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May 04, 2003 12:23 PM
North American Refractories/ Honeywell Asbestos Settlement - Settlement Agreement

This letter (the “Agreement”) memorializes the terms and conditions pursuant to which Honeywell International Inc. and all persons listed on Exhibit A hereto (the “Current Claimants”), acting by and through your firm or the firms designated on Exhibit A as their counsel (“Certain Affiliated Counsel”), have agreed to settle the asbestos-related personal injury and death claims (the “Current Claims”) of the Current Claimants against Honeywell that allege that the Current Claimants were exposed to asbestos-containing product(s) manufactured or distributed by North American Refractories Company (“NARCO”) or its predecessors (the “NARCO Product
Line”),1 which exposure contributed to the cause of the Current Claimants (or claimants’ decedents’) personal injuryor death.
This Agreement is premised on the following facts and circumstances:
a. Pursuant to the Purchase Agreement between NARCO Investors, Inc., Allied Corporation and Allied Canada, Inc. dated October 24, 1985, as amended, Honeywell as successor-in-interest to Allied Corporation may have exposure in connection with potential liability for certain products included in the NARCO Product Line;
b. NARCO filed a petition for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Pennsylvania (the “Bankruptcy Court”) on January 4, 2002, and all claims against NARCO were automatically stayed;
1 The Current Claims shall not include any claims the Current Claimants may have that
arise from exposure to any asbestos-containing product manufactured or distributed by TheBendix Corporation.
c. The Bankruptcy Court issued a Temporary Restraining Order (the “TRO”) on January 4, 2002 staying the commencement or prosecution of all actions against Honeywell arising out of the NARCO Product Line;
d. Honeywell has proposed to participate as the principal funder of a trust to be established pursuant to Section 524(g) of the United States Bankruptcy Code (the “Bankruptcy Trust”), to which all present and future asbestos-related claims against NARCO and/or Honeywell arising from the NARCO Product Line will be channeled;
e. The Current Claims include claims on which certain of the Current Claimants had reached legally enforceable agreements to settle with NARCO and/or Honeywell prior to NARCO’s January 4, 2002 bankruptcy filing date (“Pending Settlements”) for a specific monetary amount (the “Pending Settlement Amount”), as well as unsettled claims;
f. Ness, Motley, P.A. (“Ness, Motley”) and Certain Affiliated Counsel, counsel for the Current Claimants, have conducted investigations into the facts of each of the Current Claims and have concluded that a settlement with Honeywell on the terms hereinafter set forth is in the best interests of each of their Current Claimants;
g. Honeywell, without conceding liability or making any admission with respect to any legal or factual issue, wishes to avoid further litigation of and to resolve the claims of the Current Claimants on the terms set forth herein.
Ness, Motley and Certain Affiliated Counsel, as counsel for the Current Claimants, and Honeywell International Inc. thus stipulate and agree that all of the Current Claims shall be compromised and settled, and are settled as of the date of the execution of this Agreement, on the following terms and conditions.
1. No Admission of Liability. Neither this Agreement nor any of its provisions nor evidence of any negotiations or proceedings in furtherance of this settlement shall be offered or received in evidence in any action or proceeding as an admission or concession of liability or wrongdoing of any nature on the part of Honeywell or
NARCO or anyone acting on their behalf, and Honeywell specifically denies any such liability or wrongdoing.
2. Effectuation of Agreement. All parties to this Agreement and their counsel shall exercise their best efforts (a) to effectuate this Agreement;2 and, (b) upon Honeywell’s payment of all amounts due a Current Claimant from Honeywell under Section 5 below, to promptly seek any required orders of all Courts with jurisdiction over
the Current Claim at issue to secure the complete and final dismissal with prejudice of Honeywell and any and all of its officers, directors, employees, representatives, agents or attorneys from any actions filed by the Current Claimant. Counsel for the Current Claimants agree to support the continuance of the TRO before the Bankruptcy Court until the Bankruptcy Court issues an order approving or disapproving the plan of reorganization for NARCO,
provided that Honeywell makes payments pursuant to Section 5 below and seeks the Bankruptcy Court’s approval of Asbestos Personal Injury Settlement Bankruptcy Trust Distribution Procedures (the “TDP”) substantially in the form of that attached hereto as Exhibit B. In the event that the Bankruptcy Court does not approve the Bankruptcy Trust or otherwise dissolves the TRO, counsel for the parties agree to seek a stay from the court of the jurisdiction in which each Current Claim is pending until the parties have the opportunity to pursue good faith negotiations and, if chosen by a claimant, arbitration under this Agreement. Honeywell agrees to toll any statute of limitations applicable to any Current Claim against Honeywell from January 4, 2002 to the later of the date the Bankruptcy Court dissolves the TRO or the date a Current Claimant chooses to resort to the tort system pursuant to Section 9(d) below. Regardless of whether the Bankruptcy Court approves the Bankruptcy Trust, counsel for the Current Claimants shall refrain from initiating or prosecuting any legal action on behalf of a Current Claimant against Honeywell, other than resort to the tort system pursuant to the requirements of Sections 9 and 11 below or for breach
of this Agreement, or, with respect to Discontinued Products (as that term is defined in the Purchase Agreement between NARCO Investors, Inc., Allied Corporation and Allied Canada, Inc. dated October 24, 1985, as amended), against NARCO.3
3. Release. Each Current Claimant shall provide to Honeywell a release for the benefit of Honeywell and a waiver of and covenant-not-to-sue on any claim he or she may have 2 Counsel for the Current Claimants expressly retains the right to exercise his or her independent professional judgment in advising each individual client and each client shall have the right to accept or reject this settlement.3 Pursuant to Section 2.3.4 of the above-referenced agreement, the definition of Discontinued Products is “a product of the [NARCO] [b]usiness that is no longer manufactured or sold by the [b]usiness on the Closing Date.”against NARCO relating to Discontinued Products, in the appropriate form for the jurisdiction in which such Current Claimant’s claim is pending, as attached hereto as
Exhibit C (“Release”).4
4. Evidentiary Requirements. Each Current Claimant must present the following evidence to be eligible for payment hereunder:
a. A written statement of the first date of the Current Claimant’s exposure to an asbestos-containing product manufactured or distributed by NARCO. In addition, Current Claimants seeking compensation for Mesothelioma, Lung Cancer or Other Cancer, as defined below (“Cancer Claimants”), must provide competent sworn testimony of the claimant or a co-worker showing exposure to an asbestos-containing product manufactured or distributed by NARCO at a work-site.
b. Competent Medical Evidence of an asbestos-related injury, defined as follows:
“Bilateral Asbestos-Related Nonmalignant Disease” means that the claimant has or
had an X-ray reading of 1/0 or higher on the ILO scale, or bilateral pleural plaques or
bilateral pleural thickening (or, if an ILO reading is not available, a chest X-ray
reading that indicates bilateral interstitial fibrosis, bilateral interstitial markings,
bilateral pleural plaques or bilateral pleural thickening supporting a diagnosis of
asbestos-related disease). Competent Medical Evidence of Bilateral Asbestos-
4 The Release shall provide that (a) a Nonmalignant Claimant, as defined in footnote 5
below, may, notwithstanding the Release, seek payment from the Bankruptcy Trust in the event that such claimant develops a malignant disease allegedly caused by exposure to the NARCO Product Line, provided the claimant qualifies for such payment under the terms of the Trust Distribution Procedures then in force; and (b) in the event that the Bankruptcy Trust is not approved, such Current Claimant may seek compensation from Honeywell under the terms of this Agreement. If a Current Claimant seeks such compensation from Honeywell, the amount Honeywell shall be obligated to pay such Current Claimant who qualifies for payment for a malignancy shall be reduced by the 
Related Nonmalignant Disease shall mean a medical report by a physician containing a diagnosis of such disease based upon an X-ray reading by a NIOSH certified B reader whenever available, or, when not available, upon an X-ray reading by a radiologist.
“Lung Cancer” shall mean a primary lung cancer. Competent Medical Evidence of an
asbestos-related malignancy, including Lung Cancer, Mesothelioma and Other
Cancer, as defined below, shall mean a medical report containing a diagnosis of such
malignancy based upon either (i) a physical examination of the claimant by the
physician providing the diagnosis, or (ii) a diagnosis of such a malignant disease by a
board-certified pathologist. A Current Claimant with Lung Cancer who seeks to prequalify for a payment from the Bankruptcy Trust for Lung Cancer I (Level VII) under Section 7(b) below must also provide evidence of an underlying Bilateral Asbestos-Related Nonmalignant Disease.
“Mesothelioma” shall mean a malignant tumor originating in the mesothelial cells of the pleural or peritoneal surfaces.
“Other Cancer” shall mean a primary colorectal, laryngeal, esophageal, pharyngeal, or stomach cancer, plus evidence of an underlying Bilateral Asbestos-Related Nonmalignant Disease.
5. Payment on Claims. In exchange for Releases from the Current Claimants, the parties agree that, upon presentation of the requisite evidence set forth in Section 4 above, Honeywell will pay each Current Claimant based on the values set forth on Exhibit D for the disease applicable to such claimant (the “Settlement Values”) as follows:
(a) Honeywell will pay each Nonmalignant Claimant, as defined below5, a payment of $600.00 within ninety (90) days of receipt of the required evidence and Release. 5 “Nonmalignant Claimants” means those Current Claimants who seek compensation under this Agreement for a Bilateral Asbestos-Related Nonmalignant Disease, as defined in Section4(b) above.
(b) Honeywell will pay each Cancer Claimant fifty percent (50%) of the applicable Settlement Value set forth on Exhibit D within ninety (90) days of receipt of the required evidence and Release.
(c) (i) Subject to Section 5©(iii) below, if the Bankruptcy Court approves a plan of reorganization for NARCO that includes the Bankruptcy Trust by December 15, 2003, Honeywell shall have no obligation to pay a Current Claimant additional funds hereunder.
(ii) If the Bankruptcy Court does not approve a plan of reorganization for NARCO that includes the
Bankruptcy Trust by December 15, 2003, Honeywell will pay each Cancer Claimant the fifty percent (50%) balance of the applicable Settlement Value set forth on Exhibit D, within ninety (90) days following the earlier of December 15, 2003 or the Court’s order rejecting such plan; provided, however, Honeywell shall have the right to hold in abeyance payment of the fifty percent (50%) balance of the Settlement Value due under this subsection if the Current Claimant seeks Supplemental Review, as defined below, until the parties reach resolution on such claim under Section 9 below.
(iii) If, pursuant to Section 7 below, the Bankruptcy Trust pays a Cancer Claimant less than 50% of the applicable Settlement Value set forth on Exhibit D, counsel for the Cancer Claimant involved shall submit a notice to Honeywell of the deficit in payment to such Current Claimant under this Agreement (which shall be the difference between 50% of the applicable Settlement Value and the amount the Trust has paid the claimant). Honeywell shall pay the deficit within 60 days of receipt of such notice. If a Court of Appeals issues an order reversing the approval of the Bankruptcy Trust prior to the time the Trust makes payment to any Cancer Claimant pursuant to Section 7 below, Honeywell shall pay each such Cancer Claimant 50% of the applicable Scheduled Value set forth on Exhibit D within 60 days of the court’s order of reversal.
6. Effect of Payments. Honeywell’s payment of the Settlement Values pursuant to Section 5 above shall fully satisfy Honeywell’s payment obligation with respect to the Current Claimants under the terms of this Agreement and under the terms of any Pending Settlement, where applicable. Except as set forth in Section 9 below, the Release provided by any Current Claimant hereunder will not be contingent or conditioned upon approval of the Bankruptcy Trust by the Bankruptcy Court, or the trustee’s determination that a claimant is eligible for payment by the Bankruptcy Trust.
7. Claims Against Bankruptcy Trust. Notwithstanding Honeywell’s payments pursuant to Section 5 above, the Current Claimants retain the right to seek compensation from the Bankruptcy Trust to be established in connection with the NARCO bankruptcy for alleged exposure to the NARCO Product Line, which exposure contributed to the cause of the Current Claimants’ (or claimants’ decedents’) personal injury or death, as set forth below; provided, however, the amount paid from the Bankruptcy Trust to a Current Claimant with a Pending
Settlement shall be limited to the Pending Settlement Amount.6 Provided, further, if the Bankruptcy Court does not approve a plan of reorganization for NARCO that includes the Bankruptcy Trust by December 15, 2003 and Honeywell makes payments to Current Claimants under Section 5©(ii) above, the amount of any payment from the Bankruptcy Trust to a Current Claimant shall be reduced by the amount of the payment (50% of the applicable Settlement Value set forth on Exhibit D) by Honeywell under Section 5©(ii) above.
(a) Each Nonmalignant Claimant may file a claim for Expedited Review with the Bankruptcy Trust, pursuant to the terms of the TDP (all capitalized terms used in this Section and not defined herein have the meaning ascribed to them in the TDP). If a Nonmalignant Claimant has, though not mandated by the evidentiary requirements in Section 4 above, submitted to Honeywell hereunder sworn testimony evidencing exposure to an asbestos-containing product manufactured or distributed by NARCO at one or more worksite(s), which identifies the worksite(s) where he or she was allegedly exposed, the eligibility of such Claimant for a Level 1 payment ($1,000) from the Bankruptcy Trust under Section 4.3(b) of the TDP shall be pre-established.
(b) Each Cancer Claimant may file a claim for Expedited or Individual Review with the Bankruptcy Trust, in accordance with the TDP. If a Cancer Claimant has, though not mandated by the evidentiary requirements in Section 4 above, submitted to Honeywell hereunder exposure evidence that meets the requirements of Sections 4.3(b)(3), fn 2 and 4.7(b) of the TDP, the eligibility of such Cancer Claimant for payment of the lowest Scheduled Value for the applicable disease category from the Bankruptcy Trust under Section 4.3(b) of the TDP shall be preestablished; provided, however, a Current Claimant with Lung Cancer who seeks to pre-qualify
6 Nothing contained in this Agreement is intended to limit the right of NARCO or a
Current Claimant with a Pending Settlement to seek to enforce any pre-petition settlement agreement before the Bankruptcy Court or through the Bankruptcy Trust. under this Section for a payment from the Bankruptcy Trust for Lung Cancer I (Level VII) must also provide evidence of an underlying Bilateral Asbestos-Related Nonmalignant Disease.
8. Establishment of Bankruptcy Trust. The Current Claimants who receive compensation under this Agreement, acting by and through Ness, Motley and Certain Affiliated Counsel agree that they, as present claimants with alleged claims against the Bankruptcy Trust to be established in connection with the NARCO bankruptcy, will vote in favor of establishment of the Bankruptcy Trust under Section 524(g) of the United States Bankruptcy Code in accordance with the principal terms set forth on Exhibit B hereto in any proceedings thereon before the United States Bankruptcy Court for the Western District of Pennsylvania.
9. Supplemental Review. In the event that the Bankruptcy Court does not confirm a plan of reorganization for NARCO that includes the Bankruptcy Trust by January 1, 2004, the Current Claimants may seek additional compensation from Honeywell as follows:
(a) Counsel for the Current Claimants must provide in writing to Honeywell by January 1, 2004 a list of those Current Claims for which counsel seeks Supplemental Review with a specific monetary demand to resolve each of the Current Claims listed;
(b) Honeywell will respond in writing by March 1, 2004 to advise counsel for those Current Claimants subject to Supplemental Review of its position with respect to the demands made. Counsel for Current Claimants and Honeywell shall conduct good faith negotiations to resolve the claims subject to Supplemental Review;
(d) In the event the parties are not able to reach agreement on the claims subject to Supplemental Review, counsel for the Current Claimants may choose to (i) submit the outstanding claims to binding arbitration in accordance with Section 10 below, or (ii) prosecute the claim against Honeywell in the tort system pursuant to Section 11 below.
10. Arbitration. All parties to this Agreement agree to arbitrate all disputes arising out of or relating to qualification for payment under or the interpretation of this Agreement, excepting only those Current Claims that counsel chooses to prosecute in the tort system pursuant to Section 9(d)(ii) above, in accordance with the terms set
forth herein. One arbitrator from those on the list of arbitrators attached hereto as Exhibit F shall consider and render a decision on any dispute submitted for arbitration. Honeywell and counsel for the Current Claimant whose claim is submitted for arbitration shall seek to reach agreement on choice of arbitrator. In the event the parties cannot reach agreement, each party shall choose one arbitrator from Exhibit F, and the two chosen arbitrators shall choose a third from Exhibit F, who shall arbitrate the dispute. Venue for arbitration shall be Washington, D.C., and the arbitrators shall apply the law of the jurisdiction in which the claimant’s case is pending against codefendants or, if no longer pending, where the action was filed, or, if not filed, in which the claimant resides. The arbitrator shall render a final decision based on the written submission of the parties within 45 days of submission of any dispute to him or her. The parties agree to be bound by the decision of the arbitrator.
11. Resort to the Tort System. In any Current Claim that a Current Claimant and his or her counsel choose to assert in the tort system in accordance with the procedures set forth in Section 9 above, such Current Claimant agrees to waive, release and not to assert any claim for punitive damages in connection with the NARCO Product
Line. Language to memorialize this agreement is included the Release. In such an action, the amount Honeywell has paid a Current Claimant hereunder shall be credited against the amount of any court award of damages.
12. Essential Terms. The parties agree that the provisions of Paragraphs 3-11 above, are essential to and unseverable from this Agreement; if any of Paragraphs 3-11 are breached or declared to be void or voidable, the entire Agreement shall be breached or be void or voidable.
13. Breach. Breach of any single section of this Agreement, other than paragraphs 3-11, shall not be construed to be a breach or repudiation of the whole Agreement.
14. Waiver. The waiver by any party of any breach of any term or condition of this Agreement shall not be construed as a waiver of any other breach of such term or condition, or of any breach of any other term or condition of this Agreement.
15. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
16. Modification. This Agreement may be modified only by written agreement of the parties.
17. Confidentiality. The parties shall treat this Agreement and all terms and conditions thereof as confidential and shall not disclose the Agreement or any of its terms and conditions to any person, except as may be required by law or court order, including without limitation, by the Bankruptcy Court in connection with its consideration of the Bankruptcy Trust.
18. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof) as to all matters, including, but not limited to, matters of validity, construction, effect, performance and remedies. Please countersign this letter below, and procure the signatures of representatives of the other firms that represent the Current Claimants, to memorialize your and their agreement, on behalf of the Current Claimants, to the terms and conditions hereof, and to finalize this Agreement.
Very truly yours,

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