Exhibit 10.1

 

SETTLEMENT AGREEMENT AND RELEASE

 

This Settlement Agreement (the “Agreement”) is entered into as of May __, 2015
by and among the ShengdaTech Liquidating Trust (the “Liquidating Trust”), A.
Carl Mudd (“Mudd”), Sheldon B. Saidman (“Saidman” and together with Mudd, the
“Independent Directors”), Federal Insurance Company, (“Federal”), Ironshore
Indemnity, Inc. (“Ironshore”), the Miller Investment Trust, Jura Limited
(“Jura”), the Randi and Clifford Lane Foundation (the “Lane Foundation” and
collectively with the Miller Investment Trust and Jura, the “Miller Trust
Plaintiffs”) and Oaktree Capital Management, L.P., on behalf of certain of its
managed accounts; Oaktree (Lux.) Funds – Oaktree Convertible Bond Fund; Oaktree
High Income Convertible Fund, L.P.; Oaktree High Income Convertible Fund II,
L.P.; Oaktree Non-U.S. Convertible Fund, L.P.; Oaktree TT Multi-Strategy Fund,
L.P.; OCM Global Convertible Securities Fund; OCM International Convertible
Trust; OCM Non-U.S. Convertible Securities Fund; Lazard Asset Management LLC, on
behalf of its managed accounts; HFR CA Lazard Rathmore Master Trust; AG OFCON
LTD.; Zazove Associates LLC, on behalf of certain of its managed funds and
accounts; CNH CA Master Account, L.P.; CNH Diversified Opportunities Master
Account, L.P.; Advent Claymore Convertible Securities and Income Fund II; AQR
Capital Management, LLC; AQR Convertible Opportunities Bond UCITS Fund; AQR
Delta Master Account, L.P.; AQR Opportunistic Premium Offshore Fund L.P.; AQR
Diversified Arbitrage Fund; and Delaware Public Employees’ Retirement System
(the “Oaktree Plaintiffs”). Each of the foregoing persons and entities are
sometimes referred to as a “Party” and collectively as the “Parties.” All
capitalized terms used herein will have the meanings set forth in paragraph 1 of
this Agreement.

 

BANKRUPTCY CASE

 

WHEREAS, ShengdaTech filed a voluntary petition for relief under Chapter 11 of
the Bankruptcy Code on August 19, 2011 in the Bankruptcy Court, Case No.
11-52649 (BTB) (the “Bankruptcy Case”);

 

WHEREAS, on October 1, 2012, the Debtor filed the First Amended Chapter 11 Plan
of Reorganization, as Modified [Docket No. 652] (the “Plan”);

 

WHEREAS, on October 2, 2012, the Bankruptcy Court entered the Order Confirming
the First Amended Chapter 11 Plan of Reorganization, as Modified [Docket No.
655] (the “Confirmation Order”); and

 

WHEREAS, the Plan created the Liquidating Trust and the Liquidating Trust
Agreement was approved pursuant to the Confirmation Order.

 

OFFICER AND DIRECTOR INSURANCE POLICIES

 

WHEREAS, prior to the commencement of the Bankruptcy Case, Zurich American
Insurance Company (“Zurich”) issued to ShengdaTech a $5,000,000 Directors &
Officers Liability Insurance Policy – Zurich D&O Select Policy No. DOC
5965716-02 for the period March 13, 2010 through March 13, 2012 (the “Zurich
Policy”);

 

  

 

  

WHEREAS, prior to the commencement of the Bankruptcy Case, Federal issued Excess
Policy No. 8211-5057 (the “Federal Policy”) to ShengdaTech for the Policy Period
March 13, 2010 to March 13, 2012;

 

WHEREAS, prior to the commencement of the Bankruptcy Case, Ironshore issued
Excess Policy No. 000176501 (the “Ironshore Policy”) to ShengdaTech for the
Policy Period March 13, 2010 to March 13, 2012;

 

WHEREAS, on August 14, 2012, the Bankruptcy Court entered the Order Pursuant to
Bankruptcy Rule 9019 Approving Settlement Related to Debtor’s Directors &
Officers Insurance Policy [Docket No. 607] (the “Zurich Settlement”) whereby
Zurich paid approximately $3.75 million to ShengdaTech’s estate to settle
matters relating to the Zurich Policy and the Zurich Policy was deemed
exhausted;

 

WHEREAS, Federal subsequently advanced certain payments under the Federal Policy
subject to a reservation of its rights; and

 

WHEREAS, the parties have actual or potential disputes concerning the
availability of coverage under the Federal Policy and the Ironshore Policy
(collectively, the “Remaining D&O Insurance Policies”).

 

LITIGATION

 

WHEREAS, on June 26, 2012, the Miller Trust Plaintiffs filed the Miller Trust
Lawsuit in which the Miller Trust Plaintiffs assert claims against the
Independent Directors for violations of the Massachusetts Uniform Securities
Act, negligent misrepresentation, common law fraud, and violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”),
which claims are disputed by the Independent Directors;

 

WHEREAS, the Miller Trust Plaintiffs and the Independent Directors have reached
an agreement in principle to settle the Miller Trust Lawsuit, the payment of
which from the Remaining D&O Insurance Policies was enjoined by the Bankruptcy
Court in connection with the Declaratory Judgment Action;

 

WHEREAS, on March 15, 2013, the Oaktree Plaintiffs filed the Oaktree Lawsuit in
which the Oaktree Plaintiffs originally asserted claims against the Independent
Directors for, among other things, negligent misrepresentation, which claims
were disputed by the Independent Directors;

 

WHEREAS, on May 14, 2014, the Bankruptcy Court entered an order granting the
Independent Directors’ Motion to Enforce [Docket No. 823; Bankruptcy Case] and
awarded fees and costs against the Oaktree Plaintiffs, which fees and costs have
not yet been liquidated, and which order is now on appeal before the United
States District Court for the District of Nevada, Case No. 3:14-CV-00279-RCJ
(the “Appeal”) and set for oral argument on May 18, 2015 [Docket No. 27; Appeal]
[Docket No. 944; Bankruptcy Case];

 

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WHEREAS, after entry of the order granting the Independent Directors’ Motion to
Enforce, the Oaktree Plaintiffs amended the Oaktree Lawsuit to assert claims
against the Independent Directors for gross negligence, which claims are
disputed by the Independent Directors;

 

WHEREAS, on August 19, 2013, the Liquidating Trust filed the Inside Director
Lawsuit against the Inside Directors alleging various claims, including breach
of fiduciary duties, in the Bankruptcy Court;

 

WHEREAS, on October 10, 2014, the Oaktree Plaintiffs filed the Declaratory
Judgment Action against Federal, Ironshore, the Miller Trust Plaintiffs and the
Independent Directors seeking certain declaratory relief, including a
declaratory judgment that the Federal Policy and Ironshore Policy and their
respective proceeds were property of ShengdaTech’s estate and seeking to enjoin
the use of the proceeds of the Remaining D&O Insurance Policies, which claims
are disputed by the defendants in the Declaratory Judgment Action;

 

WHEREAS, the Liquidating Trust filed a motion to intervene in the Declaratory
Judgment Action as a plaintiff, which motion was granted on December 5, 2014;
and

 

WHEREAS, the Bankruptcy Court has issued an injunction in connection with the
Declaration Judgment Action to and including June 17, 2015 [Docket No. 161;
Declaratory Judgment Action].

 

CLASS 4 PROOF OF CLAIM

 

WHEREAS, on December 19, 2011, ShengdaTech and the Official Committee of
Unsecured Creditors of the Debtor (the “Committee”) entered into the Stipulation
by and Among the Debtor and the Official Committee of Unsecured Creditors
Regarding Proofs of Claim to be Filed by Bar Date [Docket No. 283], that subject
to approval by the Bankruptcy Court, provisionally allowed a class proof of
claim on behalf of certain purchasers of the 6.0% Notes due 2018 and 6.5% Notes
due 2015 offered for sale by ShengdaTech on May 22, 2008 and December 10, 2012,
respectively (collectively, the “Notes”), for any and all claims that they held
against ShengdaTech’s estate, under securities or other laws related to the
offer, sale and purchase of such Notes (the “Class 4 Proof of Claim”);

 

WHEREAS, on February 26, 2013, the Liquidating Trust filed the Objection of the
ShengdaTech Liquidating Trust Seeking Entry of an Order Pursuant to 11 U.S.C. §§
105(A) and 502, Fed. R. Bankr. P. 3007 and Local Rule 3007 Disallowing and
Expunging Contingent, Unliquidated and/or Disputed Claims of Certain Noteholders
[Docket No. 750] whereby the Liquidating Trust deferred liquidation of the Class
4 Proof of Claim until a later date;

 

WHEREAS, on October 15, 2014, certain holders of the Class 4 Proof of Claim
filed the Note Purchaser’s Request for Allowance of Claims and Response to
Objection of the ShengdaTech Liquidating Trustee to the Allowance of such Claims
[Docket No. 878];

 

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WHEREAS, on December 2, 2014, the Bankruptcy Court entered the Order Approving
Settlement Allowing Class 4 Proof of Claim Pursuant to Rule 9019 of the Federal
Rules of Bankruptcy Procedure [Docket No. 913] (the “Class 4 Claim Settlement
Order”); and

 

WHEREAS, pursuant to the Class 4 Claim Settlement Order, the Class 4 Proof of
Claim was deemed allowed in the amount of $50 million (the “Allowed Class 4
Claim”).

 

GENERAL STATEMENTS

 

WHEREAS, the Parties have engaged in extensive efforts to reach a global
resolution with those Parties to this Agreement with potential demands for
coverage from the Remaining D&O Insurance Policies, or whose losses could be
covered by the Remaining D&O Insurance Policies, or who have brought or could
potentially bring actions against Federal or Ironshore with respect to certain
coverage disputes;

 

WHEREAS, the Parties desire to resolve amicably their disputes as set forth in
this Agreement and avoid the costs, risks and uncertainty of the underlying
litigation and coverage litigation by entering into this Agreement;

 

WHEREAS, this Agreement affords significant benefits to all Parties;

 

WHEREAS, achieving a resolution expressly depends upon obtaining appropriate
orders from the Bankruptcy Court to carry out the purposes of, and approving all
of the terms contained in, this Agreement;

 

WHEREAS, the Parties acknowledge that the amounts paid pursuant to this
Agreement and its terms and conditions, including, without limitation, the
releases incorporated into this Agreement, are part of a global resolution of
complex legal and factual issues, the outcomes of which are uncertain, and
constitute good and valuable consideration for this Agreement; and

 

NOW THEREFORE, in consideration of the mutual covenants and promises contained
in this Agreement, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:

 

1.                  Defined Terms. For the purposes of this Agreement, the
following terms have the following meanings:

 

a.“Agreement” means this Settlement Agreement and Release by and between the
Liquidating Trust, the Independent Directors, Federal, Ironshore, the Miller
Trust Plaintiffs, and the Oaktree Plaintiffs.

 

b.“Allowed Class 4 Claim” has the meaning ascribed to such term in the recitals
of this Agreement.

 

c.“Appeal” has the meaning ascribed to such term in the recitals of this
Agreement.

 

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d.“Approval Order” means that certain final order approving, among other things,
this Agreement and entered by the Bankruptcy Court in a form reasonably
acceptable to all Parties, which order will include releases and injunctions in
favor of all Parties.

 

e.“Bankruptcy Case” has the meaning ascribed to such term in the recitals of
this Agreement.

 

f.“Bankruptcy Court” means the United States Bankruptcy Court for the District
of Nevada presiding over the Chapter 11 case of ShengdaTech.

 

g.“Claim(s)” means any past, present or future, known or unknown, suspected or
unsuspected, asserted or unasserted, foreseen or unforeseen, direct or indirect,
fixed or contingent, matured or inchoate, in law or equity, civil or criminal,
claims, liabilities, obligations, damages, debts, cross-claims, counterclaims,
complaints, rights, demands, lawsuits, actions, causes of action, directives,
orders, administrative proceedings, arbitrations, requests for information,
notice of partial or total responsibility or governmental actions made, asserted
or filed, which seek compensatory damages, punitive damages, interest, statutory
damages, fines, or injunctive or other equitable relief, including the Class 4
Proof of Claim, the Miller Trust Lawsuit, the Oaktree Lawsuit, the Inside
Directors Lawsuit, the Declaratory Judgment Action, Defense Costs incurred by
the Liquidating Trust, the Federal Released Claims, the Ironshore Released
Claims, the Liquidating Trust Released Claims, the Miller Trust Released Claims,
the Oaktree Released Claims, the fee and sanction award relating to the Motion
to Enforce and any other claims specifically identified in the recitals of this
Agreement.

 

h.“Class 4 Proof of Claim” has the meaning ascribed to such term in the recitals
of this Agreement.

 

i.“Class 4 Claim Settlement Order” has the meaning ascribed to such term in the
recitals of this Agreement.

 

j.“Class 5 Claim” means (i) proof of claim number 9, which was filed by the lead
plaintiffs, Donald P. Yaw and Edward J. Schaul, individually and on behalf of
all others similarly situated in the Securities Class Action in an unliquidated
amount, (ii) proof of claim number 10, which was filed by Yaw in the amount of
$2,262,701.62 and (iii) proof of claim number 11, which was filed by Schaul in
the amount of $675,864.47.

 

k.“Committee” has the meaning ascribed to such term in the recitals of this
Agreement.

 

l.“Confirmation Order” has the meaning ascribed to such term in the recitals of
this Agreement.

 

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m.“Declaratory Judgment Action” means that certain lawsuit filed in the United
States Bankruptcy Court for the District of Nevada and captioned Oaktree Capital
Management, L.P., et al. vs. Ironshore indemnity, Inc., et al., Case No.
14-05054.

 

n.“Defense Costs” has the meaning ascribed to such term in each of the Remaining
D&O Insurance Policies, except that for purposes of paragraph 5.g., Defense
Costs has the meaning set forth in paragraph 5.g.

 

o.“Effective Date” means that date on which all of the conditions set forth in
this Agreement have been satisfied or waived and this Agreement becomes
effective.

 

p.“Exchange Act” has the meaning ascribed to such term in the recitals of this
Agreement.

 

q.“Federal” has the meaning ascribed to such term in the recitals of this
Agreement.

 

r.“Federal Policy” has the meaning ascribed to such term in the recitals of this
Agreement.

 

s.“Federal Released Claims” means those Claims released by Federal pursuant to
this Agreement.

 

t.“Federal Released Parties” means Federal, its past, present and future
parents, affiliates, subsidiaries, departments, divisions, predecessors,
successors, assigns, employees, directors, officers, stockholders, underwriters,
insurers, reinsurers, claims managers, principals, agents, attorneys and
representatives.

 

u.“Independent Directors” has the meaning ascribed to such term in the recitals
of this Agreement.

 

v.“Independent Director Released Claims” means those Claims released by the
Independent Directors pursuant to this Agreement.

 

w.“Independent Director Released Parties” means A. Carl Mudd, Sheldon B. Saidman
and their respective agents, assigns, attorneys, estates, heirs, and
representatives.

 

x.“Insured Claim(s)” means any Claim that has been, or could be, asserted
against any entity or individual that has been or could be the subject of a
demand for coverage under either or both of the Remaining D&O Insurance
Policies.

 

y.“Ironshore” has the meaning ascribed to such term in the recitals of this
Agreement.

 

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z.“Ironshore Policy” has the meaning ascribed to such term in the recitals of
this Agreement.

 

aa.“Ironshore Released Claims” means those Claims released by Ironshore pursuant
to this Agreement.

 

bb.“Ironshore Released Parties” means Ironshore, its past, present and future
parents, affiliates, subsidiaries, departments, divisions, predecessors,
successors, assigns, employees, directors, officers, stockholders, underwriters,
insurers, reinsurers, claims managers, principals, agents, attorneys and
representatives.

 

cc.“Jura” has the meaning ascribed to such term in the recitals of this
Agreement.

 

dd.“Lane Foundation” has the meaning ascribed to such term in the recitals of
this Agreement.

 

ee.“Liquidating Trust” has the meaning ascribed to such term in the recitals of
this Agreement.

 

ff.“Liquidating Trust Agreement” has the meaning ascribed to such term in the
Plan.

 

gg.“Liquidating Trust Released Claims” means those claims released by the
Liquidating Trust pursuant to this Agreement.

 

hh.“Liquidating Trust Released Parties” means the Liquidating Trust, any trustee
of the Liquidating Trust, any advisory board of the Liquidating Trust, and their
respective members, affiliates, employees, directors, officers, principals,
representatives, agents, attorneys, successors, assigns and heirs.

 

ii.“Loss” has the meaning ascribed to such term in each of the Remaining D&O
Insurance Policies.

 

jj.“Miller Trust Lawsuit” means that certain lawsuit filed in the United States
District Court for the Southern District of New York and captioned Miller
Investment Trust et al. v. Chen et al., Case No. 1:12-cv-04997-LGS (S.D.N.Y.).

 

kk.“Miller Trust Plaintiffs” has the meaning ascribed to such term in the
recitals of this Agreement.

 

ll.“Miller Trust Released Claims” means those claims released by the Miller
Trust Plaintiffs pursuant to this Agreement.

 

mm.“Miller Trust Released Parties” means each of the Miller Trust Plaintiffs,
and each of its past, present and future parents, affiliates, subsidiaries,
departments, divisions, predecessors, successors, assigns, employees, directors,
officers, stockholders, underwriters, insurers, reinsurers, claims managers,
principals, agents, attorneys and representatives.

 

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nn.“Motion to Enforce” means that certain motion to enforce the Plan injunction
filed by the Independent Directors on February 11, 2014 in the Bankruptcy Court
[Docket No. 796].

 

oo.“Mudd” has the meaning ascribed to such term in the recitals of this
Agreement.

 

pp.“Notes” has the meaning ascribed to such term in the recitals of this
Agreement.

 

qq.“Oaktree Lawsuit” means that certain lawsuit against the Independent
Directors by the Oaktree Plaintiffs filed in the District Court of Clark County,
Nevada and previously captioned Oaktree Capital Management LP, et al. v.
Xiangzhi Chen, et al., and currently captioned Oaktree Capital Management LP, et
al. v.A. Carl Mudd, et al., Case No. A-13-678471-B (District Court, Clark
County, Nevada).

 

rr.“Oaktree Plaintiffs” has the meaning ascribed to such term in the recitals of
this Agreement.

 

ss.“Oaktree Released Claims” means those claims released by the Oaktree
Plaintiffs pursuant to this Agreement

 

tt.“Oaktree Released Parties” means each of the Oaktree Plaintiffs, and each of
their respective past, present and future parents, affiliates, subsidiaries,
departments, divisions, predecessors, successors, assigns, employees, directors,
officers, stockholders, underwriters, insurers, reinsurers, claims managers,
principals, agents, attorneys and representatives.

 

uu.“Inside Directors” means Xiangzhi Chen, Anhui Guo and Andrew Chen.

 

vv.“Inside Directors Lawsuit” means that certain lawsuit filed by the
Liquidating Trust against Inside Directors in the United States Bankruptcy Court
for the District of Nevada and captioned ShengdaTech Liquidating Trust v.
Xiangzhi Chen, et al., Case No. 13-05047-gwz (Bankr. D. Nev.).

 

ww.“Party” or “Parties” has the meaning ascribed to such term in the recitals of
this Agreement.

 

xx.“Person” means any natural person, class or group of natural persons,
corporation, partnership, association, trust, or any other entity or
organization, including, without limitation, any federal, provincial, state,
county, city or municipal governmental or quasi-governmental body or political
subdivision, department, agency or instrumentality thereof.

 

yy.“Plan” has the meaning ascribed to such term in the recitals of this
Agreement.

 

 8 

 

 

zz.“Remaining D&O Insurance Policies” has the meaning ascribed to such term in
the recitals of this Agreement.

 

aaa.“Saidman” has the meaning ascribed to such term in the recitals of this
Agreement.

 

bbb.“Settlement Amount” has the meaning set forth in paragraph 2 of this
Agreement.

 

ccc.“Securities Class Action” means that certain class action case filed on May
6, 2011 in the United States District Court for the Southern District of New
York and captioned In re ShengdaTech, Inc. Securities Litigation, Case No.
1:11-cv001918-LGS (S.D.N.Y.) for alleged violations of Sections 10(b) and 20(a)
of the Exchange Act.

 

ddd.“Securities Plaintiffs” means the plaintiffs in the Securities Class Action.

 

eee.“ShengdaTech” means ShengdaTech, Inc.

 

fff.“ShengdaTech Released Parties” means ShengdaTech, Inc., its past, present
and future parents, affiliates, subsidiaries, departments, divisions,
predecessors, successors, assigns, employees, directors, officers, stockholders,
principals, agents, attorneys and representatives. The term “ShengdaTech
Released Parties” does not include, and is not intended to include, any of
ShengdaTech’s outside auditors or any underwriter of any ShengdaTech security.

 

ggg.“Zurich” has the meaning ascribed to such term in the recitals of this
Agreement.

 

hhh.“Zurich Policy” has the meaning ascribed to such term in the recitals of
this Agreement.

 

iii.“Zurich Settlement” has the meaning ascribed to such term in the recitals of
this Agreement.

 

2.                  Payment of Settlement Amount. Within fourteen (14) business
days after the Approval Order has become a final, binding and non-appealable
order, in full and final settlement of all Claims, Federal and Ironshore will
pay a total of $7,900,000 (the “Settlement Amount”) for the following: (a)
$1,000,000 to the Liquidating Trust for payment of Defense Costs incurred by the
Liquidating Trust (or as directed by the Liquidating Trust to its counsel,
Greenberg Traurig, LLP) and to the extent any monies remain after payment of
Defense Costs, such monies shall be used to fund the ongoing administration of
the Liquidating Trust or distributed to the holders of the Allowed Class 4
Claim, net of costs and fees associated with any such distribution; (b)
$2,400,000 to the Miller Trust Plaintiffs; and (c) the balance of $4,500,000 to
the Oaktree Plaintiffs. Each of the Liquidating Trust, the Miller Trust
Plaintiffs and the Oaktree Plaintiffs specifically acknowledges that the
Settlement Amount constitutes payment of Loss for the Insured Claims and
constitutes fair and adequate consideration for undertaking to perform the
obligations provided for by this Agreement. Federal and Ironshore each further
acknowledge that ShengdaTech and/or the Liquidating Trust has satisfied any and
all retention obligations under the Federal Policy and the Ironshore Policy as
applicable. Each of the Miller Trust Plaintiffs, the Oaktree Plaintiffs and the
Liquidating Trust will provide to Federal and Ironshore wire instructions and
tax identification numbers for their portions of the Settlement Amount.

 

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3.                  Holders of Allowed Class 4 Claim. The Miller Trust
Plaintiffs and the Oaktree Plaintiffs shall not be considered holders of the
Allowed Class 4 Claim and, therefore, will not be entitled to a distribution
under paragraph 2(a) of this Agreement should there be funds available for a
distribution to holders of the Allowed Class 4 Claim.

  

4.                  Full Release by Parties.

 

a.                   Federal. For and in consideration of Federal’s payment
towards the Settlement Amount, the agreements and covenants contained in this
Agreement, and for other good and valuable consideration, the adequacy of which
is expressly acknowledged, upon the Effective Date, except as otherwise provided
for herein, (i) the Liquidating Trust, on behalf of itself and, to the fullest
extent legally permissible, the Liquidating Trust Released Parties and the
ShengdaTech Released Parties; (ii) the Independent Directors on behalf of the
Independent Director Released Parties; (iii) the Miller Trust Plaintiffs on
behalf of the Miller Trust Released Parties; (iv) the Oaktree Plaintiffs on
behalf of the Oaktree Released Parties; and (v) Ironshore on behalf of the
Ironshore Released Parties, each on behalf of itself and to the fullest extent
legally permissible, fully and forever release and discharge the Federal
Released Parties from any and all actual or potential Claims, actions, causes of
action, suits, claims for sums of money, contracts, controversies, agreements,
costs, attorneys’ fees, expenses, damages, judgments and demands whatsoever in
law or in equity, known or unknown, now existing or hereafter arising, whether
contractual, extra-contractual, in tort or otherwise, which the Liquidating
Trust Released Parties, the ShengdaTech Released Parties, the Independent
Director Released Parties, the Miller Trust Released Parties, the Oaktree
Released Parties, and the Ironshore Released Parties had, have, or may have in
the future against the Federal Released Parties with respect to the Claims; any
of the allegations alleged or that could have been alleged in the Claims; the
Federal Policy; ShengdaTech; the Liquidating Trust and any loss incurred in
connection with the Claims, including but not limited to any action, proceeding
or claim arising from any investigation, evaluation or handling of the Claims or
alleging any “bad faith” or breach of any promise, oral or written, or breach of
any duty grounded in law or in contract relating thereto. Furthermore, in
exchange for Federal’s payment towards the Settlement Amount and disbursement of
the monies as set forth in paragraph 2 of this Agreement, upon the Effective
Date, each of the Releasors set forth in this paragraph 5.a. will be deemed to
have waived any Claim or Insured Claim or claim for insurance coverage under the
Federal Policy. Each of the Parties recognizes and acknowledges that on the
Effective Date, neither Federal nor any of the Federal Released Parties will
have any further obligations to any of the other Parties under or in connection
with the Federal Policy or for any Claim that has or may be the subject of
notice under the Federal Policy. Each of the Parties recognizes and acknowledges
that on the Effective Date, the Federal Policy will be exhausted.

 

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b.                  Ironshore. For and in consideration of Ironshore’s payment
towards the Settlement Amount, the agreements and covenants contained in this
Agreement, and for other good and valuable consideration, the adequacy of which
is expressly acknowledged, upon the Effective Date, except as otherwise provided
for herein, (i) the Liquidating Trust, on behalf of itself and, to the fullest
extent legally permissible, the Liquidating Trust Released Parties and the
ShengdaTech Released Parties; (ii) the Miller Trust on behalf of the Miller
Trust Released Parties; (iii) the Oaktree Plaintiffs on behalf of the Oaktree
Released Parties; and (iv) Federal on behalf of the Federal Released Parties,
each on behalf of itself and to the fullest extent legally permissible, fully
and forever release and discharge the Ironshore Released Parties from any and
all actual or potential Claims, actions, causes of action, suits, claims for
sums of money, contracts, controversies, agreements, costs, attorneys’ fees,
expenses, damages, judgments and demands whatsoever in law or in equity, known
or unknown, now existing or hereafter arising, whether contractual,
extra-contractual, in tort or otherwise, which the Liquidating Trust Released
Parties, the ShengdaTech Released Parties, the Miller Trust Released Parties,
the Oaktree Released Parties, and the Federal Released Parties had, have, or may
have in the future against the Ironshore Released Parties with respect to the
Claims; any of the allegations alleged or that could have been alleged in the
Claims; the Ironshore Policy; ShengdaTech, the Liquidating Trust; and any loss
incurred in connection with the Claims, including but not limited to any action,
proceeding or claim arising from any investigation, evaluation or handling of
the Claims or alleging any “bad faith” or breach of any promise, oral or
written, or breach of any duty grounded in law or in contract relating thereto.
Furthermore, in exchange for Ironshore’s payment towards the Settlement Amount
and disbursement of the monies as set forth in paragraph 2 of this Agreement,
upon the Effective Date, each of the Releasors set forth in this paragraph 5.b
will be deemed to have waived any Claim or Insured Claim or claim for insurance
coverage under the Ironshore Policy, except as otherwise provided for herein.
Each of the Parties recognizes and acknowledges that on the Effective Date,
neither Ironshore nor any of the Ironshore Released Parties will have any
further obligations to any of the other Parties under or in connection with the
Ironshore Policy or for any Claim that has or may be the subject of notice under
the Ironshore Policy, except the Independent Directors expressly retain any and
all rights to seek Defense Costs and other coverage from the Ironshore Policy as
set forth in paragraph 5.g.

 

c.                   Liquidating Trust. For and in consideration of the
agreements and covenants contained in this Agreement, and for other good and
valuable consideration, the adequacy of which is expressly acknowledged, on the
Effective Date, except as otherwise provided for herein, (i) the Independent
Directors on behalf of the Independent Director Released Parties, (ii) the
Miller Trust Plaintiffs on behalf of the Miller Trust Released Parties, (iii)
the Oaktree Plaintiffs on behalf of the Oaktree Released Parties, (iv) Federal
on behalf of the Federal Released Parties, and (v) Ironshore on behalf of the
Ironshore Released Parties, each on behalf of itself and to the fullest extent
legally permissible, will fully and forever release and discharge the
Liquidating Trust Released Parties and the ShengdaTech Released Parties from any
and all actual or potential Claims, Insured Claims, actions, causes of action,
suits, claims for sums of money, contracts, controversies, agreements, costs,
attorneys’ fees, expenses, damages, judgments and demands whatsoever in law or
in equity, known or unknown, now existing or hereafter arising, whether
contractual, extra-contractual, in tort or otherwise, which any of the
respective Releasors set forth in this pargraph 5.c had, have, or may have in
the future against the Liquidating Trust Released Parties and the ShengdaTech
Released Parties with respect to the Claims or Insured Claims, any of the
allegations alleged or that could have been alleged in the Claims or Insured
Claims; the Federal Policy; the Ironshore Policy; and any loss incurred in
connection with the Claims or Insured Claims.

 

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d.                  Independent Directors. For and in consideration of the
agreements and covenants contained in this Agreement, and for other good and
valuable consideration, the adequacy of which is expressly acknowledged, on the
Effective Date, except as otherwise provided for herein, (i) the Liquidating
Trust, on behalf of itself and, to the fullest extent legally permissible, the
Liquidating Trust Released Parties and the ShengdaTech Released Parties; (ii)
the Miller Trust Plaintiffs on behalf of the Miller Trust Released Parties;
(iii) the Oaktree Plaintiffs on behalf of the Oaktree Released Parties; (iv)
Federal on behalf of the Federal Released Parties; and (v) Ironshore on behalf
of the Ironshore Released Parties, each on behalf of itself and to the fullest
extent legally permissible will fully and forever release and discharge the
Independent Director Released Parties from any and all actual or potential
Claims, Insured Claims, actions, causes of action, suits, claims for sums of
money, contracts, controversies, agreements, costs, attorneys’ fees, expenses,
damages, judgments and demands whatsoever in law or in equity, known or unknown,
now existing or hereafter arising, whether contractual, extra-contractual, in
tort or otherwise, which any of the respective Releasors set forth in this
paragraph 5.d had, have, or may have in the future against the Independent
Director Released Parties with respect to the Claims or Insured Claims; any of
the allegations alleged or that could have been alleged in the Claims or Insured
Claims; the Federal Policy; the Ironshore Policy; and any loss incurred in
connection with the Claims or Insured Claims.

 

e.                   Miller Trust. For and in consideration of the agreements
and covenants contained in this Agreement, and for other good and valuable
consideration, the adequacy of which is expressly acknowledged, on the Effective
Date, except as otherwise provided for herein, the (i) Liquidating Trust, on
behalf of itself and, to the fullest extent legally permissible, the Liquidating
Trust Released Parties and the ShengdaTech Released Parties; (ii) the
Independent Directors on behalf of the Independent Director Released Parties;
(iii) the Oaktree Plaintiffs on behalf of the Oaktree Released Parties; (iv)
Federal on behalf of the Federal Released Parties; and (v) Ironshore on behalf
of the Ironshore Released Parties, each on behalf of itself and to the fullest
extent legally permissible, will fully and forever release and discharge the
Miller Trust Released Parties from any and all actual or potential Claims,
Insured Claims, actions, causes of action, suits, claims for sums of money,
contracts, controversies, agreements, costs, attorneys’ fees, expenses, damages,
judgments and demands whatsoever in law or in equity, known or unknown, now
existing or hereafter arising, whether contractual, extra-contractual, in tort
or otherwise, which any of the respective Releasors set forth in this paragraph
5.e had, have, or may have in the future have against the Miller Trust Released
Parties with respect to the Claims or Insured Claims, any of the allegations
alleged or that could have been alleged in the Claims or Insured Claims; the
Federal Policy; the Ironshore Policy; and loss incurred in connection with the
Claims or Insured Claims.

 

 12 

 

  

f.                   Oaktree. For and in consideration of the agreements and
covenants contained in this Agreement, and for other good and valuable
consideration, the adequacy of which is expressly acknowledged, on the Effective
Date, except as otherwise provided for herein, (i) the Liquidating Trust, on
behalf of itself and, to the fullest extent legally permissible, the Liquidating
Trust Released Parties and the ShengdaTech Released Parties; (ii) the
Independent Directors on behalf of the Independent Director Released Parties;
(iii) the Miller Trust Plaintiffs on behalf of the Miller Trust Released
Parties; (iv) Federal on behalf of the Federal Released Parties; and (v)
Ironshore on behalf of the Ironshore Released Parties, each on behalf of itself
and to the fullest extent legally permissible, will fully and forever release
and discharge the Oaktree Released Parties from any and all actual or potential
Claims, Insured Claims, actions, causes of action, suits, claims for sums of
money, contracts, controversies, agreements, costs, attorneys’ fees, expenses,
damages, judgments and demands whatsoever in law or in equity, known or unknown,
now existing or hereafter arising, whether contractual, extra-contractual, in
tort or otherwise, which any of the respective Releasors set forth in this
paragraph 5.f had, have, or may have in the future have against the Oaktree
Released Parties with respect to the Claims or Insured Claims; any of the
allegations alleged or that could have been alleged in the Claims or Insured
Claims; the Federal Policy; the Ironshore Policy; and the loss incurred in
connection with the Claims or Insured Claims.

 

g.                  Independent Directors’ Defense Costs. Upon the Effective
Date, the Independent Directors on behalf of the Independent Director Released
Parties fully and forever release and discharge the Ironshore Released Parties
from any Claims or Insured Claims which the Independent Director Released
Parties had, have, or may have in the future against the Ironshore Released
Parties for monies (including payment of settlements or Defense Costs) paid by
Zurich, the Federal Released Parties, or the Ironshore Released Parties to the
Independent Director Released Parties, and received by the Independent Directors
prior to the Effective Date of this Agreement, in connection with the Class 4
Proof of Claim, the Miller Trust Lawsuit, the Oaktree Lawsuit, the Inside
Directors Lawsuit, the Declaratory Judgment Action, the Federal Released Claims,
the Ironshore Released Claims, the Liquidating Trust Released Claims, the Miller
Trust Released Claims, or the Oaktree Released Claims. Notwithstanding this
Agreement, including the foregoing releases, the Independent Director Released
Parties expressly retain any and all rights to seek Defense Costs and other
coverage from the Ironshore Policy in connection with: (1) the Securities Class
Action, including but not limited to any settlement or judgment in connection
therewith; and (2) any claim, including but not limited to any third-party
discovery request or any other action, that has been the subject of notice under
the Ironshore Policy. For purposes of this paragraph 5.g, Defense Costs means
reasonable and necessary legal fees, costs and expenses incurred in the
investigation, defense, or appeal of any Claim or Insured Claim that has or may
be the subject of notice under the Ironshore Policy, including the costs of an
appeal bond, attachment bond, or similar bond.

 

h.                  Securities Class Action and Class 5 Claim. Notwithstanding
the foregoing releases, nothing in this Agreement settles the Securities Class
Action or the Class 5 Claim or provides any distributions on account of the
Securities Class Action or the Class 5 Claim. This Agreement shall, however,
resolve the Remaining D&O Insurance Policies to the extent set forth in this
Agreement. For purposes of clarification, given that the various Releasors will
waive all claims against the Federal Policy and the Ironshore Policy and given
that the Federal Policy will be deemed exhausted, there will be no available
insurance coverage for the Class 5 Claim.

 

 13 

 

  

i.                    Agreement Requirements. Notwithstanding the foregoing
releases, all Parties to this Agreement are bound to perform the terms of this
Agreement and meet their obligations under this Agreement.

 

5.                  Withdrawal of Claims. After payment of the Settlement Amount
and entry of the Approval Order, the Liquidating Trust, the Independent
Directors, the Miller Trust Plaintiffs, and the Oaktree Plaintiffs will withdraw
any demands for coverage from the Federal Policy or the Ironshore Policy and
further agree that they will not institute any actions, litigation or claim in
connection with the Remaining D&O Insurance Policies; except that the
Independent Director Released Parties expressly retain any and all rights to
seek Defense Costs and other coverage from the Ironshore Policy as set forth in
paragraph 5.g.

 

6.                  Dismissal of Litigation. After payment of the Settlement
Amount and entry of the Approval Order, the Parties agree that the following
lawsuits will be dismissed with prejudice: (a) the Oaktree Lawsuit, (b) the
Miller Trust Lawsuit, (c) the Declaratory Judgment Action, and (d) the Inside
Directors Lawsuit. In addition, the Independent Directors will withdraw any and
all requests for fees and costs against the Oaktree Plaintiffs.

 

7.                  California Civil Code Section 1542. The Parties acknowledge
that they have been advised by their respective attorneys concerning, and are
familiar with California Civil Code Section 1542, which reads as follows:

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his settlement with the
debtor.

 

Each of the Parties expressly waives any and all rights under California Civil
Code Section 1542 and under any other federal or state statute or law of similar
effect with respect to the Claims.

 

8.                  Further Discovery and Prosecution of Litigation. Each of the
Parties represents and warrants that each of the Parties will refrain from
serving or causing any discovery requests to be served on the Liquidating Trust
with respect to any Claim; provided, that a Party may request the Liquidating
Trust to consent to any additional discovery requests or, in the event the
Liquidating Trust does not consent, seek relief from the Bankruptcy Court.
Should the Liquidating Trust consent or otherwise become obligated to respond to
additional discovery requests by a Party, the requesting Party will be
responsible to pay any costs or fees reasonably incurred by the Liquidating
Trust in responding to the requests.

 

 14 

 

  

9.                  Injunction. The Liquidating Trust will file a motion for
entry of an order by the Bankruptcy Court (a) approving this Agreement and (b)
precluding any and all of the Liquidating Trust’s beneficiaries and any and all
of ShengdaTech’s creditors, shareholders, officers, directors, insurers or other
parties in interest, who are not signatories to this Agreement from directly or
indirectly bringing, commencing, initiating, instituting, maintaining,
prosecuting or otherwise aiding in any action or other proceeding of any kind or
nature, whether for the benefit of the Liquidating Trust, the ShengdaTech
Chapter 11 estate, the beneficiaries of the Liquidating Trust or the creditors
of ShengdaTech or for the benefit of any third party, against any of
ShengdaTech, the Liquidating Trust, the Liquidating Trust Released Parties, the
ShengdaTech Released Parties, the Independent Directors, the Independent
Director Released Parties, the Miller Trust Plaintiffs, the Miller Trust
Released Parties, the Oaktree Plaintiffs, the Oaktree Released Parties, Federal,
the Federal Released Parties, Ironshore or the Ironshore Released Parties for
any act committed by such parties with respect to the Federal Policy, the
Ironshore Policy, the settlement herein, this Agreement, or any other action or
proceeding relating to the conduct of Federal or Ironshore. The motion will
further seek an order by the Bankruptcy Court precluding any interested party,
who is not a signatory to this Agreement from directly or indirectly bringing,
commencing, initiating, instituting, maintaining, prosecuting or otherwise
aiding any Claim, action or other proceeding against the Liquidating Trust, the
Liquidating Trust Released Parties, ShengdaTech, the ShengdaTech Released
Parties, the Independent Directors, the Independent Director Released Parties,
the Miller Trust Plaintiffs, the Miller Trust Released Parties, the Oaktree
Plaintiffs, the Oaktree Released Parties, Federal, the Federal Released Parties,
Ironshore or the Ironshore Released Parties in connection with the Federal
Policy or the Ironshore Policy. Notwithstanding the foregoing, the Securities
Plaintiffs shall maintain the right to pursue their pending action against the
Independent Directors, and the Independent Director Released Parties expressly
retain any and all rights to seek Defense Costs and other coverage from the
Ironshore Policy as set forth in paragraph 5.g. Further notwithstanding anything
to the contrary herein, KPMG’s and Morgan Stanley’s rights will be subject to
the terms of the Plan and Confirmation Order and any agreements that might exist
between either or both of KPMG and Morgan Stanley, on the one hand, and the
Liquidating Trust Released Parties or the ShengdaTech Released Parties, on the
other hand.

 

10.              Contribution Bar Order. The Liquidating Trust will file a
motion for entry of an order by the Bankruptcy Court precluding any and all of
the Liquidating Trust's beneficiaries and any and all of ShengdaTech's
creditors, shareholders, officers, directors, insurers or other parties in
interest who are not signatories to this Agreement from bringing or maintaining
any claims in any jurisdiction for contribution or indemnification of any kind
against the Independent Director Released Parties that arise out of or in any
way relate to the Claims.

 

11.              Court Approval. As soon as practicable after the execution of
this Agreement by all Parties, the Liquidating Trust will file a motion with the
Bankruptcy Court seeking approval of this Agreement in its entirety and will
serve the motion and schedule a hearing in accordance with the Federal Rules of
Bankruptcy Procedure. Any order obtained from the Bankruptcy Court approving
this Agreement will be in a form acceptable to all Parties.

 

12.              Agreement Not an Admission. This Agreement and the payments
referred to in it are for the negotiated compromise of disputed Claims and will
not be construed as an admission of coverage by Federal or Ironshore, or an
admission of liability by ShengdaTech or the Independent Directors. Neither this
Agreement nor the allocation of the Settlement Amount will constitute a
determination or evidence that the Federal Policy or the Ironshore Policy does
or does not provide coverage for Insured Claims against ShengdaTech or the
Independent Directors. The definitions or terms used in this Agreement will not
be construed as an admission of any kind by any of the Parties.

 

 15 

 

  

13.              Notices. Any notice which the Parties wish to give, or are
required to give, under this Agreement will be given in writing, unless the
urgency of a situation would render written notice impracticable, in which case
oral notice will be given. Any oral notice or communication will be confirmed in
writing as soon as reasonably possible after such oral notice or communication
is given. All written notices or communications, including confirmations of oral
notices or communications, will be made by hand, by overnight courier, by email
(with hard copy sent by hand, overnight delivery or facsimile) or by facsimile
(with an original sent by U.S. Mail), to the Parties, as set forth below, or to
such other representative(s) or addresses as each of the Parties, respectively,
may designate in writing in accordance with the notice provisions of this
paragraph 13. Notice to fewer than the following representatives of the Parties,
or as subsequently designated, will not constitute notice under this Agreement.

 

For the Liquidating Trust:

 

Michael D. Kang

Alvarez & Marsal North America LLC

100 Pine Street, Suite 900

San Francisco, CA 94111

Telephone: (415) 490-2308

Facsimile: (415) 358-5835

Email: mkang@alvarezandmarsal.com

 

and

 

Nancy A. Peterman, Esq.

Greenberg Traurig, LLP

77 West Wacker Drive, Suite 3100

Chicago, IL 60601

Telephone: (312) 456-8410

Facsimile: (312) 456-8435

Email: petermann@gtlaw.com

 

For the Independent Directors:

 

A. Carl Mudd

5318 Royal Crest Dr.

Dallas, TX 75229

Telephone: (214) 361-1721

Facsimile: (509) 757-9211

Email: acmudd@aol.com

 

 16 

 

 

Sheldon B. Saidman

Saidman & Associates, Inc.

5912 Via Verona View

Colorado Springs, CO 80919

Telephone: (719) 548-9963

Facsimile:

Email: Saidmaninc@aol.com

 

and

 

Stephen Mark Dollar, Esq.

Norton Rose Fulbright US LLP

666 Fifth Avenue

New York, NY 10103-3198

Telephone: (212) 318-3211

Facsimile: (212) 318-3400

Email: Steve.Dollar@nortonrosefulbright.com

 

For Federal

 

Kenneth West

Assistant Vice President

Chubb Group of Insurance Companies

82 Hopmeadow Street

Post Office Box 2002

Simsbury, CT 06070-7683

kwest@chubb.com

 

and

 

Merril Hirsh

Troutman Sanders, LLP

401 – 9th St., N.W., Suite 1000

Washington, D.C. 20004

merril.hirsh@troutmansanders.com

 

For Ironshore

 

Michael Adler

Senior Vice President

Claims

IRONSHORE

One State Street Plaza, 7th Floor

New York, NY 10004

michael.adler@ironshore.com

 

 17 

 

 

and

 

Mary Jo Barry

D'Amato & Lynch, LLP

Two World Financial Center

New York, NY 10281

MJBarry@Damato-Lynch.com

 

For the Miller Trust Plaintiffs

 

Laurence M. Rosen

The Rosen Law Firm

275 Madison Avenue, 34th Floor

New York, NY 10016

 

For the Oaktree Plaintiffs

 

Stuart Grant

Grant & Eisenhofer, P.A.

485 Lexington Avenue

New York, NY 10017

 

14.              Miscellaneous Provisions.

 

a.                   Recitals. This Agreement has been entered into upon
reliance on the recitals set forth above and are incorporated into this
Agreement as though fully set forth herein.

 

b.                  Entire Agreement. This Agreement comprises the entire
understanding of the Parties with respect to the subject matter of the
Agreement. All prior communications, including correspondence and drafts of this
Agreement, are merged into this Agreement, and only this Agreement contains the
actual and final agreement of the Parties.

 

c.                   Agreement is Freely Entered. This Agreement is the product
of informed, arm’s-length negotiations with each Party having the advice of
counsel, and involves compromises of the Parties’ previously-stated legal
positions. Each of the Parties acknowledges that it or they know all of its or
their rights in connection with this Agreement, and that it or they have not
been improperly influenced, coerced, or induced to make this compromise
settlement by any action on the part of any employee, agent, attorney, or
representative of any Party to this Agreement.

 

d.                  Representations and Warranties.

 

i.Subject to entry of the Approval Order, each Party to this Agreement
represents and warrants that it (or he) has the authority to enter into this
Agreement and to perform the duties and obligations to which it or they have
agreed herein.

 

 18 

 

 

ii.The Liquidating Trust and the Independent Director Released Parties warrant
that they have not sold, assigned, or otherwise transferred any interest in the
matters, demands, rights, or insurance policies that are the subject of the
releases herein, and that they are the only Persons entitled to recover under
the Remaining D&O Insurance Policies for such released matters.

 

iii.Each of the Parties further represents and warrants that to the extent
necessary, it or they have taken all necessary corporate and internal legal
actions to duly approve of the making and performance of this Agreement and that
no further corporate or other internal approval is necessary.

 

e.                   Rules of Interpretation. This Agreement is the product of
arm’s-length negotiation between the Parties, and the Parties have entered into
this Agreement freely and voluntarily and with the advice of legal counsel. This
Agreement is not a contract of insurance and no special rules of construction or
interpretation of insurance policies will apply. Instead, only the rules of
interpretation or construction of contracts in general will apply. None of the
Parties will be deemed the drafter of this Agreement. In the event that a
dispute arises over the meaning or application of any term of this Agreement,
such term will not be construed by reference to any doctrine calling for
ambiguities to be construed against an insurer or against the drafter of a
document.

 

f.                   Agreement Not to Confer Rights on Third Parties. This
Agreement is intended to confer rights and benefits only on the Parties to it
and only with respect to the matters described in it. No Person other than the
Parties will have any legally enforceable rights under this Agreement. This
Agreement will not be assigned without the written consent of each of the
Parties.

 

g.                  Execution in Counterparts. To facilitate execution, this
Agreement may be executed in several counterparts by one or more of the
undersigned Parties and all such counterparts when so executed will together be
deemed to constitute a single agreement as if one document had been signed by
all Parties. Facsimile or electronic (pdf) signatures will be deemed original,
valid and binding signatures to this Agreement.

 

h.                  Governing Law. This Agreement will be governed by the laws
of the State of Nevada and will be construed and interpreted in accordance with
its laws, notwithstanding its conflict of law principles or any other rule,
regulation or principle that would result in the application of any other
state’s law.

 

i.                    Bankruptcy Court Jurisdiction. The Bankruptcy Court will
retain jurisdiction to resolve any disputes or controversies arising from or
related to this Agreement. All Parties agree and consent to the jurisdiction of
the Bankruptcy Court to resolve any disputes or controversies between the
Parties hereto arising from or related to this Agreement. Any motion,
application or other action or proceeding brought before the Bankruptcy Court to
resolve a dispute arising from or related to this Agreement will be brought on
proper notice in accordance with the Federal Rules of Bankruptcy Procedure and
the Local Rules of the Bankruptcy Court. In the event the Bankruptcy Court is
deemed to lack jurisdiction over this matter, the Parties consent to
jurisdiction in the United States District Court for the District of Nevada to
the extent that it is otherwise lawfully available.

 

 19 

 

  

j.                    Attorneys’ Fees. Each Party will bear its or their own
attorneys’ fees, costs and expenses incurred in negotiating and drafting this
Agreement.

 

k.                  Severability. To the extent that any provision of this
Agreement may be held to be invalid or legally unenforceable by a court of
competent jurisdiction, such provision may be severed from the remainder of this
Agreement only if and to the extent agreed upon by the Parties.

 

l.                    Effective Date of Agreement; Conditions Precedent. The
effectiveness of this Agreement is subject to the following conditions
precedent, which if not satisfied, will render this Agreement null and void;
provided, however, that (a) the negotiations among the Parties will remain
confidential and (b) this Agreement, the terms of this Agreement and the
negotiations among the Parties with respect thereto will not be admissible in
any case or proceeding:

 

i.This Agreement will have been executed and delivered by all Parties;

 

ii.The Bankruptcy Court will have entered the Approval Order in a form
acceptable to all Parties, which Approval Order will contain agreed upon
releases and injunctions, and such Approval Order will have become a final,
binding and non-appealable order that has not been stayed, reversed or modified
in any respect; and

 

iii.The Liquidating Trust, the Miller Trust Plaintiffs, and the Oaktree
Plaintiffs will have received the Settlement Amount as set forth in paragraph 2
of this Agreement.

 

m.                Waiver of Conditions. To the extent that they are not
otherwise required by law, any or all of the conditions for making this
Agreement effective may be waived by written agreement of each of the Parties to
this Agreement. However, the agreement to waive any condition or to waive a
condition in any particular instance will not be construed as an agreement to
waive any other condition in any other instance.

 

n.                  Amendments. This Agreement may not be amended, modified or
otherwise altered in any respect other than in a writing signed by all Parties.

 

 20 

 

  

o.                  Divisions and Headings. The divisions of this Agreement into
paragraphs and subparagraphs and the use of captions or headings in connection
therewith are solely for convenience and will have no legal effect in construing
this Agreement.

 

 

[Signature page to follow - Remainder of this page left intentionally blank]

 

 

 

 

 

 

 

 

 

 

 21 

 

  

IN WITNESS WHEREOF, the undersigned, by their respective duly authorized
representatives, affix their signatures hereto.

 

  LIQUIDATING TRUST         By:     Name:     Title:  

 

  FEDERAL         By:     Name:     Title:  

  

  IRONSHORE         By:     Name:     Title:  

 

  MILLER TRUST PLAINTIFFS         By:     Name:     Title:  

 

  OAKTREE PLAINTIFFS         By:     Name:     Title:  

 

  A. CARL MUDD and SHELDON SAIDMAN         By:     Name:     Title:  

 

  NORTON ROSE FULBRIGHT US, LLP         By:     Name:     Title:  

 

 22