AGREEMENT FOR CLAIM DETERMINATION
EXHIBIT
99.1
THIS
AGREEMENT (the “Agreement”) is executed by and between the Liquidator of The
Protective National Insurance Company of Omaha (the “Liquidator”) and Congoleum
Corporation, a Delaware corporation and a debtor-in-possession under Chapter 11
of the U.S. Bankruptcy Code (the “Claimant”) (collectively referred to as the
“Parties”).
RECITALS
A. The
Protective National Insurance Company issued to Claimant Policy XUB 180 72 81
for the period from January 1, 1984 to January 1, 1985 (the
“Policy”).
B. Claimant
has been and may in the future be subject to asbestos-related claims that
Claimant contends are covered by the Policy.
C. Claimant
and the Liquidator disagree with respect to whether and the extent to which
coverage is afforded by the Policy for asbestos-related claims.
D. Claimant
and the Liquidator stipulate that, for the purposes of this agreement, the total
amount of undisputed limits applicable and available to pay asbestos-related
claims under the Policy is Six Million U.S. Dollars
(US$6,000,000.00).
E. On
December 31, 2003, Claimant filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code.
F. Claimant
continues to operate its business and to manage its properties as a
debtor-in-possession under the Bankruptcy Code.
G. On
February 12, 2004, the District Court of Lancaster County, Nebraska (the
“Liquidation Court”) entered an Order of Liquidation, Declaration of Insolvency
and Injunction (the “Order of Liquidation”) for The Protective National
Insurance Company of
Page
1 of 8
Omaha
(“Protective National”) pursuant to the provisions of the Insurers Supervision,
Rehabilitation, and Liquidation Act, Neb. Rev. Stat. § 44-4801 et
seq. (the “Act”).
H. The
Order of Liquidation established a February 12, 2005 deadline to file claims in
the liquidation proceedings of Protective National.
I. The
Claimant timely filed a Proof of Claim (referred to as “POC”) with the
Liquidator claiming rights as an insured under the Policy, which was assigned
Proof of Claim Number 700186.
J. The
Liquidator is charged with the obligation, among others, of administering the
POCs made against the assets of Protective National.
K. The
Liquidator and the Claimant have negotiated regarding the amount of the
Claimant’s covered POC to be recommended to the Liquidation Court for approval
pursuant to Neb. Rev.
Stat. §§ 44-4838 and 44-4843.
L. In
the normal course of the administration of the Protective National liquidation
estate, the Liquidator referred the Claimant’s POC to the New Hampshire
Insurance Guaranty Association (“NHIGA”) as required by law. The
NHIGA denied coverage for the POC by letter dated May 31, 2007.
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by the Parties, and in further consideration of the
covenants and promises, agreements and premises set forth below, the Parties
mutually agree as follows:
Page
2 of 8
AGREEMENTS
1. Binding Effect of
Recitals. The above recitals are incorporated into this
Agreement by reference.
2. Waiver of
Adjudication by Guaranty Association. The Claimant hereby
acknowledges its right to have its POC filed in the Protective National
liquidation proceedings referred to, adjudicated, and covered by the applicable
guaranty association or foreign guaranty association and hereby waives that
right with full knowledge that said waiver may result in the denial by the
guaranty association or foreign guaranty association of any and/or all claims of
the Claimant against Protective National or the guaranty association or foreign
guaranty association if the Claimant should subsequently present its claims to
the guaranty association or foreign guaranty association.
3. Amount of Covered
Claim(s). The Liquidator agrees to recommend to the
Liquidation Court that the Claimant’s POC Number 700186 be allowed as a Class 2
Claim (as defined by Neb. Rev.
Stat. §44-4842 of the Act) in the amount of Three Million U.S. Dollars
(US$3,000,000.00). The Claimant hereby acknowledges its understanding
that said allowance, if approved by the Liquidator and the Liquidation Court,
does not guarantee it a distribution from the liquidation estate in the
recommended amount or any other amount; that the amount of distributions that
may ultimately be made by the Liquidator of Protective National is unknown; that
the amount of distribution, if any, that the Claimant ultimately receives may be
ratable, based upon the amount of funds available upon distribution and the
amount of the allowed Class 2 claims existing upon determination; and that the
time of distributions, if any, is unknown. Unless informed in writing
otherwise by the Claimant, payment by the Liquidator shall be by check made
payable to Congoleum Corporation.
Page
3 of 8
4. Mutual
Releases. In further consideration of the Liquidator
recommending the allowance of the Claim, Claimant on behalf of itself, and on
behalf of any and all insureds on whose behalf Claimant is authorized to
act (the “Releasing Parties”) does hereby release and forever
discharge Protective National, the Liquidator of Protective National, the New
Hampshire Insurance Guaranty Association, and any other applicable guaranty
association or foreign guaranty associations, and each of their agents,
representatives, successors or assigns, of any and from any and all claims,
actions, causes of action arising out of the Policy. Except as stated
in this Agreement, the Liquidator, Protective National, and each of their
agents, representatives, successors, or assigns, hereby release and forever
discharge the Releasing Parties and their respective agents,
representatives, successors, and assigns, from any and all claims, actions, or
causes of action arising out of the Policy. The mutual releases in
this Paragraph do not extend to claims for breach of this
Agreement.
5. Bankruptcy Court
Approval. This Agreement and the Parties’ obligations
hereunder are conditioned on and will be effective immediately upon entry of an
order by the United States Bankruptcy Court for the District of New Jersey
(“Bankruptcy Court”) where the case captioned as In re Congoleum
Corp., Case No. 03-51524 (KCF) (“Bankruptcy Case”) s is pending,
approving this Agreement. Within ten (10) business days after the
Liquidation Court issues an order approving the Liquidator’s report identifying
the Claimant’s allowed Class 2 Claim in the amount of three million United
States Dollars (US$3,000,000.00) described herein, Claimant shall file a motion
pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure seeking entry
of an order of the Bankruptcy Court approving this Agreement. The
Liquidator shall reasonably cooperate with the Claimant to obtain such
approval. After Bankruptcy Court approval, the Liquidator shall pay
to the Claimant the percentage distributions made with respect
Page
4 of 8
to
allowed Class 2 Claims, in accordance with the Liquidator’s applicable reports
to the Liquidation Court. This Agreement shall become null and void
upon entry of a Final Order by the Bankruptcy Court denying the approval
motion. In such case, the Parties’ rights shall be as they were on
September 20, 2007, the date on which the Claimant sent its response to the
Liquidator’s July 23, 2007, initial notice of determination. “Final
Order” means an order or judgment of the Bankruptcy Court or other court of
competent jurisdiction, as to which no appeal, petition for certiorari, or other
proceedings for reargument, rehearing or reconsideration has been sought and
is pending, and the time for such appeal or review, rehearing,
reconsideration, or certiorari has expired.
6. Handling and Use
of Settlement Proceeds. Claimant will maintain any
distributions received from the Liquidator of Protective National in a
segregated interest-bearing account (the “Protective National Settlement
Proceeds”). Claimant will hold the Protective National Settlement
Proceeds until the earlier of (i) the effective date of a plan of reorganization
following confirmation by the Bankruptcy Court, (ii) dismissal or conversion of
the Chapter 11 cases, or (iii) as otherwise directed by the Bankruptcy
Court. The Protective National Settlement Proceeds shall be used only
in connection with the payment of asbestos claims and/or to pay any other
amounts payable by the plan or the confirmation order.
7. Binding Effect of
Terms. The terms of this Agreement shall be binding upon and
shall inure to the benefit of the Parties, their successors, and assigns,
including, without limitation, any asbestos-related personal injury trust
(“Asbestos PI Trust”) that may be established in Congoleum’s Bankruptcy Case, or
any trustee, responsible person, estate administrator, representative, or
similar person appointed in connection with the Bankruptcy Case. Upon
the later of the date that the Confirmation Order becomes a Final Order or the
date
Page
5 of 8
that the
confirmed plan of reorganization in the Bankruptcy Case become effective, all of
Congoleum’s right, title, and interest in and to this Agreement shall be
assigned to the Asbestos PI Trust pursuant to the terms of such plan of
reorganization, automatically and without need for further action by any
Party. “Confirmation Order” means an order entered by the U.S.
District Court for the District of New Jersey that either (a) confirms a plan of
reorganization that includes an injunction pursuant to section 524(g) of the
Bankruptcy Code and, in connection with such plan, enters such a section 524(g)
injunction; or (b) affirms an order of the Bankruptcy Court that has confirmed a
plan and, in connection with such plan, has entered such a section 524(g)
injunction.
8. Representations
and Warranties. The Parties hereby warrant and represent to
the best of their knowledge and belief that, other than the Policy, they have no
knowledge of any other policies of liability insurance issued by Protective
National and providing coverage to Claimant for asbestos-related
claims.
9. No Admissions by
the Parties. The Parties enter into this Agreement for the
purpose of compromising disputed claims over various insurance coverage issues
and neither this Agreement’s existence nor any of its terms may be used or
construed as an admission or concession of any position for any purpose apart
from this Agreement. This Agreement involves compromises of the
Parties’ previously stated legal positions and is without prejudice to positions
taken by either Party with regard to any third party, including other insureds
and other insurers.
10. Independent
Evaluation. Except as stated in this Agreement, the Claimant
and the Liquidator each acknowledges that it enters into this Agreement based
upon its independent
Page
6 of 8
evaluation
and understanding of the relevant facts and not based upon any representations
made by or on behalf of the other Party.
11. Costs. The
Parties agree that each Party shall pay its own attorneys fees and court costs
in this matter , and the Parties hereby release each other from any claim with
respect thereto. The mutual releases in this paragraph do not extend
to claims for breach of this Agreement.
12. Merger and
Integration. This Agreement constitutes the entire agreement
between the Parties with respect to those matters addressed
herein. There are no other agreements, promises, representations, or
understanding as to the matters addressed herein, except as expressly set forth
herein. The Parties agree that there were no inducements or
representations leading to the execution of this Agreement, except as herein
contained, and that this Agreement may not be altered, changed or modified
except by written agreement between the Parties.
13. Authority to
Execute Agreement. The Parties warrant that they are fully
empowered and authorized to execute this Agreement and that the person signing
on behalf of each Party is fully authorized to do so. Except as
described herein, the Parties warrant and represent that there are no additional
entities or persons affiliated with any of the Parties hereto who are necessary
to effectuate this Agreement.
14. Miscellaneous. This
Agreement may be executed in two or more identical counterparts, all of which
constitute one and the same Agreement. No inference in favor of or
against either Party shall be drawn from the fact that such Party has drafted
any portion of this Agreement. This Agreement shall be interpreted,
enforced and governed by the Liquidation Court.
Page
7 of 8
15. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all such counterparts together shall constitute one and the same
agreement. The Parties agree to accept signatures transmitted by
facsimile or other electronic means as original signatures.
The
Liquidator and the Claimant have executed this Agreement as of the date set
forth below.
|
Dated: February 18,
2008
|
THE
LIQUIDATOR OF THE PROTECTIVE
NATIONAL
INSURANCE COMPANY OF
OMAHA,
IN LIQUIDATION
|
|
By:
/s/ ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Print:
▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title:
Special Deputy
Liquidator
|
|
|
Dated: February 18,
2008
|
CONGOLEUM
CORPORATION, Claimant
|
|
By:
/s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇
Print:
▇▇▇▇▇▇ ▇.
▇▇▇▇▇
Title:
CFO
|
Page
8 of 8