transmitted by telex,
telefax or other telecopy mechanism, provided that any notice so given is also
mailed as provided in clause (c), or (c) mailed, postage prepaid, receipt
requested, as follows:
If to Continental, addressed to:
Continental Casualty Co.
Specialty Claims Office, 12th Floor
50 Fremont Street
San Francisco, CA 94105
Attention: Claim Manager
Telecopier: (415) 512-4899
and
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd Street
New York, New York 10019
Attention: Herbert M. Wachtell, Esq.
Telecopier: (212) 403-2000
and
CARROLL, BURDICK & McDONOUGH
44 Montgomery Street, Suite 400
San Francisco, CA 94104
Attention: Rodney L. Eshelman, Esq.
Telecopier: (415) 989-0932
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If to Pacific, addressed to:
Pacific Indemnity Company
Chubb & Son Inc.
15 Mountain View Road
P.O. Box 1615
Warren, NJ 07061-1615
Attention: Malcolm B. Burton
Telecopier: (908) 580-3030
and
WHITE & CASE
1155 Avenue of the Americas
New York, NY 10036
Attention: Paul J. Bschorr, Esq.
Telecopier: (212) 354-8113
If to Fibreboard, addressed to:
FIBREBOARD CORPORATION
2121 North California Blvd.
Walnut Creek, CA 94596
Attention: Michael R. Douglas
Senior Vice President and
General Counsel
Telecopier: (510) 274-0714
and
BROBECK, PHLEGER & HARRISON
Spear Street Tower
One Market Plaza
San Francisco, CA 94105
Attention: Stephen M. Snyder, Esq.
Telecopier: (415) 442-1020
If to the Class Counsel, addressed to:
CAPLIN & DRYSDALE, CHARTERED
399 Park Avenue
New York, NY 10022
Attention: Elihu Inselbuch
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Telecopier: (212) 644-6755
If to Escrow Agent, addressed to:
The First National Bank of Chicago
One Federal National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Joseph Cahill
Telecopier: (312) 407-1708
or to such other address or to such other person as either party shall have
last designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 13 and an appropriate answer back is received, (ii) if given by mail,
three business days after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (iii) if given by any
other means, when actually delivered at such address.
14. AMENDMENTS; WAIVERS. This Escrow Agreement may be amended only
by (i) and agreement in writing executed by Escrow Agent, Continental, Pacific,
Fibreboard Corporation and Class Counsel, or (ii) pursuant to a Court Order.
No waiver of any provisions nor consent to any exception to the terms of this
Escrow Agreement shall be effective unless in writing and signed by the party
to be bound, and then only to the specific purpose, extent and instance as so
provided.
15. COUNTERPARTS. This Escrow Agreement and any other agreement (or
document) delivered pursuant hereto may be executed in one or more counterparts
and
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by different parties in separate counterparts. All such counterparts shall
constitute one and the same agreement and shall become effective when one or
more counterparts of this Escrow Agreement have been signed by each party, and
delivered to the other parties.
16. ASSIGNMENT. Neither this Escrow Agreement nor any rights or
obligations under it are assignable.
17. GOVERNING LAW. This Escrow Agreement and the legal relations
among the parties shall be governed by and construed in accordance with the
laws of the State of Illinois applicable to contracts made and performed in
such state without regard to conflicts of law doctrines, except to the extent
that certain matters are preempted by federal law or are governed by the law of
the jurisdiction of organization of the respective parties.
18. INTEGRATION. This Escrow Agreement constitutes the entire
agreement and understanding of Continental, Pacific, Fibreboard Corporation and
Class Counsel on the one hand and Escrow Agent on the other with respect to the
subject matter of this Escrow Agreement and supersedes all prior agreements and
understandings with respect thereto.
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19. SEVERABILITY. If any provision of this Escrow Agreement is held
invalid by any court, governmental agency or regulatory body, the other
provisions shall remain in full force and effect.
20. PARTIES IN INTEREST. This Escrow Agreement shall be binding upon
and inure to the benefit of each party, Fibreboard Corporation and Class
Counsel, and nothing in this Escrow Agreement, express or implied, is intended
to confer upon any other person any rights or remedies of any nature whatsoever
by, under or by reason of this Escrow Agreement. Nothing in this Escrow
Agreement is intended to relieve or discharge the obligation of any third
person to, or to confer any right of subrogation or action over against, any
party to this Escrow Agreement or Fibreboard Corporation or Class Counsel or
Class Counsel.
21. HEADINGS. The descriptive headings of the Sections of this Escrow
Agreement are for convenience only and do not constitute a part of this Escrow
Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on the day and year first above written.
CONTINENTAL CASUALTY COMPANY
By /s/ LAURENS F. TERRY
----------------------------
Title Vice President
-----------------------
PACIFIC INDEMNITY CORPORATION
By /s/ JOHN J. DEGNAN
----------------------------
Title Senior Vice President
-----------------------
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ R.D. MANELLA
----------------------------
Title Vice President
-----------------------
AGREED TO:
FIBREBOARD CORPORATION
By /s/ MICHAEL R. DOUGLAS
---------------------------------------------
Title Sr. Vice President and General Counsel
----------------------------------------
CLASS COUNSEL
By /s/ JOSEPH RICE
------------------------
Joseph Rice
By /s/ JOSEPH COX
------------------------
Joseph Cox
By /s/ HARRY WARTNICK
------------------------
Harry Wartnick
By /s/ STEVEN KAZAN
------------------------
Steven Kazan
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