100225728.2 0061365-00040
UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
In re
KAISER GYPSUM COMPANY, INC., et al.,
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Debtors.
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Chapter 11
Case No. 16-31602 (JCW)
(Jointly Administered)
SETTLEMENT AGREEMENT REGARDING
THE PORT OF SEATTLE'S GENERAL UNSECURED CLAIMS
RECITALS
A. On September 30, 2016, Kaiser Gypsum Company, Inc. ("Kaiser
Gypsum") and Hanson Permanente Cement, Inc. ("HPCI" and together with Kaiser Gypsum,
the "Debtors"), commenced reorganization cases by filing voluntary petitions for relief under
chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Western
District of North Carolina (the "Bankruptcy Court").
B. On March 31, 2017, the United States, at the request of the United States
Environmental Protection Agency (the "EPA") and the United States Department of Interior,
acting through the U.S. Fish and Wildlife Service, and the United States Department of
Commerce, acting through the National Oceanic and Atmospheric Administration, each filed
identical proofs of claim (proof of claim numbers 6, 7, 8, 9, 10 and 11) against each Debtor
based on alleged liability under the Comprehensive Environmental Response, Compensation,
and Liability Act ("CERCLA") in connection with the Lower Duwamish Waterway Superfund
Site (the "Site"). These claims are based on Section 107 of CERCLA, 42 U.S.C. §9607, and
seek recovery from the Debtors for: (a) a portion of unreimbursed past response costs incurred
by the EPA in the amount of $5,690,299.30; (b) a portion of future response costs based on a
Record of Decision released by the EPA in November 2014 that selects the CERCLA remedy for
the Site, which the EPA estimates will result in remedial costs of $342 million; and (c) a portion
of Site natural resource damages, including past and future assessment costs. The Debtors are
but two of the approximately 120 potentially responsible parties ("PRPs") that the EPA has
identified at the Site.
C. On September 1, 2017, The Port of Seattle (the "Claimant" and
collectively with the Debtors, the "Parties"), another PRP at the Site, filed proof of claim
number 23 in an unliquidated amount against HPCI ("Claim No. 23") and proof of claim number
24 in an unliquidated amount against Kaiser Gypsum ("Claim No. 24" and together with Claim
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The Debtors are the following entities (the last four digits of their respective taxpayer identification
numbers follow in parentheses): Kaiser Gypsum Company, Inc. (0188) and Hanson Permanente Cement,
Inc. (7313). The Debtors' address is 300 E. John Carpenter Freeway, Irving, Texas 75062.
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No. 23, the "Claims"). Each of the Claims asserts that the applicable Debtor is responsible for
some portion of (i) more than $18 million in investigation, cleanup, source control, remediation
and response costs allegedly incurred by the Claimant at the Site and (ii) undetermined future
investigation, cleanup, source control, remediation and response costs relating to the Site that
have not yet been incurred by the Claimant. On November 1, 2018, the Debtors filed an
objection to the Claims [Docket No. 1278].
D. The City of Seattle and King County, Washington, additional PRPs at the
Site, each filed proofs of claim against the Debtors asserting that the applicable Debtor is
responsible for some portion of (i) the investigation, cleanup, source control, remediation and
response costs allegedly incurred by each of those PRPs at the Site and (ii) undetermined future
investigation, cleanup, source control, remediation and response costs relating to the Site that
have not yet been incurred by each of those PRPs. On November 1, 2018, the Debtors filed
objections to each of the claims asserted by The City of Seattle and King County, Washington
[Docket Nos. 1279, 1280].
E. The Claimant, The City of Seattle and King County, Washington and The
Boeing Company (collectively, the "LDW Claimants") have completed a remedial investigation
and feasibility study ("RI/FS") of the Site pursuant to the requirements of a joint Administrative
Order on Consent to Conduct a RI/FS between the aforementioned entities and the EPA and the
Washington Department of Ecology. The LDW Claimants have also engaged in cleanup of
various "early action areas" identified as locations at the Site that would require cleanup under
any remedial scenario and agreed to perform additional studies of the Site. In 2013, the LDW
Claimants also agreed to perform additional pre-remedial design investigations and studies of the
Site, which remain ongoing.
F. In April 2014, HPCI, for itself and for Kaiser Gypsum, entered into an
Alternative Dispute Resolution Memorandum of Agreement (the "MOA") with over thirty
participating parties, including the LDW Claimants, pursuant to which the MOA signatories
agreed to participate in a non-judicial process for allocating the response costs incurred in
connection with investigation and remediation of the Site.
G. The Debtors and the Claimant agree for purposes of this Settlement
Agreement, as a reasonable compromise of their respective positions, that the Claimant has
incurred $17,500,582.00 in total costs at the Site (the "Past Costs"). These Past Costs are
comprised of (a) $11,736,549.00 for the Claimant's portion of shared costs incurred by the LDW
Claimants at the Site, and (b) $5,764,033.00 in direct costs incurred by the Claimant at the Site.
H. The Debtors have reached an agreement in principle with the United
States, on behalf of the EPA and the United States Department of Interior, acting through the
U.S. Fish and Wildlife Service, and the United States Department of Commerce, acting through
the National Oceanic and Atmospheric Administration, to liquidate and pay in full an allowed
general unsecured claim in a certain amount (the "US Settlement").
I. The Parties engaged in extensive good faith negotiations regarding the
Claims. As a result of the Parties' arm's-length negotiations, the Parties have agreed to resolve
the claims on the following terms.
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NOW, THEREFORE, in consideration of the mutual promises and terms
contained herein, and other good and valuable consideration, the receipt and sufficiency of which
is acknowledged by the Parties hereto, the Parties, intending to be legally bound, agree as
follows:
1. Allowance of Claims.
a. Proof of Claim No. 23. Subject to the satisfaction of the conditions
set forth in Section 1.c., Proof of Claim No. 23 is hereby allowed as a general unsecured claim in
the amount of $81,815.22 against HPCI in its bankruptcy case.
b. Proof of Claim No. 24. Subject to the satisfaction of the conditions
set forth in Section 1.c., Proof of Claim No. 24 is hereby allowed as a general unsecured claim in
the amount of $81,815.22 against Kaiser Gypsum in its bankruptcy case.
c. Conditions to Allowance of Claims. The Claims shall not be
allowed pursuant to Sections 1.a. and 1.b. until each of the following conditions is satisfied:
(i) the entry of a consent decree concerning the Debtors' liabilities at the Site pursuant to the
terms of the US Settlement, (ii) Bankruptcy Court approval of an agreement resolving the proofs
of claim filed by City of Seattle, (iii) Bankruptcy Court approval of an agreement resolving the
proofs of claim filed by King County, Washington, (iv) Bankruptcy Court approval of this
Settlement Agreement, and (v) the occurrence of the effective date of a plan of reorganization
confirmed in the Debtors' chapter 11 cases that provides for payment in full in cash, without
interest, of the allowed amount of the Claims stated in Sections 1.a and 1.b above.
2. Effectiveness of the Settlement Agreement. This Settlement Agreement
shall be effective (the "Effective Date") upon the later of (a) the date that the Settlement
Agreement is signed by all Parties (the "Execution Date") and (b) its approval by (i) the
Bankruptcy Court and (ii) an administrative law judge for the Washington State Office of
Administrative Hearing.
3. Court Approval.
a. On or before seven business days after the Execution Date, the
Debtors will file a motion seeking entry of an order pursuant to Rule 9019 of the Federal Rules
of Bankruptcy Procedure approving this Settlement Agreement with the Bankruptcy Court.
b. As soon as reasonably practicable after the Execution Date, the
Claimant will seek approval of this Settlement Agreement from an administrative law judge for
the Washington State Office of Administrative Hearing.
4. Most Favored Nation. If the Debtors enter into an agreement with either
The City of Seattle or King County, Washington that provides for the allowance of that
claimant's proofs of claim related to the Site in an amount that is more than 0.935% of that
claimant's direct costs and portion of shared costs incurred at the Site (a "More Favorable
Settlement"), then the allowed amount of the Claims set forth in Section 1 will equal (a) the Past
Costs times (b) the percentage share of The City of Seattle's or King County, Washington's costs
allowed under the More Favorable Settlement.
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5. Law; Jurisdiction. This Settlement Agreement shall be governed by and
construed according to the laws of the State of North Carolina. The Parties agree that the
Bankruptcy Court shall have exclusive jurisdiction, and the parties hereby submit to such
jurisdiction, of any dispute arising under or related to this Settlement Agreement.
6. Representations. Each of the Parties, in order to induce each other to
enter into this Settlement Agreement, hereby covenants, represents and warrants to each other
with the intent and understanding that the other Parties are expressly relying thereon as a
material inducement to enter into this Settlement Agreement as follows: (a) each Party has full
rights, powers and authority to execute this Settlement Agreement; and (b) upon the Effective
Date, this Settlement Agreement will be a valid, binding, subsisting and enforceable obligation
of such Party.
7. Miscellaneous Provisions.
a. Construction of Terms. This Settlement Agreement has been
drafted jointly by the Parties in full consultation with their respective attorneys, and no
ambiguity in this Settlement Agreement shall be interpreted or construed against any of the
Parties on the basis that such Party was the drafter.
b. Entire Agreement. This Settlement Agreement constitutes the
entire agreement between the Parties relating to the subject matter hereof and is the final and
complete expression of their intent. No prior or contemporaneous negotiations, promises,
agreements, covenants or representations of any kind or nature, whether made orally or in
writing, have been made by the Parties, or any of them, in negotiations leading to this Settlement
Agreement or relating to the subject matter hereof, which are not expressly stated herein, or
which have not become merged and finally integrated into this Settlement Agreement.
c. Modification. This Settlement Agreement can only be changed,
modified or discharged if consented to in writing and executed by the Parties hereto.
d. Binding Effect. This Settlement Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors or assigns.
e. Counterparts. This Settlement Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as of the date set forth below.