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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 23, 1993
FIBREBOARD CORPORATION
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(exact name of registrant as specified in charter)
Delaware 0-016951 94-0751580
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(State or other jurisdic- (Commission (IRS Employer Iden-
tion of incorporation) file number) tification No.)
2121 North California Blvd., #560, Walnut Creek, CA 94596
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(Address of principal executive offices)
(510) 274-0700
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(Registrant's telephone number, including area code)
None
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On December 23, 1993, Fibreboard Corporation issued the press release
attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
10.1 Global Settlement Agreement among Fibreboard Corporation, Continental
Casualty Company, CNA Casualty Company of California, Columbia Casualty
Company, Pacific Indemnity Company and the Settlement Class (Exhibits
follow and are listed separately).
10.2 Exhibit A -- Glossary of Terms in Global Settlement Agreement, Trust
Agreement, Trust Distribution Process and Defendant Class Settlement
Agreement
10.3 Exhibit B -- Fibreboard Asbestos Compensation Trust Agreement
10.4 Exhibit C -- Defendant Class Settlement Agreement
10.5 Exhibit D -- Escrow Agreement
10.6 Exhibit E -- Assignment
99.1 Press Release dated December 23, 1993 issued by Fibreboard Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIBREBOARD CORPORATION
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(Registrant)
Dated: January 6, 1994 By: /s/ Garold E. Swan
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Garold E. Swan
Vice President and Controller
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GLOBAL SETTLEMENT AGREEMENT
AMONG
FIBREBOARD CORPORATION,
CONTINENTAL CASUALTY COMPANY,
CNA CASUALTY COMPANY OF CALIFORNIA,
COLUMBIA CASUALTY COMPANY,
PACIFIC INDEMNITY COMPANY,
AND
THE SETTLEMENT CLASS
AND
TOGETHER WITH EXHIBITS A - E
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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
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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. )
)
FIBREBOARD CORPORATION, ) Civil Action No. 6:93 cv 526
)
Defendant, )
)
CONTINENTAL CASUALTY COMPANY )
)
and )
)
PACIFIC INDEMNITY COMPANY, )
)
Intervenors. )
_________________________________________)
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 condition. 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 judgment 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 remains 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 Releasees") 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 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 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) (2) 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 Claim 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 the 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 Judgment 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 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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<PAGE>
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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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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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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<PAGE>
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
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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,
WARTNICK, 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
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 F. Rice
---------------------------------------------------------------
Joseph Rice, Esq.
By: /s/ Joseph B. Cox, Jr.
---------------------------------------------------------------
Joseph B. Cox, Jr., Esq.
By: /s/ Harry F. Wartnick
---------------------------------------------------------------
Harry F. Wartnick, Esq.
By: /s/ Steven Kazan
---------------------------------------------------------------
Steven Kazan, Esq.
By: /s/ Elihu Inselbuch
---------------------------------------------------------------
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, Continental Casualty Co.
PACIFIC INDEMNITY COMPANY
By: /s/ John J. Degnam
---------------------------------------------------------------
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
<PAGE>
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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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
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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.
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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 less than 80% of predicted WITH
FEV-1/FVC greater than 75% (actual value);
OR
b. TLC less than 80% of predicted, WITH either
DLCO less than 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 a 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 lesss than 80% of predicted WITH
FEV-1/FVC greater than 72% (actual value) or, if the
individual tested is at least 68 years old at the time of the
testing, WITH FEV-1/FVC greater than 65% (actual value);
OR
b. TLC less than 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 certain
asbestos-related claims.
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18. "CONTINENTAL RELEASEES" 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 Products 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. "FIBREBOARD RELEASEES" mean the following entities, each
of their respective predecessors, Subsidiaries, divisions, current and former
attorneys, officers, directors and employees, and, with regard to Fibreboard
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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<PAGE>
(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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<PAGE>
(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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<PAGE>
(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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<PAGE>
(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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
(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" mean 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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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.
<PAGE>
EXHIBIT B
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FIBREBOARD ASBESTOS COMPENSATION
TRUST AGREEMENT
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<PAGE>
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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<PAGE>
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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<PAGE>
FIBREBOARD ASBESTOS COMPENSATION
TRUST AGREEMENT
Trust Agreement ("Trust Agreement") dated as of December __, 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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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 of
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 interest 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 of 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
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, 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 the 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.
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IN WITNESS WHEREOF, the parties have executed this Trust Agreement
on this _____ day of December, 1993.
TRUSTORS:
FIBREBOARD CORPORATION
By:_______________________________
Title:____________________________
COLUMBIA CASUALTY COMPANY
By:_______________________________
Title:____________________________
CONTINENTAL CASUALTY COMPANY
By:_______________________________
Title:____________________________
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CNA CASUALTY COMPANY OF CALIFORNIA
By:_______________________________
Title:____________________________
PACIFIC INDEMNITY COMPANY
By:_______________________________
Title:____________________________
INITIAL TRUSTEE:
__________________________________
<PAGE>
TRUST DISTRIBUTION PROCESS
ANNEX A TO THE TRUST AGREEMENT
<PAGE>
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-judgment 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 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 the 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 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 judgment 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-judgment 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 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 efficiently 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 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 that 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 that 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 that 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 a 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
than 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 OF 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 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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Forum Law to challenge such apportionment, and (ii) that wherever Judgment
Forum Law calls for apportionment of economic and non-economic damages, the
value assigned to the Trust's settlement of a Class Member Claim shall be
allocated between economic and non-economic damages in the same proportion
that the subsequent judgment or underlying verdict against Defendant Class
Member(s) allocates such damages, notwithstanding any apportionment set forth
in the settlement documents.
B. STATUS OF THE TRUST AT TRIAL. The Settlement Class
Member and the Trust shall consent to any procedures required in order to
enable the trial court to establish the amount of any judgment reduction or
set off in respect of a Trust settlement as if the Trust, itself or in
Fibreboard Corporation's stead, had been a party to the litigation prior to
settlement. Should a trial court require that the Trust or Fibreboard
Corporation be a party in order to establish such amount, no objection shall
be made by the Trust or the Settlement Class Member to the filing by Defendant
Class Member(s) of a third-party complaint or to the joinder of the Trust, for
itself or in Fibreboard Corporation's stead, as a party for this limited
purpose only. The Trust, if made a party, shall not be required to enter an
appearance, be subject to discovery as a party, or be subject to default or
other trial court process or procedure. Under no circumstances shall
Fibreboard Corporation or the Insurers be made parties for any purpose.
C. DISCOVERY AND INFORMATIONAL ISSUES. The Trust shall
comply with the rules of discovery under Judgment Forum Law concerning
requests for product exposure and disease information provided by the
Settlement Class Member pertaining
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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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by virtue of a Defendant Class Member's settlement with a Settlement Class
Member reached after a contested trial resulting in verdict, or a verdict or
jury or court fact finding as to damages or judgment.
3. TORT SYSTEM CLAIMS AGAINST THE TRUST. Should a Settlement
Class Member proceed to litigation against the Trust pursuant to Section D of
this Trust Distribution Process, no objection shall be made in such tort
system cases by the Trust or the Settlement Class Member to the filing by
Defendant Class Member(s) of a third-party or cross-complaint against the
Trust as successor to Fibreboard Corporation under the Global Approval
Judgment. Without in any way waiving or limiting the provisions of this Trust
Distribution Process limiting the Trust's liabilities with respect to Class
Member Claims and Third Party Claims when a Class Member Claim proceeds to
litigation against the Trust in the tort system pursuant to Section D,
Defendant Class Members shall retain against the Trust whatever rights of
contribution and/or indemnification they otherwise would have had against
Fibreboard Corporation under Judgment Forum Law and the Trust shall retain
whatever Fibreboard Corporation rights of contribution and/or indemnification
it would have had against Defendant Class Members under Judgment Forum Law.
In the event that after a verdict or judgment against a Defendant Class
Member, the Defendant Class Member upon assertion of its rights is determined
to have a valid contribution claim or indemnity claim against Fibreboard or
the Trust under Judgment Forum Law, the Settlement Class Member's verdict or
judgment against the Defendant Class Member shall be reduced or set off in the
amount necessary under Judgment Forum Law to satisfy such Defendant Class
Member's claim for contribution
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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 with 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 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 to (y) the total underlying 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
Trust 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 first
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
<PAGE>
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."
R E C I T A L S
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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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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<PAGE>
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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<PAGE>
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 as 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
Judgment. 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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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. DEGNAM
--------------------------
Title: Senior Vice President
ON BEHALF OF SETTLEMENT CLASS
By /S/ JOSEPH R. 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.
<PAGE>
EXHIBIT D
ESCROW AGREEMENT
ESCROW AGREEMENT made this ______ 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 attached 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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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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<PAGE>
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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<PAGE>
($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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<PAGE>
(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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<PAGE>
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
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<PAGE>
no obligation to institute or defend any action, suit or legal proceeding in
connection 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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<PAGE>
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. ACCOUNTS 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 a 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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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, New York 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 First 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) an 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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<PAGE>
by different parties in separate counterparts. All of 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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<PAGE>
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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<PAGE>
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. DEGNAM
---------------------------
Title SENIOR VICE PRESIDENT
THE FIRST NATIONAL BANK OF CHICAGO
By _____________________________________
Title _______________________________
AGREED TO:
FIBREBOARD CORPORATION
By /S/ MICHAEL R. DOUGLAS
---------------------------
Title SENIOR VICE PRESIDENT & GENERAL COUNSEL
CLASS COUNSEL
By /S/ JOSEPH RICE
---------------------------
Joseph Rice, Esq.
By /S/ JOSEPH COX
---------------------------
Joseph Cox, Esq.
By /S/ HARRY WARTNICK
---------------------------
Harry Wartnick, Esq.
By /S/ STEVEN KAZAN
---------------------------
Steven Kazan, Esq.
<PAGE>
EXHIBIT E
ASSIGNMENT
THIS ASSIGNMENT, is made by Fibreboard Corporation, a Delaware
Corporation ("Fibreboard") to the Trust (as hereinafter defined).
1. Definitions:
When used in this Assignment the following terms shall have the
following meanings:
"Global Approval Judgment" shall mean the Global Approval Judgment
defined in the Glossary of Terms annexed as Exhibit A to the
Global Settlement Agreement.
"Global Settlement Agreement" shall mean the settlement agreement
among Fibreboard Corporation, Continental Casualty Company, CNA
Casualty of California, Columbia Casualty Company, Pacific
Indemnity Company, and the Settlement Class.
"Insurance Company" shall mean Home Insurance Company.
"Insurance Policy" shall mean policy number HEC4356316 issued by
Home Insurance Company in favor of Fibreboard effective June 1,
1975 through June 1, 1978.
"Trust" shall mean the Trust referred to in Article V of the
Global Settlement Agreement among Fibreboard Corporation,
Continental Casualty Company, CNA Casualty Company of California,
Columbia Casualty Company, Pacific Indemnity Company, and the
Settlement Class.
2. Assignment:
In consideration of the Trust's full discharge and release of
Fibreboard's obligation under paragraph 2.3(B)(2) of the Global
Settlement Agreement to pay interest owed on the sum of
$9,892,223.00 from September 23, 1993 through Global Approval
Judgment, Fibreboard hereby without recourse sells, assigns,
transfers, conveys and delivers to the Trust all right, title and
interest of Fibreboard Corporation to collect from the Insurance
Company under or pursuant to the Insurance Policy interest owed on
the sum of $9,892,223.00 from September 23, 1993 and damages
arising from bad faith
<PAGE>
or other tortious conduct by the Insurance Company for its failure
to pay the $9,892,223.00 to Fibreboard Corporation in a timely
fashion and to pay such interest to Fibreboard Corporation.
3. Effective Date:
The effective date of this Assignment shall be the date of Global
Approval Judgment.
4. Governing Law:
This Assignment shall be governed by, and in accordance with, the
law of the State of California.
Dated: __________ FIBREBOARD CORPORATION
By: /S/ MICHAEL R. DOUGLAS
------------------------------------
Title: SENIOR VICE PRESIDENT & GENERAL
COUNSEL
Assignment Acknowledged
and Accepted By Assignee, the Trust:
Dated: _________________
By: ____________________
<PAGE>
FOR IMMEDIATE RELEASE Contact: Stephen L. DeMaria
510-274-0700
800-323-2677
FIBREBOARD ANNOUNCES GLOBAL ASBESTOS SETTLEMENT
(WALNUT CREEK, CALIFORNIA, December 23, 1993) Fibreboard Corporation
(AMEX:FBD) announced it has entered into definitive Global Settlement and
Insurance Settlement agreements with its insurers, Continental Casualty and
Pacific Indemnity, and class counsel for asbestos personal injury claimants
providing for a comprehensive settlement of asbestos personal injury claims
against the Company. The settlement agreements, which require final court
approval, would resolve Fibreboard's asbestos personal injury liabilities within
available insurance and existing reserves. Final court action on the settlement
agreements is anticipated in mid-1994, although appellate review of a favorable
trial court ruling if pursued could take an additional year or more.
Fibreboard Chairman and CEO, John D. Roach, stated, "I am delighted that
the settlement agreements we announced as agreements in principle in August 1993
are now completed. Given the benefits of these settlements to all parties
involved, I am optimistic we will obtain prompt judicial review and final court
approval. The settlements should ultimately result in more than $3 billion
being made available for existing and future asbestos personal injury
claimants."
If both the Global Settlement and Insurance Settlement agreements are
approved by the court, a Settlement Trust will be established with funding of
more than $1.53 billion for future asbestos personal injury claims. Continental
Casualty and Pacific Indemnity will also satisfy existing Fibreboard asbestos
personal injury settlement obligations and assume responsibility for existing
unsettled personal injury claims. Upon court approval, the Settlement Trust
will assume responsibility for resolving all future asbestos personal injury
claims. Future claimants will thus be barred from suing Fibreboard, Continental
or Pacific Indemnity.
In the event the Global Settlement agreement does not obtain court
approval, but the Insurance Settlement agreement is approved, Continental and
Pacific will still satisfy existing Fibreboard personal injury settlement
obligations and will also provide the Company up to $2 billion in additional
funds to deal with existing unsettled and future asbestos personal injury
claims.
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<PAGE>
FIBREBOARD ANNOUNCES
GLOBAL ASBESTOS SETTLEMENT
January 6, 1994
If neither the Global Settlement nor Insurance Settlement agreements are
approved by the court, Fibreboard and its insurers will continue the appeal of
their insurance coverage litigation in the California courts. On November 15,
1993, the California Court of Appeal issued a decision in the insurance coverage
case between Fibreboard and its insurers affirming the duty of the insurers to
indemnify Fibreboard for asbestos-related personal injury claims.
In its decision the Court of Appeal affirmed the trial court's favorable
ruling on the scope of coverage of the insurance policies and the trial court's
basic decision on continuous trigger of coverage. The Court modified the trial
court judgment to provide that the policies are triggered by a claimant's first
exposure to the policyholder's products. However, the Court emphasized that the
burden is on the insurer to show that the claimant was not exposed to the
policyholder's product before or during the policy period. It is likely that
one or more parties will seek discretionary review of the Court of Appeal
decision with the California Supreme Court. As requested by Fibreboard and two
of the insurers, Continental Casualty Company and Pacific Indemnity, the Court
of Appeal withheld its ruling on the issues in the case discrete to Continental
and Pacific, pending finalization of this settlement.
During the court approval process the Company will be free to expand its
businesses, make additional acquisitions and maintain continued access to
capital markets. However, until such time as final court approval is obtained
the Company will not be in a position to consider stock repurchases or cash
dividends due to legal and contractual restrictions.
Fibreboard Corporation, headquartered in Walnut Creek, California, owns
more than 80,000 acres of timberland in the Sierra Nevada mountains and
manufactures lumber, hardwood plywood, moulding and millwork, agricultural
container components, precision molded industrial insulation and fireproofing
materials. Its Resort Operations Group owns and operates Northstar-at-Tahoe, an
all season resort featuring skiing, golfing and a conference center, and
Sierra-at-Tahoe, a day ski facility, both located in the Sierra Nevada mountains
of California.
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