exv10w1



 




EXHIBIT 10.1


     [The identity of one of the parties and its predecessors indicated by **
in Exhibit 10.1 has been omitted and has been filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 24b-2 of the Securities Exchange Act of 1934.]



SETTLEMENT AGREEMENT AND FULL POLICY RELEASE




     This Settlement Agreement and Full Policy Release (hereinafter referred to
as “the Agreement”) is entered into between ** Insurance Company, as
successor-in-interest to ** Insurance Company,
formerly ** Insurance Company (“**”), and Metalclad Insulation
Corporation (“Metalclad”), a wholly owned subsidiary of Entrx Corporation, and
Entrx Corporation, formerly known as Metalclad Corporation (“Entrx”), as of the
date of execution of this Agreement by all signatories hereto, and in
accordance with the terms and conditions set forth below.



RECITALS




     WHEREAS, for purposes of this Agreement, the following terms have the
following meanings:



     1. “**” means ** Insurance Company, as successor-in-interest
to ** Insurance Company, formerly ** Insurance
Company and all of its corporate parents, subsidiaries, affiliated companies,
predecessor and successor companies and all of their present, past and future
officers, directors, employees, stockholders, representatives, agents and
attorneys.



     2. “Policy” means that certain Umbrella Liability Policy, Policy ** issued by ** Insurance Company to the named
insured, Metalclad Insulation Corporation, for the policy period March 15, 1980
to March 15, 1981.



     3. “Metalclad” means Metalclad Insulation Corporation and its current and
former subsidiaries, divisions, affiliated companies, parent


1









 




companies, and
predecessor and successor companies, including but not limited to all those listed as
named insureds or additional named insureds under the Policy for which
Metalclad is the successor or which were a “DBA” of Metalclad or one of its
predecessors or successors and also includes present, past and future officers,
directors, employees, stockholders, representatives, agents, attorneys,
assigns, predecessors-in-interest, successors-in-interest and any and all other
persons and entities acting by, through, under or in concert with any of them.



     4. “Entrx” means Entrx Corporation, formerly known as Bower Industries,
Inc. and later as Metalclad Corporation, and its predecessor and successor
companies, subsidiaries, other than Metalclad, divisions, affiliated companies,
including but not limited to all those listed as named insureds or additional
named insureds under the Policy for which Entrx is the parent or successor,
other than Metalclad, and also includes present, past and future officers,
directors, employees, stockholders, representatives, agents, attorneys,
assigns, predecessors-in-interest, successors-in-interest and any and all other
persons and entities acting by, through, under or in concert with any of them.



     5. “Claims” means any and all past, present and future claims, proofs of
claim, demands, orders, directives, actions, suits, lawsuits, causes of action,
cross-claims, third-party actions, allegations, assertions, penalties,
assessments, arbitration or mediation demands, adversary proceedings,
administrative proceedings or statutory or regulatory obligations, of whatever
nature, whether at law or in equity, and whether sounding in tort, contract,
equity, nuisance, trespass, negligence, strict liability or any other
statutory, administrative or common law cause of action of any sort, including
but not limited to Asbestos Claims, as defined herein.



2









 




     6. “Asbestos Claims” means those Claims brought or asserted against
Metalclad or Entrx for alleged bodily injury, property damage, personal injury
or natural resource damages: (i) arising out of any actual or alleged
exposure to asbestos or asbestos-containing products or materials manufactured,
installed, sold, supplied, and/or distributed by Metalclad, or by anyone else;
(ii) arising out of any actual or alleged exposure to asbestos occurring during
installation, rip-out/removal operations or other claims allegedly or actually
occurring while Metalclad, or anyone else was performing operations at sites
other than its premises; or (iii) arising out of any actual or alleged
exposure to asbestos or asbestos containing products or materials occurring at
any premises owned by or rented to Metalclad.



     7. “Effective Date” means the date by which both Metalclad and **
have executed this Agreement.



     8. “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.



     WHEREAS, ** Insurance Company issued the Policy
to Metalclad;



     WHEREAS, the Policy provides limits of liability in the amount of five
million dollars ($5,000,000) in the aggregate and per occurrence;



     WHEREAS, Metalclad has tendered to ** Asbestos Claims brought
against Metalclad and in some instances against Entrx, as the


3









 




parent of
Metalclad, alleging under a variety of legal theories that Metalclad was legally liable and
responsible for injuries allegedly sustained by the Claimants because of
exposure to and inhalation of asbestos fibers;



     WHEREAS, Metalclad, in its tender to **, has requested that **
defend and indemnify Metalclad in connection with the Asbestos Claims;



     WHEREAS, ** in response to Metalclad’s request for defense and
indemnification for the Asbestos Claims has denied the claim and raised a
variety of coverage defenses, including but not limited to the proper
exhaustion of underlying coverage and the contention that some, if not all, of
the Asbestos Claims are excluded under the terms, conditions and exclusions of
the Policy;



     WHEREAS, ** and Metalclad acknowledge the existence of disputed
questions of insurance coverage arising from Metalclad’s tender of the Asbestos
Claims discussed above;



     WHEREAS, ** and Metalclad now desire to resolve all issues and to
compromise, settle and release any and all Claims for insurance coverage
whatsoever by Metalclad against ** under the Policy on the terms set
forth below; and



     WHEREAS, Entrx, in consideration of the payments made by ** to
Metalclad as more fully described herein, is also willing to release any and
all rights, if any, it may have under the Policy,



     NOW, THEREFORE, in consideration of and in reliance upon the aforesaid
recitals and the mutual agreements contained herein, it is agreed by and
between **, Metalclad and Entrx as set forth below.



4









 






	1.	 	PAYMENT OF THE SETTLEMENT AMOUNT




     Within ten (10) days of the date of full execution of this Agreement,
** shall, by wire transfer in accordance with instructions provided by
Metalclad, pay to Metalclad the total sum of $2,500,000 (TWO MILLION FIVE
HUNDRED THOUSAND DOLLARS and 00/00) (hereinafter “the Settlement Payment”).
**’s payment of $2,500,000 to Metalclad shall constitute a full and
complete settlement of all Claims, including Asbestos Claims which have been or
which could be made against Metalclad and/or Entrx or asserted by Metalclad
and/or Entrx against ** under the Policy.




	2.	 	RELEASE OF ALL CLAIMS




     a. In consideration of the Settlement Payment to Metalclad set forth in
paragraph 1 and of the agreements made herein by **, Metalclad hereby
releases and forever discharges ** from any and all liability whatsoever
for any and all claims, actions, demands, liabilities, obligations, rights or
causes of actions of every kind and nature, known and unknown, past, present
and future, including, but not limited to, consequential and punitive damages,
loss of profit, compensation, emotional distress, breach of legal or
contractual duties, property damage, bodily injury, personal injury, natural
resource damages, losses, costs, expenses, attorneys’ fees, recision,
reformation and declaratory relief, which claims, actions, demands,
liabilities, obligations, rights or causes of action arise out of, relate to or
are in any way connected with the Claims that are, or are alleged to be,
covered under the Policy, including but not limited to the Asbestos Claims.



     b. For and in consideration of Metalclad’s and Entrx’s promises made
herein and for other good and valuable consideration, the adequacy of


5









 




which is
expressly acknowledged, ** hereby fully and forever releases Metalclad from any and all
obligations, rights and Claims, known and unknown, anticipated or
unanticipated, past, present or future for, or with respect to, the released
Claims and the Policy, including without limitation, any obligations, rights or
claims for or with respect to premiums, retrospective premiums, deductibles,
self-insured retentions or retained limits, and loss adjustment expenses.



     c. In further consideration of the Settlement Payment to Metalclad set
forth in paragraph 1 and of the agreements made herein by **, Entrx
hereby releases and forever discharges ** from any and all liability
whatsoever for any and all claims, actions, demands, liabilities, obligations,
rights or causes of actions of every kind and nature, known and unknown, past,
present and future, including, but not limited to, consequential and punitive
damages, loss of profit, compensation, emotional distress, breach of legal or
contractual duties, property damage, bodily injury, personal injury, natural
resource damages, losses, costs, expenses, attorneys’ fees, recission,
reformation and declaratory relief, which claims, actions, demands,
liabilities, obligations, rights or causes of action arise out of, relate to or
are in any way connected with the Claims that are, or are alleged to be,
covered under the Policy, including but not limited to the Asbestos Claims.



     d. For and in consideration of Metalclad’s and Entrx’s promises made
herein and for other good and valuable consideration, the adequacy of which is
expressly acknowledged, ** hereby fully and forever releases Entrx from
any and all obligations, rights and Claims, known and unknown, anticipated or
unanticipated, past, present or future for, or with respect to, the released
Claims and the Policy, including without



6









 




limitation, any obligations, rights or
claims for or with respect to premiums, retrospective premiums, deductibles,
self-insured retentions or retained limits, and loss adjustment expenses.



     e. Metalclad further acknowledges and agrees that, in consideration of the
Settlement Payment set forth in paragraph 1, and of the agreements made herein
by **, Metalclad hereby releases and forever discharges ** from any
and all Claims, including Asbestos Claims, that relate in any way to the
Policy, but that are also based in whole or in part on any alleged breach of
the duty of good faith and fair dealing, unfair claims practices or violation
of any statute, regulation or code; provided, however, that the foregoing
Release shall not apply to, impair or affect the parties’ rights and
obligations set forth in this Agreement.



     f. Entrx further acknowledges and agrees that, in consideration of the
Settlement Payment set forth in paragraph 1, and of the agreements made herein
by **, Entrx hereby releases and forever discharges ** from any and
all Claims, including Asbestos Claims, that relate in any way to the Policy,
but that are also based in whole or in part on any alleged breach of the duty
of good faith and fair dealing, unfair claims practices or violation of any
statute, regulation or code; provided, however, that the foregoing Release
shall not apply to, impair or affect the parties’ rights and obligations set
forth in this Agreement.



     g. With respect to the Releases set forth in paragraphs 2(a), 2(b), 2(c),
2(d), 2(e) and 2(f) of this Agreement, Metalclad, Entrx and ** expressly
assume the risk that there might exist facts, acts, omissions, matters, causes
or things that may have occurred which are presently unknown or unsuspected by
Metalclad, Entrx or **. Metalclad, Entrx and ** hereby waive the
application of terms and provisions of any statute, rule or doctrine of common
law that either (1) narrowly construes releases that by their terms release
claims based in whole or in



7









 




part upon, arise from, or relate to unknown or unsuspected acts, omissions,
matters, causes or things; or (2) restricts or prohibits the releasing of such
claims.



     h. Metalclad and Entrx hereby acknowledge and agree that the releases and
discharges given herein by Metalclad and Entrx to ** extend to any and
all kinds of Asbestos Claims which potentially may be covered under the Policy.



     i. It is the express intent and understanding of Metalclad and **,
as part of the consideration given pursuant to this Agreement and effective
upon Metalclad’s receipt of the Settlement Payment as set forth in Paragraph 1,
that the Policy shall be deemed to be null and void as of the date of full
execution of this Agreement and that ** is released and discharged as
provided herein from any and all past, present or future claims for, or
obligation of defense and indemnity owed, whether actual or alleged, known or
unknown, accrued or unaccrued, existing or potential, suspected or unsuspected,
which Metalclad or any other person may have or assert, or may hereafter have
or assert against ** in connection with, relating to or arising out of
the Policy, including, but not limited to, any claims for personal injury,
bodily injury, property damage, natural resource damages, occupational disease,
workers compensation, advertising liability, economic loss, loss of use, breach
of the duty of good faith and fair dealing or unfair claims practices. In
addition, Metalclad hereby withdraws any and all requests, demands or tenders
for indemnity or defense previously submitted to ** under the Policy and
further surrenders, relinquishes and releases any further right to tender or
present any claims whatsoever to ** under the Policy. Furthermore, by
virtue of the foregoing release, ** shall have no duty to defend or
indemnify Metalclad under the Policy, or any other person who is or may claim
to be a named insured or an additional



8









 




insured under the Policy, with respect
to any matter; nor shall ** have any duty or obligation to Metalclad or to
any person who claims to be the named insured or additional insured under the
Policy.



     j. It is also the express intent and understanding of Entrx and **,
as part of the consideration given pursuant to this Agreement and effective
upon Metalclad’s receipt of the Settlement Payment as set forth in Paragraph 1,
that the Policy shall be deemed to be null and void as of the date of full
execution of this Agreement and that ** is released and discharged as
provided herein from any and all past, present or future claims for, or
obligation of defense and indemnity owed, whether actual or alleged, known or
unknown, accrued or unaccrued, existing or potential, suspected or unsuspected,
which Metalclad, Entrx, or any other person may have or assert, or may
hereafter have or assert against ** in connection with, relating to or
arising out of the Policy, including, but not limited to, any claims for
personal injury, bodily injury, property damage, natural resource damages,
occupational disease, workers compensation, advertising liability, economic
loss, loss of use, breach of the duty of good faith and fair dealing or unfair
claims practices. In addition, Entrx hereby withdraws any and all requests,
demands, or tenders for indemnity or defense previously submitted to **
under the Policy, acknowledges that Metalclad pursuant to the terms of this
Agreement is withdrawing any and all requests, demands or tenders for indemnity
or defense previously submitted to ** under the Policy and Entrx further
surrenders, relinquishes and releases any further right to tender or present
any claims whatsoever to ** under the Policy. Furthermore, by virtue of
the foregoing release, ** shall have no duty to defend or indemnify Entrx
under the Policy, or any other person who is or may claim to be a named insured
or an additional insured under the Policy, with respect to any matter; nor
shall ** have any duty or
obligation to Entrx or to any person who claims to be the named insured or
additional insured under the Policy.



9









 





	3.	 	HOLD HARMLESS AND INDEMNIFICATION




     a. Metalclad hereby acknowledges and agrees that, upon Metalclad’s receipt
of the Settlement Payment described in paragraph 1 of the Agreement, Metalclad
agrees to hold ** harmless relative to future claims by any entity or
individual against ** pertaining to Claims that are, or are alleged to
be, covered under the Policy, including Asbestos Claims, and further agrees to
indemnify ** for any sums sought by any other individual or entity in
connection with claims by these individuals or entities for contribution or
indemnification from Metalclad regarding such Claims, including the Asbestos
Claims. This Agreement extends to any Claims made by any other insurers of
Metalclad or Entrx, alleged third-party beneficiaries under the Policy, any
persons or entities claiming derivative rights under the Policy, any persons or
entities attempting to garnish proceeds of the Policy, or any persons or
entities attempting to challenge the reasonableness or adequacy of the
settlement. Metalclad agrees to defend ** with respect to the claims
referred to in this paragraph, with counsel of Metalclad’s choice, subject to
**’s approval, which approval shall not be unreasonably withheld or
denied. In this event, Metalclad agrees that it will not take a position
regarding interpretation of the Policy without **’s prior written
consent, which consent will not unreasonably be withheld.



     b. Additionally, in the event Metalclad fails to hold harmless and
indemnify ** as described in Paragraph 3(a) above, Entrx hereby
acknowledges and agrees that in place of Metalclad, Entrx will hold **
harmless relative to future claims by any entity or individual against **
pertaining to Claims that are, or are alleged to be, covered under the Policy,



10









 




including Asbestos Claims, and further agree to indemnify ** for any
sums sought by any other individual or entity in connection with claims by
these individuals or entities for contribution or indemnification from
Metalclad regarding such Claims, including the Asbestos Claims. This Agreement
extends to any Claims made by any other insurers of Metalclad or Entrx, alleged
third-party beneficiaries under the Policy, any persons or entities claiming
derivative rights under the Policy, any persons or entities attempting to
garnish proceeds of the Policy, or any persons or entities attempting to
challenge the reasonableness or adequacy of the settlement. Entrx agrees to
defend ** with respect to the Claims referred to in this paragraph, with
counsel of Entrx’s choice, subject to **’s approval, which approval shall
not be unreasonably withheld or denied. In this event, Entrx agrees that it
will not take a position regarding interpretation of the Policy without
**’s prior written consent, which consent will not be unreasonably
withheld.



     c. Notwithstanding the foregoing, Metalclad’s and Entrx’s agreements to
defend, hold harmless and indemnify ** as stated in Paragraphs 3(a) and
3(b) only extend up to and do not exceed a combined total aggregate amount
equal to the $2,500,000 Settlement Payment made by ** under paragraph 1
of this Agreement, whether paid for by Metalclad alone, Entrx alone or
partially by Metalclad and partially by Entrx.



     d. Further, notwithstanding the foregoing, **, Metalclad and Entrx
acknowledge and agree the obligations of Metalclad and Entrx to defend, hold
harmless and indemnify ** as stated in Paragraphs 3(a) and 3(b), do not
include personal liability of any present, past and future officers, directors,
employees, or stockholders of Metalclad and Entrx — excepting
Entrx’s capacity as a stockholder of Metalclad —
representatives, agents, attorneys or other persons and entities acting by,
through, under or in concert with any of them.



11









 






	4.	 	WAIVER OF CERTAIN CLAIMS AND METALCLAD WARRANTY.




     a. ** agrees that it will not seek any recovery, by way of
subrogation, contribution, indemnity or otherwise, against any other insurer of
Metalclad or Entrx with respect to the Settlement Payment paid pursuant to
Paragraph 1 hereunder unless a Claim is asserted against ** by any other
party or Person, including any other insurer, which results from, arises out
of, or relates directly or indirectly to: (a) the Settlement Payment made or
to be made by ** under this Agreement; (b) any other payments made or
which may be made to Metalclad or Entrx by any other party or Person, including
any other insurer, in connection with Metalclad’s or Entrx’s insurance
coverage, or (c) actual, alleged or potential liabilities which are owed or may
be owed to Metalclad or Entrx, by any other party or Person, including without
limitation any of Metalclad’s or Entrx’s other insurers, relating, in whole or
in part, to any Claims including Asbestos Claims released under the terms of
this Agreement.



     b. The Parties agree and acknowledge that this Agreement has been entered
into in good faith, as a result of arms length negotiations, with advice of
counsel, and that this Agreement represents a fair, reasonable, proportionate
and good faith compromise of disputed claims, disputed liabilities and disputed
issues. The Parties agree that they will each cooperate with each other and
will not oppose in any way any motion made jointly or made by any of the
Parties for an order determining that this Agreement constitutes a fair,
reasonable, proportionate and good faith settlement.



12









 





     c. In the event that Claims are made against ** and Metalclad
indemnifies ** under Paragraph 3, ** acknowledges and agrees that
Metalclad is entitled to assert any contractual, equitable or implied rights
** has or may have against other Metalclad or Entrx insurers, including
but not limited to **’s contribution, indemnification, subrogation, or
“other insurance” rights, provided that Metalclad first advises ** of the
circumstances and of its intention to pursue these rights. Metalclad
acknowledges and agrees that it will only pursue these rights to the extent of,
and in the amount of, such indemnified Claims.



     d. In the event that Claims are made against ** and Entrx
indemnifies ** under Paragraph 3, ** acknowledges and agrees that
Entrx is entitled to assert any contractual, equitable or implied rights
** has or may have against other Metalclad or Entrx insurers, including
but not limited to **’s contribution, indemnification, subrogation, or
“other insurance” rights, provided that Entrx first advises ** of the
circumstances and of its intention to pursue these rights. Entrx acknowledges
and agrees that it will only pursue these rights to the extent of, and in the
amount of, such indemnified Claims.




	5.	 	EXHAUSTION OF POLICY LIMITS




     Metalclad, Entrx and ** mutually agree and acknowledge that the
Settlement Payment, in addition to constituting a full and complete settlement
of all present, past and future Claims covered, or alleged to be covered, under
the Policy, known or unknown, of any type or nature, alleging any theory of
recovery or relief, including the Asbestos Claims, and a recission of the
Policy upon the date of full execution of this Agreement, also constitutes
exhaustion of all limits of liability under the Policy. Metalclad and Entrx
expressly acknowledge and agree that the payment by ** of the Settlement
Payment as called for under this Agreement is in exchange for a full, final and
complete policyholder release of all
general liability coverage under the Policy and no further claims or requests
for coverage under all coverages of the Policy will be made by Metalclad or
Entrx upon **.



13









 






	6.	 	REPRESENTATION AND WARRANTIES




     a. Metalclad and Entrx each represent that it has not and will not in any
manner assign, transfer, convey or sell any rights, actions, causes of action
or claims arising out of, related to or connected with the Policy or the
matters released herein, and that Metalclad and Entrx, to the extent that it is
the parent or successor to named insureds or additional named insureds under
the Policy, are the only entities entitled to recover for any damages under
such right, actions, causes of action or claims. Metalclad and Entrx represent
and warrant that no subrogation of any cause of action, chose in action or part
hereof has taken place. Metalclad and Entrx further represent, warrant and
agree that neither will in any way voluntarily assist any person or entity in
the establishment of any right, action, cause of action or claim against
** in any way relating to the matters which are the subject of this
Agreement.



     b. Metalclad hereby warrants and represents that it is a corporation duly
organized and validly existing in good standing under the laws of the State of
California and has the requisite corporate power and authority to enter into
this Agreement and to perform the obligations contemplated by this Agreement.



     c. Entrx also hereby warrants and represents that it is a corporation duly
organized and validly existing in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to enter into this
Agreement and to perform the obligations contemplated by this Agreement.



14









 





     d. Metalclad and Entrx hereby warrant and represent that the execution and
delivery of this Agreement by Metalclad and the performance by Metalclad and
Entrx of the obligations contemplated by this Agreement have been approved by
duly authorized representatives of Metalclad and Entrx and by all other
necessary corporate actions on the part of Metalclad and Entrx. This Agreement
constitutes the valid and binding agreement of Metalclad and Entrx.



     e. **, Metalclad and Entrx represent and warrant that the Agreement
represents a good faith settlement of disputed insurance coverage issues and
further warrant that the Settlement Payment is fair and reasonable
consideration for release of the Claims as set forth herein. In addition,
Metalclad and Entrx hereby represent and warrant that the rights and interests
released under this Agreement are released in exchange for a reasonable
equivalent value from ** and that, upon payment of the Settlement
Payment, Metalclad and Entrx shall be deemed unconditionally, absolutely and
irrevocably estopped and forever barred from challenging the reasonable
equivalent value of the settlement herein without further act or deed.




	7.	 	COOPERATION BETWEEN THE PARTIES




     a. In the event that any action or proceeding of any type whatsoever is
commenced or prosecuted by any person other than Metalclad, Entrx or **
to invalidate, interpret or prevent the validation, enforcement or carrying out
of any or all of the provisions of this Agreement, the parties mutually agree,
represent, warrant and covenant to cooperate fully in opposing such action or
proceeding.



     b. Metalclad and Entrx will undertake all reasonable actions to cooperate
with ** in connection with its claims against reinsurers for any sums
paid pursuant to this Agreement, including, but not limited to, responding to
reasonable
requests for information and documentation relating to the Claims, including
the Asbestos Claims.



15









 






	8.	 	PRESERVATION OF AUDIT RIGHTS




     Metalclad, Entrx and ** acknowledge and agree that ** shall
have the right to conduct an audit of the closed asbestos bodily injury claims
against Metalclad, subject to agreement between Metalclad and ** on a
mutually convenient time and location for conducting the requested audit of the
underlying closed claims files pertaining to the claims addressed in this
Agreement. Metalclad and Entrx shall provide their best efforts to make the
closed claims files available to ** within sixty (60) days of the
Effective Date of this Agreement. ** agrees to conduct the audit no
later than ninety (90) days from the Effective Date of this Agreement, provided
that Metalclad and Entrx have made the files available as provided herein.
**’s audit of closed claims files shall not affect its rights or
obligations or Metalclad’s or Entrx’s rights or obligations under this
Agreement.




	9.	 	COMPROMISE




     This Agreement is the result of a compromise among the parties hereto and
shall never at any time or for any purpose be construed as an admission of
liability and/or coverage for any claims tendered by Metalclad or Entrx to
**, both of which are expressly denied by **. This Agreement is a
compromise or settlement of disputed claims, is the product of arms-length
negotiations, is neither intended to nor shall be construed as an insurance
policy interpretation, and shall not be used in any court, dispute resolution
proceeding, or otherwise, to create, prove or interpret the obligations under
any insurance policy issued by **. Metalclad, Entrx and **
mutually agree and acknowledge that this good faith resolution of Metalclad’s
claim under the Policy is not being undertaken to impair or avoid any
liabilities Metalclad or Entrx may owe to the applicable underlying Asbestos
Claims claimants.



16









 







	10.	 	AGREEMENT




     This Agreement has been negotiated at arms length by and between parties
knowledgeable of the terms and conditions set forth in the Agreement. The
wording of this Agreement was reviewed by legal counsel for Metalclad, Entrx
and ** and that Metalclad, Entrx and ** had sufficient
opportunities to propose and negotiate changes in wording prior to its
execution. Metalclad and Entrx hereby warrant and represent that each is the
lawful owner of the rights, claims, claims of right or causes of action under
the Policy as set forth and defined in this Agreement. Neither Metalclad,
Entrx nor ** will be entitled to have any wording of this Agreement
construed against the other party based on any contention as to which of the
parties drafted the language in question.




	11.	 	PARTIES TO AGREEMENT




     This Agreement is intended to confer rights and benefits only on the
signatories hereto and is not intended to confer any right or benefit upon any
other person or entity. No person or entity other than the signatories hereto
shall have any legally enforceable right under this Agreement. All rights or
action for any breach of this Agreement are hereby reserved to the signatories
hereto.




	12.	 	ENTIRE AGREEMENT




     This Agreement constitutes the entire understanding between and among the
parties with regard to the matters herein set forth. The terms of this
Agreement are contractual and not a mere recital. Except as specifically set
forth in this Agreement, there are no representations,



17









 




warranties, promises or inducements, whether oral or written, expressed or
implied, that in any way affect or condition the validity of this Agreement or
alter its terms. This Agreement may be amended only by subsequent written
instrument that is executed by Metalclad, Entrx and **.




	13.	 	BANKRUPTCY OBLIGATIONS




     Metalclad and Entrx represent and warrant that neither entity currently
has plans to enter bankruptcy, including but not limited to the filing of a
Chapter 11 petition. In the event that either Metalclad and/or Entrx may do so
at some time in the future, the Parties agree:



     a. This Agreement is not an executory contract within the meaning of 11
U.S.C. Section 365; and Metalclad and/or Entrx agree not to seek to reject or
set aside this Agreement in any manner or forum based on any bankruptcy
proceeding. Metalclad and/or Entrx shall use their best efforts to seek an
order of the Bankruptcy Court that this Agreement is not an executory contract
subject to rejection or, in the alternative, approving Metalclad’s and/or
Entrx’s assumption of this Agreement.



     b. This Agreement, having been negotiated at arms-length in settlement of
bona fide disputes and supported by adequate consideration, is not a preference
under Section 547 of the Bankruptcy code, a fraudulent conveyance under Section
548 of the Bankruptcy Code, or avoidable under any other applicable federal
bankruptcy or non-bankruptcy law. Metalclad and/or Entrx agree not to seek to
avoid or set aside this Agreement in any manner or forum in connection with any
bankruptcy filing or otherwise.



18









 





     c. The Parties shall cooperate to preserve the validity, finality and
enforceability of this Agreement. Metalclad and/or Entrx shall use their best
efforts to oppose any and all efforts or objections to challenge the Agreement
under any provision of the Bankruptcy Code, including without limitation, 11
U.S.C. Sections 365, 547 and 548.



     d. In any bankruptcy action where Metalclad, Entrx, or both, as part of
any plan of reorganization seeks to discharge asbestos-related bodily injury or
personal injury Claims, Metalclad, Entrx, or both, shall use their reasonable
best efforts to request that the Bankruptcy Court and/or the District Court
enter a permanent injunction pursuant to 11 U.S.C. Sections 105 and/or 524(g)
that enjoins all persons from commencing or continuing any action, proceeding
or claim against **, Metalclad or Entrx, as the case may be, individually
or collectively and directly or indirectly, to collect, recover, or receive
payments, satisfaction, or recovery of any kind under, relating to, or arising
out of asbestos related bodily injury or personal injury Claims in connection
with the Policy. Metalclad and/or Entrx, as the debtor, shall use their
reasonable best efforts to: (i) include such a permanent injunction in any
plan and confirmation order it sponsors, and (ii) apply to the Bankruptcy Court
and/or District court (and diligently prosecute an application) for an order
including such a permanent injunction in any plan and confirmation order
sponsored by any other party in the bankruptcy proceeding. In the event that
any Person (e.g. another insurer or an underlying claimant) makes a claim
against ** related to asbestos-related bodily injury or personal injury
Claims after the bankruptcy petition is filed but before any Section 105 or
Section 524(g) injunction is issued, Metalclad and/or Entrx will seek an order
from the Bankruptcy Court enjoining such claim as to **.



19









 






	14.	 	MISCELLANEOUS REPRESENTATIONS




     By entering into this Agreement, neither Metalclad, Entrx nor ** has
waived, nor shall Metalclad, Entrx or ** be deemed to have waived, any
rights, obligations or positions which they have asserted or may in the future
assert in connection with any matter or persons outside the scope of this
Agreement. The parties specifically disavow any intention to create rights in
third parties under or in relation to this Agreement. Metalclad’s or Entrx’s
rights under policies of insurance other than the Policy shall not be affected
by this Agreement. The settlement reflected in this Agreement shall be without
precedential value, and it is not intended to be, nor shall it be, construed as
an interpretation of any insurance policy. It shall not be used in evidence,
or in any other manner, in any court or other dispute resolution proceeding, to
create, prove or interpret the obligations of ** under any insurance
policy issued to Metalclad or to any other person.




	15.	 	BINDING EFFECT




     This Agreement shall be binding upon and shall inure to the benefit of the
signatories and their respective heirs, executors, administrators, trustors,
trustees, beneficiaries, predecessors, successors, affiliated and related
entities, officers, directors, principals, agents, employees, assigns,
representatives and all persons, firms, associations and/or corporations
connected with them, including, without limitation, their insurers, sureties
and/or attorneys.




	16.	 	AGREEMENT IS NOT A POLICY OF INSURANCE




     This Agreement is not a policy of insurance, and the signatories do not
intend that it will be interpreted as such.



20









 






	17.	 	CONFIDENTIALITY




     This Agreement and its terms are confidential and, except as provided
herein, neither the terms of this Agreement nor its negotiation, execution or
implementation, or any communication generated in connection therewith
(collectively, “Confidential Settlement Material”) shall be disclosed to any
person. Any party may disclose Confidential Settlement Material: (i) in an
action for breach of, or otherwise to enforce the terms of, this Agreement;
(ii) as required by law, including but not limited to the compliance with,
inter alia, Securities and Exchange Commission (“SEC”) rules and regulations,
including but not limited to those requiring disclosure of material
information; (iii) in the case of **, to its reinsurer(s); (iv) to
parent, subsidiary, affiliated, or associated companies and to their
shareholders and counsel; (v) to the auditors of or counsel to the parties to
this Agreement upon request; (vi) if any party is ordered to make disclosure by
a court or governmental agency of competent jurisdiction; (vii) by written
agreement of the parties, and/or (viii) in the case of Metalclad or Entrx to
any person. Any disclosure authorized under subparagraphs (i) and (iii) through
(vii), above shall be made only after making reasonable efforts to obtain from
the party to whom disclosure is to be made an agreement that the
confidentiality of this Agreement and the Confidential Settlement Material
shall be preserved and protected in accordance with the terms of this
Agreement. Any disclosure authorized under subparagraph (viii) shall be made
only after the party to whom disclosure is being made has been advised of and
agrees that the confidentiality of this Agreement and the Confidential
Settlement Material shall be preserved and protected in accordance with the
terms of this Agreement. If any of the parties are served with a subpoena or
other document request calling for disclosure of the terms of this Agreement or
Confidential Settlement Material,


21









 




including but not limited to disclosure
of
negotiations, discussions, correspondence or other material relating to this Agreement or relating to the negotiation of this
Agreement, written notice of the receipt of such subpoena or document request
shall be given to the other party within ten business days following receipt of
such subpoena or document request. The party from whom disclosure is sought
shall not make disclosure before giving the other party to this Agreement a
reasonable amount of time to intervene, at their own expense, and oppose
disclosure and/or a reasonable amount of time to seek a protective order prior
to disclosure, unless failure to make such disclosure would subject the party
to contempt or other sanctions.



     Nothing contained in this paragraph shall be interpreted to restrict the
right of either party to bring an action to enforce the terms of this Agreement
or to make sworn statements as to the fact of this Agreement and/or releases
provided herein.




	18.	 	WARRANTY OF AUTHORIZED SIGNATORIES




     Each of the signatories hereto warrants and represents that he or she is
competent and authorized to enter into this Agreement on behalf of the party
for whom he or she purports to sign.


19. ATTORNEYS’ FEES



     The parties hereto acknowledge and agree that each of them will bear their
own attorneys’ fees, costs and expenses arising out of and/or connected with
the dispute which is the subject of this Agreement and the negotiation,
drafting and execution of this Agreement, and all matters arising out of or
connected therewith.



22









 





	20.	 	SEVERABILITY




     If any provision or part of any provision of this Agreement is for any
reason held to be invalid, unenforceable or contrary to any public policy, law,
statute and/or ordinance, then the remainder of this Agreement shall not be
affected thereby and shall remain valid and fully enforceable.




	21.	 	COUNTERPARTS




     This Agreement may be executed in counterparts, and all so executed shall
constitute an agreement which shall be binding upon all parties hereto,
notwithstanding that the signatories of the parties’ designated representatives
do not appear on the same page.




	22.	 	BENEFIT OF COUNSEL




     The advice of legal counsel has been obtained by the parties hereto prior
to entering into this Agreement.




	23.	 	NOTICES




     Any and all communications or notices in connection with this Agreement
shall be in writing and sent by facsimile or by first-class mail, postage
prepaid. Such notices shall be sent to the individuals noted below, or to such
other individuals as hereafter designated in writing:



	 	 	 
	ENTRX/METALCLAD:

	 	** INSURANCE CO:
	Michel Y. Horton
	 	 
	Stanley H. Shure

	 	 
	Morgan, Lewis & Bockius LLP

	 	 
	300 South Grand Avenue

	 	 
	Twenty-Second Floor

	 	 
	Los Angeles, CA 90071-3132

	 	 
	Tel: (213) 612-2500

	 	 
	Fax: (213) 612-2501

	 	 







23









 





     In the event a Party wishes to change the identity, address, or both, of
the individuals to whom notices shall be provided, notice of such changes shall
be in writing and sent by facsimile or by first class mail, postage prepaid to
the other Parties to this agreement.



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



	 	 	 	 	 	 	 
	

	 	 	 	ENTRX CORPORATION
	 
	 	 	 	 	 	 
	Dated:

	 	June 18, 2004	 	By:	 	/s/ Wayne Mills
	

	 	
 
	 	 	 	
 
	

	 	 	 	 	 	Wayne Mills, President and CEO
	 
	 	 	 	 	 	 
	

	 	 	 	METALCLAD INSULATION CORPORATION
	 
	 	 	 	 	 	 
	Dated:

	 	June 18, 2004	 	By:	 	/s/ John Macias
	

	 	
 
	 	 	 	
 
	

	 	 	 	 	 	John Macias, President
	 
	 	 	 	 	 	 
	

	 	 	 	** INSURANCE COMPANY,
 AS SUCCESSOR IN INTEREST TO **

INSURANCE COMPANY, FORMERLY 
** INSURANCE COMPANY
	 
	 	 	 	 	 	 
	Dated:

	 	June 22, 2004	 	By:	 	/s/ 
	

	 	
 
	 	 	 	
 
	

	 	 	 	 	 	








24