Document:

IN THE CIRCUIT COURT OF CHOCTAW COUNTY, ALABAMA

 

	
  THOMAS A. FOSTER and LINDA
  E.

  FOSTER, et al.

   

   

  Plaintiffs,

   

  v.

   

  ABTco, INC., ABT BUILDING
  PRODUCTS

  CORP., ABITIBI-PRICE, INC.
  and ABITIBI-

  PRICE CORP.,

   

  Defendants.

  	
   

  	
  Civil Action No.
  CV95-151-M 

   

   

  NATIONAL CLASS ACTION 

  SETTLEMENT AGREEMENT

  

 

RECITALS

 

The Settlement Class Representative
Plaintiffs in this Action represent owners of structures throughout the United
States on which Hardboard Siding manufactured by the Defendants was installed
prior to the Initial Notice Date in this Action.  The Settlement Class Representatives allege that the Hardboard
Siding manufactured by Defendants at the facility in Roaring River, North
Carolina and installed on structures owned by the Settlement Class Members has
buckled, discolored and deteriorated and caused damage to other parts of the
structures.  Plaintiffs allege that the
warranties applicable to such hardboard siding contain unconscionable
limitations and exclusions, and that the warranties have failed of their essential
purpose, and seek money damages and other relief as a result.

 

Defendants deny all such allegations. 
However, they have agreed to enter into this Settlement in order to put
to rest all controversy and to avoid the further expense and burdensome, protracted
litigation which would be involved in defending this and any future actions,
without in any way acknowledging any fault or liability on their part.  For their part, although Plaintiffs’ Class
Counsel are confident of their contentions and arguments, they recognize that
there are significant legal and factual obstacles to a successful prosecution
of this 

 

Action; that it would involve time consuming
and lengthy proceedings to resolve them; and that the ultimate outcome would be
uncertain.

 

In order to provide meaningful, immediate relief to the Settlement
Class Members and to resolve through compromise in a fair, appropriate manner
the many contentious legal and factual issues involved in this Action, the
Settlement Class Representatives, through their Class Counsel, have negotiated
a siding repair program available to all Settlement Class Members regardless of
when their Siding was installed. This Settlement Agreement provides immediate
payments to Settlement Class Members with Damaged Siding under a Compensation
Formula that takes into account the cost of removal and replacement of the
Siding; the length of time the Siding has been on the structure; whether the
Siding has been painted periodically; and the location of the damage on the
structure.  The Parties believe this
formula is a reasonable and appropriate means of determining the amount to be
paid to Settlement Class Members to settle fully their claims in a prompt and
equitable manner.

 

This Settlement Agreement provides substantial monetary and
non-monetary benefits to Settlement Class Members whose Hardboard Siding
experiences Compensable Damage.  Among
other things, the Settlement Agreement provides increased compensation for
failed Siding with fewer procedural or substantive conditions to payment, is
based on compensation for current labor and materials costs to repair or
replace Siding (as opposed to reimbursing Settlement Class Members only for one
or two times the original cost of the materials or for the original
installation costs), extends the benefits of the Settlement Agreement to
subsequent owners or transferees of Properties with Hardboard Siding, extends
the benefits of the Settlement Agreement to Persons who previously settled
warranty claims without legal representation, even if future claims were
released in such settlements, permits Settlement Class Members who already have
repaired or replaced their Siding to recover under the Settlement Agreement
without regard to the notice requirements of the original warranty, acknowledges
and provides for special circumstances, such as where the Property has been
listed for sale, where significant water intrusion is being experienced, or
where the style of the Damaged Siding is not

 

2

 

practicably
available, involves simplified claim forms and claim procedures, permits in
appropriate circumstances an “Accelerated Payment” by Defendants, and contains
built-in protections to insure that the Settlement Agreement is administered
fairly in accordance with the terms of this Agreement, including audit
procedures by Class Counsel and the right of all Class Members to obtain an
inspection of their Property conducted by Independent Inspectors.

 

With limited exceptions, the improved terms of the Settlement Agreement
will be available to all Settlement Class Members for twenty-five (25) years
from the Date of Installation of the Settlement Class Members’ Hardboard
Siding.  In addition, the ABT Defendants
have agreed for a minimum of two additional years to provide the Enhanced
Warranty that is attached to this Settlement Agreement to Persons who purchase
ABT Siding and to undertake their best efforts to put copies of the new
Enhanced Warranty and the company’s Owner Installation and Maintenance Instructions
into the hands of such Property Owners.

 

NOW, THEREFORE, THIS SETTLEMENT AGREEMENT is entered into this
3rd day of May, 2000, by and among (a) the Settlement Class
Representative Plaintiffs in this case, for themselves and on behalf of the
plaintiff settlement class as hereinafter defined; and (b) Defendants
ABTco, Inc. and ABT Building Products Corp.; and Defendants Abitibi-Price, Inc.
and Abitibi-Price Corporation.

 

Subject to Court approval and such additional discovery and
investigations as Plaintiffs’ Class Counsel deem necessary or appropriate, and
as required by the United States Constitution and the Alabama Rules of Civil
Procedure, it is hereby stipulated and agreed by the Parties that upon the
entry by the Court of a Final Order and Judgment approving the settlement and
directing its implementation, this Action shall be settled and compromised upon
the terms and conditions set forth below.

 

1.         DEFINITIONS

 

As used in this Agreement and in the attached Exhibits, the following
definitions apply to this Agreement:

 

3

 

1.1       Abitibi
Defendants means defendants Abitibi-Price, Inc. and
Abitibi-Price Corp., all of their present or former parents, subsidiaries or
affiliates, and/or all of their present or former directors, officers,
employees, successors, agents and assigns.

 

1.2       Abitibi
Siding means Hardboard Siding manufactured between December 22, 1969 and
October 19, 1992 at the Roaring River, North Carolina facility and that is
or has been installed on the Property of a Settlement Class Member, excluding
any such products that were labeled and sold by the Abitibi Defendants as
B-grade, shop, or cull.

 

1.3       ABT
Defendants means defendants ABTco, Inc. and ABT Building
Products Corp., all of their present or former parents, subsidiaries or
affiliates, and all of their present or former directors, officers, employees,
successors, agents and assigns.

 

1.4       ABT
Siding means Hardboard Siding manufactured at the Roaring River, North
Carolina facility on or after October 20, 1992, and that is or has been
installed on the Property of a Settlement Class Member on or before the Initial
Notice Date, excluding any such products that were labeled and sold by the ABT
Defendants as B-grade, shop or cull.

 

1.5       Action means the
above-captioned action, Thomas A. Foster, et al. v. ABTco, Inc., et. al,
Case No. CV-95-151-M, Circuit Court of Choctaw County, Alabama.

 

1.6       Administrative
Expenses means the costs and expenses to be paid by
Defendants in connection with the Settlement of this Action, as more
particularly set forth in Section 4, below.

 

1.7       Agreement
or Settlement Agreement means this Settlement Agreement, including
all Exhibits.

 

1.8       Attorney
Fees and Expenses means the reasonable amounts awarded by the Court
as compensation for the services provided by Plaintiffs’ Class Counsel and as
reimbursement of their reasonable costs and expenses (including expert or
consulting witness fees and expenses), as provided in Paragraph 14.3, below.

 

1.9       Claim means a
request for payment for Damage or for reimbursement of an Unreimbursement
Repair submitted to the Claims Office under this Settlement Agreement.

 

4

 

1.10     Claim
for Unreimbursed Repair means a Claim in the form attached to this
Agreement as Exhibit A and filed by a Settlement Class Member who seeks
reimbursement of costs or expenses incurred to repair or replace Siding prior
to submission of a Claim.

 

1.11     Claim
Form means the simplified Claim Forms for submitting Claims under the terms
of this Settlement Agreement, attached hereto as Exhibits A, B and C.

 

1.12     Claimant means any
Person who submits a Claim during the term of this Agreement.

 

1.13     Claim
Period means (a) with respect to each Claim (other than a Claim for
Unreimbursed Repair or a Prior Claim), twenty-five (25) years after the Date of
Installation; (b) with respect to a Prior Claim, twelve (12) months from
the Initial Notice Date; and (c) with respect to a Claim for Unreimbursed
Repairs for which the repair or replacement was commenced prior to or within
six (6) months following the Initial Notice Date without actual notice of this
Settlement Agreement, the Claim Period is twelve (12) months from the Initial
Notice Date.

 

In the event the Final Order and Judgment approving this Settlement is
appealed, and Defendants do not implement its terms for Settlement Class
Members during the pendency of the appeal, the Claims Period for Claims
involving Prior Claims or Claims for Unreimbursed Repairs shall be extended and
shall expire no earlier than nine (9) months following the Settlement Date.

 

A Claim shall be deemed “filed” or “submitted” as of the date of its
postmark when mailed first class, registered or certified mail, postage prepaid
and properly addressed to the Claims Office, or when delivered to any
commercial one or two-day delivery service if properly addressed to the Claims
Office, or when actually received by the Claims Office, whichever is first.

 

In all events, claims filed on behalf of Class Members whose siding was
installed between May 15, 1975 and May 15, 1976 shall have at least 9 months
following the Settlement 

 

5

Date within which to file a Claim, and the
applicable age and paint deductions shall be tolled as to such claim between
the Initial Notice Date and the Settlement Date.

 

1.14     Claims
Office means the office or department established by the Defendants for the
purpose of implementing the Settlement Agreement.

 

1.15     Settlement
Class Representatives or Settlement Class Representative Plaintiffs means Thomas Foster, Linda
Foster, Nancy Fiedler, Daniel Gaines, William Dunn, Jerry Kolar and Verdis
Sheffield, the named plaintiffs in this Action.

 

1.16     Compensable
Damage means, with respect to Site-Built Structures, Damage that is not
Excluded Damage, and with respect to Mobile Homes, any panel siding that has
sustained Damage.

 

1.17     Court means the
Circuit Court of Choctaw County, in which the Action is pending.

 

1.18     Damage,
Damages and Damaged as it relates
to Hardboard Siding means any of the following:

 

a.         thickness swell in excess of 15% of the Defendants’ maximum
standard tolerance, that is, a total measure of 0.604” for Siding with a
nominal thickness of one-half (1/2) inch and a total measure of 0.518” for
Siding with a nominal thickness of 7/16 inch;

 

b.         edge checking, where a feeler gauge of 0.025” thickness and
one-half inch width can be inserted one-half inch into a suspected delaminated
edge with moderate hand pressure;

 

c.         fungal or other moisture induced degradation which results
in soft board in which moderate thumb pressure deforms, indents or punches a
hole in the board;

 

d.         buckling, warping or bowing of Siding in excess of 1⁄4”
between studs spaced not more than 16” inches on center and 5/8” between studs
spaced more than 16” and not more than 24” on center.  Waviness or apparent warping, buckling or bowing of Siding is not
considered to constitute Damage if such is due to the Siding conforming to the
curvature of misaligned framing;

 

e.         wax bleed, raised or popped fibers or fiber bundles, where
the condition exists on more than 20% of the exposed board surface and, in the
case of 

 

6

wax bleed, where the Siding
in question was painted within two years of the date of the claim.  “Wax Bleed” does not include paint
discoloration;

 

f.         delaminated
or cracked primer or primer peel, or peeling, blistering, flaking, chipping,
cracking or other loss of adhesion of the original factory finish;

 

g.        separation
of the Fusion Finish(TM) overlay from the substrate.

 

Damage does not include (i) intentional, reckless or negligent
physical damage to Siding (unrelated to installation or maintenance or weather)
caused directly or indirectly by a Claimant or other Person; or
(ii) conditions requiring routine painting, washing, caulking or similar
maintenance; or (iii) damage to Siding to the extent resulting from
natural disaster including, but not limited to, fire, hurricane, flood,
earthquake, earth movement, or other similar force majeure events.

 

1.19     Damage
Payment

 

a.         With respect to Site
Built Structures, Damage Payment means the amount payable to Settlement
Class Members under this Settlement Agreement calculated in accordance with the
compensation formula A =[(CD) x (RC)]-D where A is the Damage Payment, CD is
the amount of Compensable Damage, RC is the Replacement Cost, and D is the
applicable Deductions.

 

b.       With respect to Mobile
Homes, Damage Payment means 50% of the applicable Replacement Cost times
the number of panels on the mobile home evidencing Damage without any other Age
or Non-Painting Deduction.

 

c.         All Damage Payments
shall be in the amounts and paid at the times provided in this Settlement
Agreement calculated in strict accordance with the provisions of this
Agreement; provided that the payments to Settlement Class Members who file a
Claim for Unreimbursed Repair shall not exceed the lesser of the reasonable and
properly documented out-of-pocket costs of the repairs or replacements or the
amount that would have been awarded under the compensation formula; and
provided, further that any amounts payable under this compensation formula
shall be reduced by any compensation received by the Settlement Class Member on
account of such Damaged Siding from any other source, including but not limited
to Defendants, builders, developers, contractors, manufacturers, wholesalers,
retailers or insurers, but only to the extent that the sum of such other
payments and the Damage Payment exceeds the 

 

7

product of Replacement Cost
multiplied times the total square footage of the Siding that has sustained
Damage.

 

d.        If any portion of a
piece of lap or panel Siding has sustained both Excluded Damage and Compensable
Damage, the entire surface area of that lap board or panel Siding will be
deemed to be Compensable Damage in calculating the Damage Payment.

 

e.         Compensable Damage to
any Siding, the production of which has been discontinued or is discontinued
before or during the Term of this Agreement and for which there is no
reasonably appropriate substitute, shall be entitled to payment as
follows:  (i) if 30% or more of any
Side of a Property has sustained Compensable Damage, then the Compensation
Formula shall include all of the remaining Siding on that Side as Compensable
Damage; or (ii) if 40% or more of the Siding on the entire Property has
sustained Compensable Damage, then the Compensation Formula shall include all
of the remaining Siding on the Property as Compensable Damage. The Parties
agree that no reasonable substitute exists to match the following list of
currently discontinued profiles: 
4” OC Fir, Redwood Panel, 9” Plain Beaded, Band Sawn Lap, System 25
Great Random Shake, Textured Panel, and Bevelside-4 Fir.

 

1.20     Date of
the Claim means the date on which a properly documented Claim
under this Settlement Agreement is postmarked when mailed first class,
registered or certified mail, postage prepaid and properly addressed to the
Claims Office, or when delivered to any commercial one or two-day delivery
service, if properly addressed to the Claims Office, or when actually received
by the Claims Office, whichever is first.

 

1.21     Date of
Installation means the date or approximate date that Hardboard
Siding was installed on the Property of a Settlement Class Member.  With respect to Siding originally installed
on a newly constructed Property, in the absence of other reasonable
documentation indicating a different installation date, the Date of
Installation will be presumed to be the later of the date of
(a) manufacture as identified by any stamp on the back of Claimant’s
sample submitted with a Claim or otherwise identified by a stamp on the back of
Claimant’s Siding, (b) the certificate of occupancy, (c) the first
purchase of the newly constructed Property having such Siding installed, or (d)
with respect to Mobile Homes, the date of the original bill of sale.

 

1.22     Deductions, as they relate
to Site Built Structures, means the following:

 

a.          Age Deduction

 

8

 

i.           No deduction for the
first year following the Date of Installation;

 

ii.          4% per year
thereafter.

 

b.         Non-Painting Deduction

 

i.           No deduction for the
first five years following the Date of Installation;

 

ii.          No deduction if
Siding was repainted within five years from Date of Installation and at least
once each five years thereafter;

 

iii.        If Siding is not
painted within five years from Date of Installation, 4% per year commencing at
the end of the fifth year from the Date of Installation until the earlier of
(a) the date painted; or (b) the Date of the Claim;

 

iv.        If Siding is not
painted within seven years from Date of Installation, 4% per year commencing at
the end of the fifth year from the Date of Installation until painted and an
additional 1% per year commencing at the end of the seventh year from the Date
of Installation until the earlier of (a) the date painted; or (b) the Date of
the Claim;

 

v.         If the Siding has been
painted since the Date of Installation, 4% for each year from the end of the
fifth year following the previous painting until the earlier of (a) the date
painted; or (b) the Date of the Claim.

 

vi.        The Non-Painting
Deduction shall be suspended as of the date the Damage occurs (but not as to
any later, unrelated Damage) provided that the fact such Damage occurred on
such date is verified by the filing of an earlier warranty, insurance or other
claim, an independent inspection, or other evidence which reasonably
establishes the fact and amount of such Damage.

 

c. The Age Deduction and the Non-Painting Deduction applicable to a
Claim for an Unreimbursed Repair shall be calculated as of the date the repair
was commenced.

 

d. The Age Deduction and Non-Painting Deduction applicable to a Prior
Claim shall be calculated only to the date the Prior Claim was submitted to the
Defendants.

 

1.23     Defendants means the
Abitibi Defendants and the ABT Defendants.

 

1.24     Eligible
Claimant means a Settlement Class Member who timely submits
a Claim under this Settlement Agreement and substantially complies with the
requirement to 

 

9

 

supply all information and materials required
by this Settlement Agreement in support of his or her Claim, and who meets any
of the following requirements:

 

a.         a current owner of
Property on the Initial Notice Date; or

 

b.         a current or former
owner of Property on the Initial Notice Date who incurred an Unreimbursed
Repair Cost; or

 

c.         a current or former
owner of Property on the Initial Notice Date who made a Prior Claim (regardless
of whether such owner signed or executed a release of claims except as provided
in 1.50(b) where legal proceedings have been initiated); or

 

d.         the current owner of
Property who is a successor-in-interest or other proper assignee of any former
owner of the Property who incurred an Unreimbursed Repair Cost or made a Prior
Claim.

 

e.         Eligible Claimants may
appoint a designated agent (e.g., an attorney or a contractor) to assist or
represent him/her in connection with the filing of a Claim provided that,
except as provided in paragraph 1.24(d), the Claim may only be filed by and in
the name of the Eligible Claimant and may not be assigned to a third party for
collection or otherwise.

 

1.25     Enhanced
Warranty means the new 25-year Enhanced Warranty attached to
this Settlement Agreement as Exhibit D.

 

1.26     Excluded
Damage on Site Built Structures means Damage which is
excluded from the calculation of Compensable Damage occurring on Site-Built
Structures, as follows:

 

a.          Buckling of any piece of Hardboard Siding

 

i.          that is attached to
studs that are placed more than 24” on center or, in the case of 7/16” lap
siding, that is attached to studs that are placed more than 16” on center? or

 

ii.         that is not in contact
with the stud or sheathing at the point where there are missing nails or where
nails do not penetrate into the studs.

 

b.         Deterioration occurring on any piece of
Hardboard Siding that is:

 

i.           installed within 6”
from the ground or within 1” from hardscape (e.g., driveways, patios,
sidewalks);

 

10

 

ii.         installed at roof/wall
intersections and which has less than a 1” cut back between the intersections;

 

iii.        in direct contact with
un-flashed masonry and concrete surfaces;

 

iv.        within 8” around the
perimeter of windows, doors and other openings;

 

v.         within 12” from the
roof line on the backside of chimney chases that do not have a “cricket” or
“saddle” to direct water flow away from the chimney.

 

c.          Excluded Damage also includes:

 

i.          all Damage that is
readily observable and that is horizontal or runs downward from and is
continuous with and originates exclusively from the Excluded Damage.  (Any doubts as to whether Damage is
continuous with and originates exclusively from Excluded Damage shall be
resolved in favor of the Claimant.); or

 

ii.         any Damage to
Hardboard Siding that is not used on the structure as Siding (e.g., Siding that
is ripped and used as trim or band board).

 

1.27     Fairness
Hearing means the settlement approval hearing(s) to be conducted by the Court
in connection with the determination of the fairness, adequacy and
reasonableness of this Agreement in accordance with Ala. R. Civ. P. 23(e).

 

1.28     Field Inspection Report
means the report, in a form to be mutually agreed upon by the Parties, to be
completed by the Independent Inspector firm when conducting an inspection of a
Property.

 

1.29     Final Order and Judgment
means the Order to be entered by the Court, in a form that is mutually
agreeable to the Parties, approving this Agreement as fair, adequate and
reasonable and in the best interests of the Class as a whole in accordance with
Ala. R. Civ. P. 23(e), and making such other findings and determinations as are
necessary and appropriate to effectuate the terms of this Agreement.

 

1.30     Hardboard Siding or
Siding means lap or panel
hardboard siding manufactured by the Abitibi Defendants between December 22,
1969 and October 19, 1992, and by the ABT Defendants since October 20, 1992, at
the manufacturing facility in Roaring River, North

 

11

 

Carolina,
and which was installed on a Property prior to the Initial Notice Date.  The capitalized terms Hardboard Siding and
Siding as used herein include only hardboard forms of siding, and do not
include siding manufactured from plywood, T-111, vinyl, fiber-cement or other
materials or processes, nor do those terms include hardboard siding
manufactured by the Defendants at any manufacturing facilities other than the
Roaring River, North Carolina manufacturing plant.

 

1.31     Independent
Inspector means the firm(s) or person(s) retained by mutual
agreement of the Parties, with the approval of the Court, to inspect Properties
in accordance with the terms of this Agreement.

 

1.32     Initial
Notice Date means the first date upon which the Notice of
Proposed Class Action Settlement is either mailed to the Settlement Class
Members or published pursuant to the Notice Plan approved by the Court.

 

1.33     Mobile
Home means a structure meeting all of the following requirements:  (a) that is built in a manufacturing
facility that is designed to fabricate and assemble family dwellings; (b) that
have Vehicle Identification Numbers (VIN), (c) that are sided predominately (more
than 50%) with panel Siding, and (d) that subsequent to their manufacture, are
transported to a remote location for final installation.  Manufactured homes (such as modular homes)
that do not meet these criteria are considered Site-Built Homes but may elect
to be treated as Mobile Homes if they are sided predominantly with panel
siding.  Any such election must be made
at the time the Claimant submits his or her Claim Form.

 

1.34     Notice
Administrator means the firm(s) hired to implement the Notice
Plan.

 

1.35     Notice
of Proposed Class Action Settlement means the Court-approved
Notice to Class Members of Proposed Settlement in the form attached as
Exhibit E to this Agreement and any additional notices agreed to by the
Parties that may be ordered by the Court.

 

1.36     Notice
Plan means the plan and schedule for providing class-wide notice of the
Settlement and certification of the Settlement Class, including the Notice of
Proposed Class Action Settlement and summary forms of notice, all as more
particularly described in Exhibit F hereto.

 

12

 

1.37     Opt-Out
Period means the period between May 8, 2000, and July 31, 2000.

 

1.38     Parties means
Plaintiffs, the Settlement Class and the Defendants.

 

1.39     Person means any
individual or legal entity.

 

1.40     Plaintiffs means the
individuals acting as named representative Plaintiffs in this Action.

 

1.41     Plaintiffs’
Class Counsel or Class Counsel includes Plaintiffs’
Co-Lead Class Counsel, and the following additional attorneys:  Daniel Berger, Berger Law Firm, 912 Frick
Building, 437 Grant Street, Pittsburgh, Pennsylvania 15219;
William H. Garvin, III of Weller, Green, Toups, & Terrell, 2937 Kerry
Forest Parkway, Suite A-2, Tallahassee, Florida 32308; Kenneth Gilman of Gilman
& Pastor, One Boston Place, 28th Floor, Boston, Massachusetts 02108;
Garrett M. Hodes of Humphrey, Farrington & McClain, P.C., 221 West
Lexington, Suite 400, P.O. Box 900, Independence, Missouri 64051; Clinton
Krislov of Krislov & Associates, Ltd., Suite 810, 222 North LaSalle Street,
Chicago, Illinois 60601-1086; Jonathan Nachsin of Law Offices of Jonathan
Nachsin, 200 North LaSalle Street, Suite 2100, Chicago, Illinois
60601-1095; Ellen M. Doyle of Malakoff, Doyle & Finberg, PC, The Frick
Building, Suite 200, Pittsburgh, Pennsylvania 15219, Beverly C. Moore, Jr.
of Moore & Brown, 4900 Massachusetts Avenue, N.W., Suite 230,
Washington, D.C. 20016, and Steve Toll of Cohen, Milstein, Hausfeld & Toll,
999 Third Avenue, Suite 3600, Seattle, Washington 98104.

 

1.42     Plaintiffs’
Co-Lead Class Counsel or Co-Lead Class Counsel means the following
counsel:

 

	
  Charles R. Watkins

  SUSMAN
  & WATKINS

  Two First National Plaza

  Suite 600

  Chicago, Illinois 60603

  	
   

  	
  John W. Sharbrough, III

  M. Stephen Dampier 

  THE
  SHARBROUGH LAW FIRM, LLC

  P.O. Box 996 

  Mobile, Alabama 36601

   

  
	
   

  	
   

  	
   

  
	
   

  David J. Guin

  DONALDSON,
  GUIN & SLATE, LLC

  2900 Highway 280

  Suite 230

  Birmingham, Alabama 35223

  	
   

  	
   

  Steven A. Martino

  JACKSON,
  TAYLOR & MARTINO, P.C.

  P.O. Box 894

  Mobile, Alabama 36601-0894

  

 

13

 

SPECIAL COUNSEL FOR MOBILE HOME OWNERS:

 

Justin
O’Toole Lucey

JUSTIN O’TOOLE LUCEY, P.A.

415
Mill Street

Mt.
Pleasant, South Carolina 29464

 

1.43     Preliminary
Approval means the Court’s Order, substantially in the form
of Exhibit G hereto, certifying the Settlement Class, granting preliminary
approval of this Agreement and approving the Notice Plan.

 

1.44     Prior
Claim means a claim or request submitted to the Defendants, or any of them,
for compensation or reimbursement because of damage to Siding (whether or not in
the form of a warranty claim) prior to the date of the entry of the Final Order
and Judgment.  A Prior Claim does not
include a legal proceeding described in 1.50(b).

 

1.45     Property or Properties means any structure including
homes (whether a Mobile Home or a Site-Built Structure), garages, outbuildings,
town houses, condominiums, apartments, commercial or industrial structures, and
other types of buildings or structures onto which Siding is currently installed
or on which an Unreimbursed Repair was performed, except for fences and
detached structures not used for garages with a floor area of less than
65 square feet.

 

1.46     Releasees means
Defendants, including their successors, parents, subsidiaries, divisions, or
affiliates, and their officers, directors, stockholders, partners, agents,
servants, successors, subrogees and assigns and their respective insurers.

 

1.47     Releasing
Parties means all Settlement Class Members who have not timely opted out of
the Settlement Class, on behalf of themselves and any Person(s) claiming by or
through them.

 

1.48     Replacement
Cost means the average cost per square foot of surface area of Siding in
the State where the Property is located, as agreed upon by the Parties with
reference to current R.S. Means Co. data, including all materials, labor and
incidental costs as required to remove, replace and repair Siding panels or
boards that have sustained Damage (including an

 

14

 

appropriate
adjustment for waste and overlap) with new Siding and to repaint and otherwise
restore the exterior of the Property to the extent reasonably necessary to make
the repair cosmetically acceptable and in conformity with good building
practices and all applicable laws, building codes, and zoning regulations.  The initial Replacement Cost for each State
has been determined by R.S. Means Co. as set forth in Exhibit H attached
to this Agreement.  The initial
Replacement Cost shall be adjusted annually on or about each anniversary of the
execution of this Agreement in accordance with a mutually agreeable formula
that takes into account increases and reductions, if any, in the cost of any of
its elements.  The cost actually
incurred to obtain permits for Siding repair or replacement work conducted in
conjunction with this Agreement also shall be reimbursed by Defendants to
Eligible Claimants - up to a maximum amount of $100 each - upon presentation of
proof of the expenditure.

 

1.49     Settled
Claim means every claim, action, cause of action, liability, right, demand,
suit, matter, obligation, damage, loss or cost, including consequential damages
to Property or Properties and any claim for other damages, losses or costs, of
every kind and description, that the Releasing Parties now have, have had in
the past or may have in the future against any of the Defendants arising out of
the subject matter of the Action, whether known or unknown, asserted or
unasserted, which if known to the Releasing Parties would have materially
affected their Settlement with the Releasees and which accrue or have accrued
as a result of having Defendants’ Hardboard Siding on the Releasing Parties’
Property.  Without limiting the scope of
the foregoing, “Settled Claims” shall include:

 

a.         property damage to
Class Members’ Siding or to the structure on which the Siding is installed or
to any surrounding property;

 

b.         any claim for breach or
violation of or for benefits conferred by any federal, state, common or other
law or statute, regulation or ordinance;

 

c.         any claim for breach of
any duty imposed by law, by contract or otherwise, including without limitation
breach of warranty express or implied or other contract, promissory or
equitable estoppel or principles of unjust enrichment;

 

15

 

d.         any claim based on
principles of tort law or other kind of liability, including without
limitation, those based on principles of strict product liability, negligence,
reliance, racketeering, fraud, conspiracy, concerted action aiding and
abetting, veil-piercing liability, alter-ego or successor liability, consumer
fraud, negligent misrepresentation, intentional misrepresentation, or other
direct or derivative liability;

 

e.         any claim related to
alleged defects or inadequacies in the design, manufacture, advertising,
product literature, sale, distribution or marketing of Hardboard Siding;

 

f.          any claim for
declaratory or injunctive relief associated with the above;

 

g.         any claim for
diminution in value of or consequential or collateral damage including, but not
limited to, claimed damage to the Siding or to any component of the structure
on which the Siding is installed or to any surrounding property;

 

h.         any claim for emotional
damages, mental anguish, or similar claim arising out of Damage to the Siding
or because of the installation of the Siding on the Property; and

 

i.          any claim for
penalties, punitive damages, exemplary damages, or any claim for damages based
upon a multiplication of compensatory damages associated with the above.

 

“Settled Claims” shall not include (a) any claim for bodily injury
(including wrongful death); or (b) claims for pain and suffering,
emotional distress, mental anguish, or similar injuries associated with such
bodily injury to the extent allowed by law; or (c) subject to Section 13.2,
claims against parties who are not Releasees under the terms of this Settlement
Agreement.

 

1.50     Settlement
Class or Class is a class
composed of all Persons who own or formerly owned Property in the United States
or its Territories on which Hardboard Siding has been installed at any time
after May 15, 1975 and before May 15, 2000, except:

 

a.         All Persons who, in
accordance with the terms of this Agreement, properly execute and timely file
during the Opt-Out Period a request for exclusion from the Settlement Class;

 

b.         All Persons represented
by counsel who, individually or as members of a class, initiated against
Defendants, or any of them, legal proceedings that were resolved prior to the
Initial Notice Date by settlement, judgment, 

 

16

release, dismissal or other
final disposition resulting in the termination of the proceedings against the
Defendant.

 

1.51     Settlement
Class Member or Class Member means a member of the
Settlement Class.

 

1.52     Settlement
Date means the date on which all of the following have occurred:  (a) the entry of the Final Order and
Judgment without material modification, and (b) finality for the Final
Order and Judgment by virtue of that order having become final and non-appealable
through (i) the expiration of all allowable appeal periods without an
appeal having been filed; (ii) final affirmance of the Final Order and
Judgment on appeal or final dismissal or denial of all such appeals, including
petitions for review, rehearing or certiorari.

 

1.53     Side of a Property
means all exterior Hardboard Siding-surfaced areas of a Property facing the
same direction.

 

1.54     Site-Built
Structures or Site-Built
Homes means all Properties built on-site and also includes any other
Property subject to this Settlement Agreement except for Mobile Homes.

 

1.55     Unreimbursed
Repair Costs or Prior
Unreimbursed Repair means the properly documented out-of-pocket
expenses reasonably incurred by an Eligible Claimant to repair or replace
Hardboard Siding that had sustained Compensable Damage.

 

2.         CERTIFICATION
OF SETTLEMENT CLASS

 

2.1       The Parties to this Agreement agree for settlement purposes
only that this Action shall be certified and proceed as a class action under
Ala. R. Civ. P. 23(b)(3), consisting of all members of the Settlement Class,
with the named Plaintiffs as the Settlement Class representatives and
Plaintiffs’ Class Counsel as counsel for the Settlement Class.

 

3.         SUBMISSION
FOR PRELIMINARY APPROVAL

 

3.1       As soon as practicable after execution of this Agreement, the
Parties shall jointly submit this Agreement, through their respective
attorneys, to the Court for Preliminary Approval.

 

17

 

4.         ADMINISTRATIVE
EXPENSES OF SETTLEMENT

 

4.1       In addition to their obligation to timely make Damage
Payments, Defendants shall pay all Administrative Expenses incurred in
connection with the Settlement, including but not limited to each of the
following:

 

a.         The reasonable costs
and expenses incurred by the Notice Administrator in connection with the
preparation and execution of the Notice Plan, in the manner and to the extent
described in Paragraph 14.1, below;

 

b.         The reasonable costs
and expenses incurred by the Independent Inspector firm in the manner and to
the extent described in Paragraph 6 below;

 

c.         All costs and expenses
incurred in connection with the establishment, implementation and
administration of the Settlement Agreement;

 

d.         All costs and expenses
incurred in connection with the Defendants’ obligation under Paragraph 7.2 to
provide copies of the Owner Maintenance Instructions and the Owner’s
Installation Check List to Property owners;

 

e.         The amounts approved by
the Court as reasonable Attorneys’ Fees and Expenses, in the manner and to the
extent described in Paragraph 14.3, below; and

 

f.          Any Court-approved
incentive award to be paid to the Settlement Class Representatives, in the
manner and to the extent described in Paragraph 14.4, below.

 

4.2       Defendants shall have thirty (30) days from the actual receipt
of any demand for payment by the Notice Administrator and/or Independent
Inspector within which to object to the demand, or any portion thereof, or to
the reasonableness of any cost, charge or expense included therein.  If such a challenge is made, Defendants
shall promptly pay the portion of the expense, if any, to which it has no
objection and attempt to resolve any differences that remain with the
assistance of Class Counsel.  If Class
Counsel, Defendants and any involved third parties are unable to resolve the
dispute, the same shall be submitted to the Court in the Action for final and
binding resolution.  Defendants shall be
deemed to have waived any objection to a claim for payment that is not made
within thirty (30) days of its receipt.

 

18

 

4.4       Payments to Eligible Claimants under the Settlement Agreement
shall be made as provided in Paragraph 5.

 

5.         SETTLEMENT
AGREEMENT AND CLAIMS ADMINISTRATION PROGRAM

 

5.1       Before the Initial Notice Date, the Notice Administrator shall
establish and staff a telephone system in a manner reasonably agreeable to the
Parties to answer a toll-free telephone number established to respond to
inquiries by Settlement Class Members regarding the settlement and/or the Settlement
Agreement.  The telephone system will be
designed so as to prevent placing callers on hold for inordinate amounts of
time.  The Notice Plan shall direct
Persons who believe they may be Settlement Class Members to call the toll-free
number to request a Class Notice and Claim Forms, or to obtain the Class Notice
and Claim Forms from an Internet web site, which also shall be established no
later than the Initial Notice Date.

 

5.2       Promptly following the execution of this Agreement, Defendants
shall establish, to the reasonable satisfaction of Class Counsel, a properly
staffed and equipped Claims Office to process in a timely way all Claims under
the Settlement Agreement and to coordinate with the Notice Administrator the
establishment and operation of the toll-free number, the Internet web site, and
the dissemination of the Class Notice and related press releases and press kits
as called for by the Notice Plan. 
Defendants shall maintain such a Claims Office for so long as necessary
to process all Claims filed under the Settlement Agreement.

 

5.3       In the event Settlement Class Members contact Defendants
regarding a potential warranty claim, or otherwise without apparent knowledge
of this Settlement Agreement, Defendants shall promptly reply to any communications
or inquiries from such Persons by advising them of this Settlement Agreement
and either provide them with a claim packet or with the toll-free telephone
number from which such claim packets may be obtained from the Notice
Administrator.  All Class Notice forms
and claims packets shall be sent to the requesting party by first class mail.

 

19

 

5.4       A computer database shall be established and maintained by the
Claims Office and the database shall collect and retain all information
necessary to determine the Claimant’s eligibility for participation in the
settlement and the disposition of the Claim. 
Plaintiffs’ Class Counsel shall be provided full access to the information
in this database.

 

5.5       An Eligible Claimant must properly complete and timely file a
Claim Form.  In order for the claims
office to initiate the processing of a Claim Form, Claimants must provide the
following basic information:

 

a.         name(s) of Claimant(s);

 

b.         mailing address;

 

c.         address of Property for
which a Claim is being submitted (if different from the mailing address);

 

d.         evidence that the
Claimant’s siding is Hardboard Siding manufactured by the Defendants, in one of
the forms delineated in Paragraph 5.6 below; and

 

e.         verification that the
Claimant is (or with respect to Claims involving a Prior Claim or a Claim for
Unreimbursed Repair, was) the owner of the Property (examples of sufficient
verification of property ownership include property tax bills for the current
year, deeds or deed of trust) or that the Claim has been properly assigned to
the Claimant.

 

5.6       When submitting a Claim Form, the Claimant must also provide
one of the forms of proof set forth in subparagraphs (a) through (e) that the
Claimant’s siding is Abitibi or ABT Siding, or in the alternative, a check in
accordance with subparagraph (f), below:

 

a.         a 2” x 2” square or 2”
diameter round sample of the Siding from the structure in question sufficient
to identify the Product as manufactured by Defendants; or

 

b.         a prior communication
from one of the Defendants (such as where a prior warranty claim was
considered) which acknowledges that the siding on the subject Property is
Abitibi or ABT Siding; or

 

c.         an invoice or warranty,
along with photographs of the exterior walls of the Property, that shows that
the siding on the Property is Abitibi or ABT Siding; or

 

20

 

d.         a photograph depicting
the back of the siding and showing the identifying stamp of the ABT or Abitibi
Defendants; or

 

e.         such other evidence
that reasonably identifies the Siding as ABT or Abitibi Siding.

 

f.          If the Claimant does
not provide one of the proofs of product identification described above, s/he
may have the product identified by sending to the Claims Office a check or
money order in the amount of $50 made payable to the Independent Inspector
firm.  In the event that the Independent
Inspector identifies the product as Abitibi/ABTco hardboard siding, the Inspector
shall proceed to inspect the property in accordance with the terms of Section
6, below, and the $50 shall be refunded to the Claimant with the payment of
his/her Claim.

 

Notwithstanding any other provisions of this paragraph, the requirement
of proof that the siding in question is Abitibi or ABT Siding is satisfied if
the Defendants’ records or warranty claims database confirm that the siding on
the subject property is Abitibi or ABT Siding.

 

5.7       Processing of each of the Claim Forms by the Claims Office
shall commence when the Claimant provides the Claims Office with the
information required by Paragraphs 5.5 and 5.6, above.  The Claims Office shall advise any Claimant
who fails to submit information required by the Claim Form, including the
information specified in Paragraphs 5.5 and 5.6, of the respects in which the
Claim Form is incomplete and request the Claimant to supply the missing
information.  Any request by the Claims
Office must be in writing and mailed to the Claimant by first class mail within
forty-five (45) days after the receipt of the Claim Form; if no such request is
made, processing of the Claim Form shall commence prior to the expiration of
the 45 day period; provided, that no Claim will be eligible for payment until
the information required by Paragraphs 5.5 and 5.6 has been supplied.

 

5.8       If a request for information described in Paragraphs 5.5, 5.6
and 5.7 is timely made by the Claims Office but not complied with by the
Claimant within one hundred and eighty (180) days after the mailing of such
request, absent reasonable justification for the delay, the Claim may be denied
by written notice to the Claimant, without prejudice to the right of the
Claimant to file within the Claim Period an additional Claim for the same or
different Damage.

 

21

 

The
filing date for the subsequent Claim, if any, will not relate back to the date
of the earlier Claim; provided, that the Non-Painting Deduction, if any,
applicable to such Claim shall be governed by Paragraph 1.22(b)(vi).

 

5.9       All Claimants with Compensable Damage to Hardboard Siding
shall be paid in accordance with the Damage Payment calculation provided for in
this Settlement Agreement, without regard to contrary requirements that may
have been set forth in any prior warranty applicable to such Siding and without
regard to any legal or factual defenses Defendants might have been able to
assert to such payment in the absence of this Agreement.  In this regard, and for purposes of this
Settlement Agreement only, Defendants specifically waive as to the Settlement
Class Members all legal and factual defenses that might have been asserted
against such claim, including without limitation, defenses asserting a lack of
causation, intervening or superseding cause, lack of privity, lack of reliance,
the “economic loss” rule, contributory negligence, assumption of risk, failure
to make timely demand, that the express warranty was not the “basis of the
bargain,” or because of a statute of limitations or repose.

 

5.10     Defendants may make one offer of settlement to a Claimant (the
“Accelerated Payment Offer”) for each Claim submitted.  For the first six (6) months after the
Fairness Hearing, the Defendants shall have a reasonable period of time (not to
exceed 45 days) after a substantially complete Claim Form is received by the
Claims Office in which to make the Accelerated Payment Offer.  After that six-month period, Defendants
shall have thirty (30) days after a substantially complete Claim Form is
received by the Claims Office in which to make the Accelerated Payment
Offer.  For purposes of deciding whether
they will make such an offer, Defendants may evaluate the Claim by making a
single visit to the Property at such reasonable time as may be agreed to by the
Claimant to obtain additional details about his or her Claim.  After such review and evaluation, and in
their sole discretion, Defendants may elect to make a written settlement offer
to Claimant to resolve the Claim without resort to the independent inspection
procedure under Section 6, below.  Any
written offer under Paragraph 5.10 or 5.11 shall include the Accelerated
Payment check and shall be communicated to Claimant in 

 

22

substantially the forms attached as
Exhibit I and Exhibit J and shall include a detailed explanation of
the basis for and calculation of the Accelerated Payment Offer.

 

5.11     If the amount of the Damage Payment under this Settlement
Agreement reasonably can be determined from the information presented to the
Defendants in the Claim Form, or if the Defendants inspect the property of the
Claimant, the Accelerated Payment Offer shall be calculated on the same basis
as the Damage Payment that would otherwise be due under this Settlement
Agreement.  If the amount of the Damage
Payment cannot reasonably be calculated from such information, the amount of
the Accelerated Payment Offer shall be set by the Defendants in good faith,
applying the compensation principles set forth in this Settlement Agreement.

 

5.12     Any Claimant who receives an Accelerated Payment Offer shall
have forty-five (45) days after its receipt to decline the offer.  Any Claimant who deposits or cashes an
Accelerated Payment check shall have the unilateral right, for an additional
period of thirty (30) days after depositing or cashing the Accelerated Payment
check, to revoke his or her acceptance by returning the amount of the check and
electing in writing to have his or her Claim inspected, processed and
determined under Section 6, below.  If a
Claimant does not decline an Accelerated Payment Offer within forty-five (45)
days after its receipt, the Accelerated Payment Offer shall be deemed accepted;
provided, however, if the Claimant was absent from the Property or did not
receive the check or Accelerated Payment Offer or failed to return the amount
of the check due to mistake or excusable neglect, the forty-five day revocation
period shall run from the date the Claimant returns to the Property, receives
the check, or discovers the mistake, whichever is sooner.

 

5.13     Class Counsel, including their experts, consultants or agents,
shall be allowed reasonable access to review the records of Defendants that
pertain to the Accelerated Payment Offers. 
If at any time Class Counsel are not reasonably satisfied that
Defendants have implemented and are administering the process for the
Accelerated Payment Offers in conformance with this Agreement, Class Counsel
shall advise Defendants of their concerns. 
If

 

23

 

Defendants
fail to satisfy these concerns, Class Counsel may, at their sole discretion,
bring the matter to the attention of the Court by noticed motion.  In its discretion, the Court may conduct a
hearing on any objections raised by Class Counsel, and if the Court finds that
Defendants’ have failed to implement the Accelerated Payment Offer process in
good faith, the Court may provide such relief as it deems proper under the
circumstances, including the revocation of the Accelerated Payment Offer
process.

 

5.14     All Claims that are not resolved by an Accelerated Payment Offer
shall be inspected by the Independent Inspector in accordance with the
provisions of Paragraph 6, below.

 

5.15     Claims shall be processed and paid in a reasonably prompt
manner, substantially in the order in which they are received; provided,
however, that priority may be given to Claimants who have listed, posted or
advertised their Property for sale and priority shall be given to Claimants who
are experiencing water intrusion into their homes which they have contracted to
repair.  The Claims Office shall
calculate the Damage Payment due Eligible Claimants in accordance with the
terms of this Settlement Agreement and shall make such payments directly to
Eligible Claimants or their assignees. 
The amount of such Damage Payments shall be entered into the Claims
Office’s computer data system.  Upon
written request by Class Counsel, a listing of such payments shall be provided
to Plaintiffs’ Class Counsel no less frequently than quarterly.

 

5.16     Any Damage Payment made on the basis of the results of the
inspection of the Independent Inspector in an amount greater than five-hundred
dollars ($500) shall be made in two installments.  The first installment shall be in an amount equal to eighty
percent (80%) of the total Damage Payment and it shall be paid at the time the
Claimant is advised of the amount of his or her Compensable Damage as
determined by the Independent Inspector’s inspection.  The second installment equal to the remaining twenty percent
(20%) shall be paid promptly upon the Claimant’s submission to the Claims
Office of satisfactory evidence of the Claimant’s purchase of any type of
replacement siding or other exterior wall cladding to repair the areas of
Compensable Damage to the Claimant’s Property or other evidence that repairs
have been made.

 

24

 

5.17     Any person who acquires Property from a Class Member after the
Initial Notice Date may, if he or she so elects, succeed to all the rights and
obligations of the Class Member under this Settlement Agreement.

 

5.18     All forms of notice, claims, claim denial, etc. used by the
Defendants to explain the rights of Class Members under the Settlement shall be
communicated in a timely manner, shall be clear, drafted in “plain English” and
approved in advance by Co-Lead Class Counsel.

 

5.19     Any Eligible Claimant who suffers additional Damage to his/her
Hardboard Siding that has not already been the subject of a Claim hereunder may
submit up to five additional Claims within the Settlement Agreement Claim
Period, not to exceed one every twelve months; provided, however, that
Defendants shall not be obligated to pay more than once for Damaged Siding for
which a Claimant previously has been compensated.

 

6.         INDEPENDENT
INSPECTION

 

6.1       The Property of any Eligible Claimant filing a Claim that is
not satisfied by an Accelerated Payment Offer shall be inspected by the
Independent Inspector and the Damage Payment shall be calculated and the Claim
shall be paid in accordance with the results of that inspection.  The Claims Office shall request an
inspection of the Claimant’s Property by the Independent Inspector within the
earlier of fourteen (14) days following a Claimant’s rejection of an
Accelerated Payment Offer, or, if an Accelerated Payment Offer is not made,
forty-five (45) days after a substantially complete Claim Form is received by
the Claims Office; and the inspection shall occur as soon thereafter as
reasonably practicable.  The Independent
Inspector will use its best efforts to ensure that inspections occur within
forty-five (45) days after being requested by the Claims Office to conduct an
inspection.

 

6.2       In making the inspection, the sole duties of the Independent
Inspector shall be: (a) to verify that the Claimant’s siding is Hardboard
Siding if requested to do so pursuant to Paragraph 5.6(f) or by Defendants (at
their expense); (b) to calculate and record the amount of Damage and Excluded
Damage on the Site Built Structures and the number of panels on Mobile

 

25

 

Homes
evidencing Damage; and (c) to report his or her findings to Claims Office.  The Independent Inspector shall not be made
aware of the existence and terms of any Accelerated Payment Offer made to the
Claimant.  The findings of the
Independent Inspector shall be made in writing in the Field Inspection Report,
which shall be mailed or otherwise transmitted to the Claims Office within ten
(10) business days following the completion of the inspection.

 

6.3       If Defendants do not make an Accelerated Payment Offer, the
Defendants shall pay the cost of inspection. 
If Defendants do make an Accelerated Payment Offer which is rejected by
Claimant, the cost of the Independent Inspection also shall be borne by
Defendants unless the amount of the Accelerated Payment Offer exceeds the
Damage Payment, in which case the inspection fee shall be borne by the Claimant
up to a maximum of $150 and deducted from the Damage Payment.

 

6.4       Within thirty (30) days of receipt of the Independent
Inspector’s Field Inspection Report, the Claims Office shall send to the
Claimant a check for the first installment of the Damage Payment due under
paragraph 5.16, calculated in accordance with the results of the Independent
Inspection, a copy of the Field Inspection Report and an explanation of the
calculation of the Damage Payment and the Claimant’s rights with respect
thereto.

 

6.5       If a Claimant is dissatisfied with the determinations made by
the first Independent Inspector, the Claimant may request a second independent
inspection by so notifying the Claims Office. 
The notification must be in writing and postmarked no later than thirty
(30) days following the Claimant’s receipt of the first installment Damage
Payment check or written denial of the Claim, and the Claimant must return the
Damage Payment check to the Claims Office with the notification.  If the check was for less than $150, the
Claimant must also send a check made payable to the Claims Office for the
difference between the Damage Payment and $150 (the amount of the inspection
fee for which Claimant is responsible). 
Promptly upon its receipt of a timely objection and check from the
Claimant, the Claims Office shall order a second inspection of the Claimant’s
Property.  The second inspection shall
be conducted by a different individual 

 

26

inspector from the Independent Inspection
firm, and the second inspector shall not be made aware of the existence or
results of the first inspection.

 

6.6       If a Claimant requests a second inspection, his or her Damage
Payment will be calculated on the basis of the results of whichever of the two
inspections results in the greater award. 
The Damage Payment will be reduced by the amount of the second inspection
fee unless the Second Inspection results in a payment to the Claimant that is
25% or more greater than the payment that was calculated on the basis of the
original Independent Inspection, in which event the amount of the second
inspection fee will be refunded to the Claimant or will not be deducted from
the Damage Payment, as appropriate.

 

6.7       In the event any Party reasonably believes that any of the
Independent Inspectors are not properly applying any of the terms of Paragraph
6 (including the inspection protocol attached as Exhibit K), or in the event
there is a question about the application of the terms of this Agreement by any
of the Independent Inspectors, then: (a) the objecting Party’s counsel shall
notify counsel for the other Parties to this Agreement in writing of the
concern; (b) Plaintiffs’ Co-Lead Class Counsel and counsel for Defendants shall
confer within thirty (30) days of receipt of the written notification to try to
resolve the concern; and (c) in the event Plaintiffs’ Co-Lead Counsel and
counsel for Defendants cannot resolve the concern, then the dispute shall be
submitted to the Court or other third party mutually agreeable to the Parties
for resolution.

 

7.         ENHANCED
WARRANTY FOR LATER PURCHASERS; ADDITIONAL EFFORTS TO PROVIDE INSTALLATION AND
MAINTENANCE INSTRUCTIONS TO PROPERTY OWNERS

 

7.1       As part of this Settlement Agreement, upon the entry of the
Final Order and Judgment in this Action, the ABT Defendants agree to provide
the Enhanced Warranty to any person who installs the Hardboard Siding within
two (2) years after the Initial Notice Date in a form substantially equivalent
to the Enhanced Warranty attached hereto as Exhibit D, provided 

 

27

that the terms of such Enhanced Warranty may
be changed within such two (2) year period in order to bring it into compliance
with any subsequent changes in federal or state law.

 

7.2       The ABT Defendants also agree to adopt and to make available
to each Class Member whose identity becomes known to them and to use their best
efforts to provide to each Person who installs Hardboard Siding within two (2)
years after the Initial Notice Date a copy of their Owner Maintenance
Instructions, Installation Instructions and Owner’s Installation Check List in
substantially the form attached hereto as Exhibits L, M and N.

 

7.3       As to any purchaser who purchases Hardboard Siding
manufactured by the ABT Defendants subsequent to the entry of the Initial
Notice Date, whether or not covered by the Settlement Agreement, the ABT
Defendants agree not to assert as a defense to any claim on account of damage
to such Siding that the Siding was improperly installed or maintained so long
as such Hardboard Siding was installed or maintained, as the case may be, in
compliance with the installation and maintenance instructions attached hereto;
provided, however, that such instructions may be changed to reflect changes in
good building practices in the area in which the Siding is installed.

 

8.         RIGHT
TO CONDUCT AUDITS

 

8.1       Plaintiff’s Co-Lead Class Counsel shall have the right to
audit the Defendants’ Accelerated Payment Offers.

 

8.2       Additionally, Plaintiffs’ Class Counsel may generally audit
the Defendants’ compliance with the terms of this Agreement.  In this connection, the Defendants’ shall
pay the costs and fees incurred by Class Counsel in performing such audits,
including the costs and fees charged by any consultants they may retain to
assist them, up to a maximum total cost for all such audits under paragraphs
8.1 and 8.2 of $40,000.  The timing of
any and all audits under this Paragraph 8.2 shall be at the sole discretion of
Plaintiffs’ Co-Lead Class Counsel, provided that the sole issue to be
considered in connection with any such audit is whether Defendants have properly
implemented and complied with the terms of this Settlement Agreement.

 

28

 

9.         NOTICE
OF PROPOSED CLASS ACTION SETTLEMENT

 

9.1       Upon Preliminary Approval, and as the Court may otherwise
direct, the Parties shall cause the Notice of Proposed Class Action Settlement
describing this proposed Settlement Agreement and the Fairness Hearing to be
provided to the members of the Settlement Class as provided in this Section and
in accordance with the Notice Plan or as otherwise approved or directed by the
Court.

 

9.2       The mailed Notice, in a form substantially in the form of
attached Exhibit E and approved by the Court, shall be mailed, first class
postage prepaid, to each member of the Class identified by the Parties through
reasonable efforts.  The Notice shall be
made available for distribution and publication in Spanish as well as English
where appropriate or upon request.

 

9.3       No later than the Initial Notice Date, the Notice
Administrator shall cause a nationwide toll-free telephone facility and
Internet website to be established, in accordance with Paragraph 11.1
below.  The telephone facility shall be
capable of (a) receiving requests for the long form of the Notice of
Proposed Class Action Settlement and other materials described in this Section;
(b) providing generalized information concerning deadlines for opt-outs,
proofs of claim, and presentations to the Court at the Fairness Hearing; and
(c)mailing the materials to Class Members as provided in this Paragraph.  The facility may, as reasonable and
appropriate under instructions from Plaintiffs’ Co-Lead Class Counsel, refer
individual inquiries to Plaintiffs’ Class Counsel for response.  The facility shall maintain records of all
mailings and such other information in such form and in such manner as
Plaintiffs’ Co-Lead Class Counsel and Defendants jointly direct.

 

9.4       The Notice of Proposed Class Action Settlement shall be mailed
to additional Settlement Class Members whose identities or addresses become
known during the term of the Agreement. 
The Notice of Proposed Class Action Settlement shall also be distributed
to such contractors, builders, distributors and mobile home manufacturers who
are reasonably determined by Defendants and/or Plaintiffs’ Class Counsel to
have been involved in the sale, distribution, installation or use of
Defendants’ Hardboard Siding.

 

29

 

10.       CLASS
MEMBERS’ RIGHT OF EXCLUSION; DEFENDANTS’ RIGHT OF TERMINATION

 

10.1     A Settlement Class Member may opt out of the Class during the
Opt-Out Period.  To exercise the opt-out
right set forth in this Paragraph, the Settlement Class Member must complete,
sign, and return a request for exclusion. 
The request must be signed by the Settlement Class Member and must state
the address of the Settlement Class Member’s Property(ies) on which Hardboard
Siding has been installed and the number of units of residential Property or
commercial structures clad with the Siding. 
Such request must be postmarked on or before the end of the Opt-Out
Period and sent to the Notice Administrator (who shall provide one copy of the
opt-out notice to Co-Lead Class Counsel and one copy to Defendants).  Any Settlement Class Member who elects to
opt out of the Settlement Class pursuant to this Paragraph shall not be
entitled to relief under or be affected by this Agreement or the Settlement
Agreement.  Class Counsel may contact
opt-outs to assure that the opt-outs understand the effect of their election.

 

10.2     To the extent that the statutes of limitations and/or repose or
any defense of lapse of time are tolled by operation of law, they will continue
to be tolled as to any Class Member who opts out of the Settlement until ninety
(90) days after receipt of the request to opt out or for such longer period as
the law may provide without reference to this Agreement.

 

10.3     In the event that, in the sole discretion of the Defendants, the
number of Class Members requesting exclusion reaches a level that in their
judgment threatens to frustrate the essential purpose of this Agreement,
Defendants may elect unilaterally to terminate this Agreement by so notifying
Plaintiffs’ Class Counsel and the Court, not less than ten (10) days prior to
the date set for the Fairness Hearing.

 

10.4     If this Agreement is terminated by Defendants under Paragraph
10.3, the legal position of each Party shall be the same as it was immediately
prior to the execution of this Agreement; and each Party may exercise its legal
rights to the same extent as if this Agreement never had been executed.

 

30

 

11.       NOTICE
ADMINISTRATION

 

11.1     The Notice Administrator shall, under the supervision of the
Court, establish and maintain the toll-free number and answering system (including
live operators to the extent deemed necessary by mutual agreement of
Plaintiffs’ Class Counsel and Defendants) and Internet web site, and shall mail
the Class Notice, appropriate claim forms attached hereto as Exhibits A, B
and C, and Request for Exclusion form to any Property Owner who requests a
copy.  The substance and content of the
answering system, Internet web site, and any scripts or pre-selected or
suggested dialog shall be subject to Defendants’ prior approval, provided that
such approval is not unreasonably withheld. 
The Notice Administrator shall maintain the records of its activities,
including logs of all telephone calls and a running tally of the number of
Notice packages mailed, in computerized database form and shall provide such
periodic and special reports and other such information as the Court,
Plaintiffs’ Class Counsel (with notice to and consent of Defendants, provided
such consent is not unreasonably withheld) and/or Defendants may request.  Plaintiffs’ Co-Lead Class Counsel and Defendants
shall have the right independently to audit any work of the Notice
Administrator.  The Notice Administrator
may, as appropriate under instructions from Plaintiffs’ Co-Lead Class Counsel
with the consent of counsel for the Defendants, which shall not unreasonably be
withheld, provide additional information or refer individual inquiries to
Plaintiffs’ Class counsel for response.

 

11.2     In the event Plaintiffs’ Co-Lead Class Counsel or Defendants
reasonably believe that the Notice Administrator is not properly applying any
of the terms of this Agreement or in the event there is a question concerning
the application of the terms of this Agreement by the Notice Administrator, the
Parties shall meet and attempt to resolve the matter, failing which the dispute
promptly shall be submitted to the Court whose ruling shall be final and
non-appealable.

 

12.       EXCLUSIVE REMEDY;
DISMISSAL OF ACTION; JURISDICTION OF COURT

 

12.1     The terms and conditions of this Agreement shall constitute the
sole and exclusive remedy for any and all Settled Claims of Class Members
against Defendants; and upon entry of 

 

31

the Final Order and Judgment by the Court,
each Class Member who has not opted out of the Class shall be barred from
initiating, asserting or prosecuting any Settled Claims against Defendants.

 

12.2     From and after the entry of the Final Order and Judgment, no
action or proceeding may be brought by any public or private party on behalf of
a Class Member in which any Settled Claim is asserted or the subject of
inquiry; nor may any Class Member commence or remain a member of a class action
or be the beneficiary of any state or federal proceeding in which any of the
Settled Claims is asserted against any of the Defendants or is the subject of
inquiry.  As soon as practicable after
the Settlement Date, the Complaint in the Action shall be dismissed.

 

12.3     The Court shall retain exclusive and continuing jurisdiction of
the Action, all Parties and Class Members, to interpret and enforce the terms,
conditions, and obligations of this Agreement, including any question regarding
the proper administration of the Settlement Agreement.

 

13.       RELEASES

 

13.1     Upon entry of the Final Order and Judgment, each Settlement
Class Member who has not timely opted out of the Settlement Class shall, on
behalf of himself and any Person claiming by or through him as his heir,
administrator, devisee, predecessor, successor, representative of any kind,
shareholder, partner, director, owner or co-tenant of any kind, affiliate,
subrogee, assignee, or insurer (the “Releasing Parties”), and regardless of
whether any Class Member executes and delivers a written release, be deemed to
and does hereby release and forever discharge Defendants, and all of their present
and former divisions, predecessors, affiliates, subordinates, parents and all
of their present or former directors, officers, attorneys, employees, servants,
agents, successors, assigns, subsidiaries and insurers (including co-insurers
and re-insurers) solely with regards to policies held by Defendants (all the
foregoing parties being referred to as “Releasees”), of and from any and all
Settled Claims and related subrogation claims of the Releasing Party’s
subrogees or insurance carriers not protected from waiver of

 

32

 

subrogation
by the provisions of applicable insurance policies (or assigned or subrogated
prior to final approval of this Agreement and not subject to compromise or
settlement by the policyholder), except as may otherwise be provided in this
Agreement.

 

13.2     The Releasing Parties specifically release and forever discharge
any other person or entity from any and all claims that arise out of Hardboard
Siding on the Property of a Releasing Party to the extent such claims are based
on alleged defects or inadequacies in the design, manufacture, advertising,
product literature, sale, distribution or marketing of Hardboard Siding, all of
which claims have been compromised and settled in their entirety by Defendants
under the terms of this Settlement Agreement; provided,
however, Releasing Parties retain any other claim or cause of action
(such as for improper installation of the Siding) they may have against any
other person or entity not a Party to this Settlement Agreement.

 

13.3     If any Releasing Party brings an action or asserts a claim
against a Releasee contrary to the terms of this Release, the counsel of record
for such Releasing Party shall be provided with a copy of this Settlement
Agreement.  If such Releasing Party does
not within thirty (30) days thereafter dismiss his or her action or claim and
the action or claim is subsequently dismissed or decided in favor of the
Releasee, the Releasing Party shall indemnify and hold harmless the Releasee
from any and all costs and expenses, including reasonable attorneys fees,
incurred by the Releasee in the defense of the action or claim.

 

13.4     Except as otherwise provided in this Paragraph 13, nothing in
this Agreement shall be construed in any way to prejudice or impair the right
of Defendants or members of the Settlement Class to pursue such rights and
remedies as they may have against third parties or under any applicable
insurance policies.  Nothing in this
Agreement limits the rights of members of the Settlement Class to pursue claims
for Hardboard Siding installed on a Property subsequent to the Initial Notice
Date.

 

33

 

14.       EXPENSES
AND FEES

 

14.1     The Defendants shall pay all reasonable fees and expenses
incurred in providing the Notice called for under this Agreement and under the
Notice Plan (or as otherwise ordered by the Court) (the “Notice Costs”).

 

14.2     If the Court does not issue the Final Order and Judgment, or in
the event that for any reason the Settlement Date does not occur, Defendants
nevertheless shall continue to bear the costs of the Notice Plan and any other
expenses incurred to such point in implementing the terms of this Agreement,
along with any associated shutdown expenses, including any notices as the Court
may direct and Defendants shall not have the right to recoup such funds,
regardless of whether the Court issues the Final Order and Judgment.  Plaintiffs’ Class Counsel and the Class Members
shall bear no obligation for any costs incurred in connection with the
implementation of the Notice Plan or for any other expenses incurred by the
Defendants hereunder.

 

14.3     Within 7 days after the Settlement Date, the Defendants shall
pay on behalf of the Settlement Class Members reasonable attorneys’ fees in the
amount of $7,000,000 and reasonable expenses in immediately available funds
subject to agreement between Co-Lead Class Counsel and counsel for Defendants
in an amount not to exceed $375,000.

 

14.4     Within 7 days after the Settlement Date, the Defendants shall
pay any Court approved incentive award to the currently named Plaintiffs in
this Action, and in Fyola, et al. v.
Abitibi-Price, Inc., et al., Case No. GD 95-12854; John Ezzell, et al. v. ABTco., Inc., Case
No. 97-CVS-167, Superior Court Division of State of North Carolina; William Beeny and Deborah Beeny, et al. v. ABTco.,
Inc., et al., Case No
99-CV-206193, Circuit Court of Jackson County, Missouri; and Joel Uptain, et al., v. ABTco., et al.,
Case No. 99C-08974, District Court of Johnson County, Kansas, not to exceed
$5,000 to any one individual or married couple.

 

14.5     Class Counsel may designate two attorneys among them to assist
in the implementation of the duties of Class Counsel under this Settlement
Agreement.  The ABT Defendants shall pay
the reasonable fees of these two attorneys (not to exceed their normal hourly
rates) for time actually incurred by them to accomplish the necessary duties of
Class 

 

34

Counsel hereunder.  Class Counsel shall provide bills in accordance with the ABT
Defendants’ billing guidelines to ABT Defendants and counsel for ABT
Defendants.

 

14.6     In the event of an appeal of the Final Order and Judgment,
Defendants agree to pay simple interest on the fees due under paragraph 14.3
(at the prime rate of interest in effect at such time) from the date of the
Final Order and Judgment until the Settlement Date.  The interest rate payable under this paragraph 14.6 shall be
recalculated every 6 months.

 

15.       ENFORCEMENT
OF AGREEMENT

 

15.1     In the event Defendants fail to perform under the Agreement or
to make a payment due and owing under the terms of this Agreement, Plaintiffs’
Co-Lead Class Counsel shall give Defendants written notice of the breach.  If the breach is not cured to the
satisfaction of Class Counsel within sixty (60) days, Plaintiffs’ Class Counsel
shall apply to the Court for relief.

 

15.2     In the event of a breach by Class Members or Defendants under
this Agreement, the Court may exercise all equitable powers over the breaching
Party(ies) to enforce this Agreement and the Final Order and Judgment
irrespective of the availability or adequacy of any remedy at law.  Such powers include, among others, the power
of specific performance, contempt and injunctive relief.

 

16.       REPRESENTATIONS
AND WARRANTIES

 

Defendants represent and warrant that (i) they have all requisite
corporate power and authority to execute, deliver, and perform this Agreement
and to consummate the transactions contemplated hereby, (ii) the
execution, delivery, and performance of this Agreement and the consummation by
it of the actions contemplated herein have been duly authorized by all
necessary corporate action on the part of such Defendants; (iii) their
signatories to the Agreement have full authority to sign on behalf of and to
bind such Defendants to the terms of the Agreement, and (iv) this
Agreement has been duly and validly executed and delivered by such Defendants
and constitutes their legal, valid and binding obligation.

 

35

 

17.       MISCELLANEOUS
PROVISIONS

 

17.1     This Agreement is for settlement purposes only.  It has been entered into for the purpose of
compromising and settling a disputed matter and is not an admission of a deficiency
in the manufacture of Hardboard Siding, or in the handling or administration of
prior warranty claims or in the validity of any denial or defense asserted by
Defendants, nor is this Agreement an admission by Plaintiffs of the validity of
any of the Defendants’ asserted defenses. 
Neither the execution of this Agreement, nor any of its provisions or
attachments, nor any action taken pursuant to its terms shall be admitted in
this or any other Action or proceeding as evidence or construed as an admission
by either Party of the validity of any claim or of any defense or of any facts
alleged in this or any other Action. 
This Agreement, however, may be admitted as evidence in any action to
enforce its terms.

 

17.2     Any certification of a conditional or preliminary Settlement
Class pursuant to the terms of this Agreement shall not constitute, and shall
not be construed as, an admission on the part of Defendants that this Action,
or any other proposed or class action, is appropriate for certification as a
litigation class pursuant to Ala. R. Civ. P.
23 or any similar state or federal class action statute or
rule.  This Agreement is without
prejudice to the rights of Defendants to (a) seek to vacate the
conditional certification order in this Action should this Settlement not be
approved or implemented for any reason; or (b) oppose final certification
in this Action should this Settlement not be approved or implemented for any
reason; or (c) use the certification of this Settlement Class to oppose
certification of any other proposed class arising out of the issues and claims
that are asserted herein.

 

17.3     This Settlement Agreement has been negotiated at arm’s length by
Class Counsel and counsel for the Defendants. 
If a dispute should later arise regarding any of its terms, no Party
shall be deemed to be the drafter of any particular provision of the Agreement;
and no part of the Agreement shall be construed against any Party.  The Parties further acknowledge and agree
that the obligations and releases contained in the Agreement are fair and
reasonable in the context of the compromises negotiated.

 

36

 

17.4     Plaintiffs’ Co-Lead Counsel and counsel for Defendants regularly
shall meet in person or by telephone conference to discuss the implementation
and execution of this Agreement and to attempt to resolve any concerns of the
Parties regarding its implementation.

 

17.5     This Agreement shall be construed under and governed by the laws
of the State of Alabama, applied without regard to its laws applicable to
choice of law.

 

17.6     Plaintiffs’ Class Counsel have taken substantial discovery in
the Action, including extensive document review and depositions of the
Defendants’ personnel with responsibility for claims processing and manufacture
of Siding.  In addition, Class Counsel
have engaged in extensive informal discovery, have consulted with experts and
interviewed many potential witnesses with relevant knowledge of the issues in
this case.  Based on that formal and
informal discovery - as well as Class Counsel’s knowledge of and participation
in other class actions involving hardboard siding Class Counsel have evaluated
the factual bases for the claims asserted in the Action and as to many of the
defenses raised by Defendants to those claims. 
Class Counsel believe they have engaged in more than sufficient
discovery to evaluate the terms of this Agreement on an informed basis and to
negotiate a fair and reasonable resolution of the Action.

 

17.7     This Agreement, including all attached Exhibits, shall
constitute the entire Agreement among the Parties with regard to the subject
matter of this Agreement and shall supersede any previous agreements and
understandings between the Parties. 
This Agreement may not be changed, modified, or amended except in
writing signed by Plaintiffs’ Co-Lead Class Counsel and Defendants’ counsel and
subject to Court approval.  The Parties
contemplate that the Exhibits may be modified by subsequent agreement of counsel
for all Defendants and Plaintiffs’ Co-Lead Class Counsel prior to dissemination
to the Class Members.

 

17.8     This Agreement may be executed by the Parties in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

37

 

17.9     This Agreement, if approved by the Court, shall be binding upon
and inure to the benefit of the Class, the Parties, and their representatives,
heirs, successors, and assigns.

 

17.10   The headings of the Sections of this Agreement are included for
convenience only and shall not be deemed to constitute part of this Agreement
or to affect its construction. 
References to a “Section” includes reference to all paragraphs within
the referenced Section.

 

17.11   Any notice, instruction, application for Court approval or
application for Court order sought in connection with this Agreement or other
document to be given by any Party to any other Party shall be in writing and
delivered personally or by facsimile followed by overnight courier, to the
following representatives of the parties:

 

	
  FOR ABT
  DEFENDANTS:

  	
   

  	
  FOR
  ABITIBI DEFENDANTS:

  
	
   

  	
   

  	
   

  
	
  Stephen Zovickian

  Michael I. Begert

  Geoffrey M. Howard

  McCUTCHEN,
  DOYLE, BROWN &

  ENERSEN,
  LLP

  Three Embarcadero Center

  San Francisco, California
  94111

  	
   

  	
  George F. Hritz

  HOGAN
  & HARTSON, LLP.

  100 Park Avenue

  New York, New York 10017

  
	
   

  	
   

  	
   

  
	
  FOR THE
  PLAINTIFF CLASS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Charles R. Watkins

  SUSMAN
  & WATKINS

  Two First National Plaza

  Suite 600

  Chicago, Illinois 60603

  	
   

  	
   

  John W. Sharbrough, III

  M. Stephen Dampier

  THE
  SHARBROUGH LAW FIRM, LLC

  P.O. Box 996

  Mobile, Alabama 36601

  
	
   

  	
   

  	
   

  
	
  David J. Guin

  DONALDSON,
  GUIN & SLATE, LLC

  2900 Highway 280

  Suite 230

  Birmingham, Alabama 35223

  	
   

  	
   

  Steven A. Martino

  JACKSON,
  TAYLOR & MARTINO, P.C.

  P.O. Box 894

  Mobile, Alabama 36601-0894

  
	
   

  	
   

  	
   

  
	
  SPECIAL
  COUNSEL FOR MOBILE

  HOME
  OWNERS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Justin O’Toole Lucey

  JUSTIN
  O’TOOLE LUCEY, P.A.

  415 Mill Street

  Mt. Pleasant, South
  Carolina 29464

  	
   

  	
   

  

 

38

 

17.12   Except as otherwise provided in this Agreement, any filing,
submission, Claim, notice or written communication shall be deemed filed,
delivered, submitted or effective as of the date of its postmark when mailed
first class, registered or certified mail, postage prepaid, properly addressed
to the recipient, or when delivered to any commercial one- or two-day delivery
service properly addressed to the recipient, or when actually received by the
recipient, whichever first occurs.

 

17.13   Throughout the Term of this Agreement, in accordance with record
retention policies that are reasonably satisfactory to Class Counsel,
Defendants will use reasonable efforts to preserve all records and evidence at
the Roaring River plant which are or could be relevant to, or could lead to the
discovery of relevant evidence, concerning the research and development of
Hardboard Siding, its marketing, distribution, and manufacture, and the
operation of its Hardboard Siding warranty claims process.

 

17.14   Each Class Member who files a Claim under the Settlement Agreement
and does not repair or replace the siding for which a Damage Payment was made
shall advise any direct, subsequent purchaser of the Property in writing of the
existence of this Settlement Agreement and the amount of the Damage Payment.

 

17.15   In no event shall Defendants, any attorneys representing
Defendants, Plaintiffs or Plaintiffs’ Class Counsel have any liability for
claims of wrongful or negligent conduct by any third party with respect to the
implementation of any term of this Settlement Agreement.

 

DATED this            day of
May, 2000.

 

39

 

	
  ABT
  DEFENDANTS:

  	
   

  
	
   

  	
   

  
	
  ABTco, Inc.

  	
  ABT BUILDING PRODUCTS
  CORP.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Stephen Zovickian

  	
   

  	
  Stephen Zovickian

  
	
   

  	
  McCUTCHEN, DOYLE, BROWN
  &

  ENERSEN, LLP

  	
   

  	
  McCUTCHEN, DOYLE, BROWN
  &

  ENERSEN, LLP

  
	
   

  	
  Three Embarcadero Center

  	
   

  	
  Three Embarcadero Center

  
	
   

  	
  San Francisco, California
  94111

  	
   

  	
  San Francisco, California
  94111

  
	
   

  	
  (415) 393-2000

  	
   

  	
  (415) 393-2000

  
	
   

  	
   

  
	
   

  	
  Counsel for ABT Defendants

  	
   

  	
  Counsel for ABT Defendants

  
	
   

  	
   

  
	
  ABITIBI
  DEFENDANTS:

  	
   

  
	
   

  	
   

  
	
  ABITIBI-CONSOLIDATED,
  INC.,

  	
  ABITIBI-PRICE CORP.

  
	
  formerly ABITIBI-PRICE,
  INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  George F. Hritz

  	
   

  	
  George F. Hritz

  
	
   

  	
  HOGAN & HARTSON, LLP

  	
   

  	
  HOGAN & HARTSON, LLP

  
	
   

  	
  100 Park Avenue

  	
   

  	
  100 Park Avenue

  
	
   

  	
  New York, New York 10017

  	
   

  	
  New York, New York 10017

  
	
   

  	
  (212) 916-7228

  	
   

  	
  (212) 916-7228

  
	
   

  	
   

  
	
   

  	
  Counsel for Abitibi
  Defendants

  	
   

  	
  Counsel for Abitibi
  Defendants

  
								

 

FOR THE PLAINTIFF CLASS:

 

	
   

  	
   

  	
   

  	
   

  
	
  Charles R. Watkins

  SUSMAN
  & WATKINS

  Two First National Plaza

  Suite 600

  Chicago, Illinois 60603

  	
  John W. Sharbrough, III

  M. Stephen Dampier

  THE
  SHARBROUGH LAW FIRM, LLC

  P.O. Box 996

  Mobile, Alabama 36601

  

 

40

 

	
   

  	
   

  	
   

  	
   

  
	
  David J. Guin

  DONALDSON,
  GUIN & SLATE, LLC

  2900 Highway 280

  Suite 230

  Birmingham, Alabama 35223

  	
  Steven A. Martino

  JACKSON,
  TAYLOR & MARTINO, P.C.

  P.O. Box 894

  Mobile, Alabama 36601-0894

  
	
   

  SPECIAL
  COUNSEL FOR MOBILE HOME

  OWNERS:

  	
   

  
	
   

  	
   

  	
   

  
	
  Justin O’Toole Lucey

  JUSTIN
  O’TOOLE LUCEY, P.A.

  415 Mill Street 

  Mt. Pleasant, South
  Carolina 29464

  	
   

  

 

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LOUISIANA-PACIFIC CORPORATION
  EXECUTIVE LOAN PROGRAM
  
  
  As Amended and Restated November 3, 2001    
  

        1.    Purpose.    To provide loans to company executives for the purchase by them of shares of
company stock. Such purchases shall be of shares of treasury stock held by the company. 

        2.    Covered Executives.    (a) The CEO, all Vice Presidents and all other employees
who are "executive officers" of the company under Section 16 of the Securities Exchange Act of 1934, (b) Business Team Leaders and (c) other executives as designated by the CEO. 

        3.    Loan Amount.    Equal to the total cost of the shares of company stock purchased in one
transaction by the executive from the company during the 60-day period following the effective date of this Executive Loan Program (the "Loan Program") for such executive. The loan shall
be made upon written notification to the company by the executive of the number of shares he or she desires to purchase. Such shares shall be sold to the executive on the date such notification is
received by the company at a price equal to the closing price of company stock on the New York Stock Exchange (NYSE) on such date or, if there is no trading on the NYSE on such date, the next
preceding day on which there was such trading, and the necessary loan documents for the loan in an amount equal to the cost of such shares shall be executed by the parties as of such date. 

        4.    Maximum Loan Amount.    Three (3) times an executive's annual base pay as of the
effective date of the Loan Program for such executive. 

        5.    Minimum Purchase and Loan.    To qualify for the loan, the executive must purchase a
minimum of 10,000 shares of company stock. 

        6.    Maximum Total Loans.    The lesser of $20 million or 1.7 million shares of
company stock. 

        7.    Interest on Loan.    The interest rate shall be the lowest prevailing rate that will
avoid imputed interest under Section 7872 of the Internal Revenue Code. 

        8.    Accrued Interest.    Annual accrued interest shall be added to the principal amount each
year and shall be paid when the principal amount becomes due. 

        9.    Term of Loan.    Six years following the expiration of the 60-day period
referred to in paragraph 3 above, except five years following the expiration of such 60-day period for those executives who become covered executives on or after November 24,
2000, unless earlier terminated as provided below. 

        10.    Security.    Loans shall be unsecured. 

        11.    Termination of Employment.    The outstanding amount of principal and accrued interest
under the loan shall be paid within 30 days following an executive's resignation or involuntary termination of employment. 

        12.    Loan Forgiveness.    The provisions of this Paragraph 12 apply to those
executives with outstanding loans under the Loan Program on or after November 24, 2000. 

1

 

        (a)    Length of Service Forgiveness.    If the executive remains continuously employed by the company until
January 23, 2004, January 23, 2005 or January 23, 2006 ("Applicable Forgiveness Dates"), the following percentages of the original loan principal amount and the amount of accrued
interest as of such date shall be forgiven: 

	Applicable

Forgiveness Date
	 	Original Loan

Principal Forgiveness
	 	Accrued Loan

Interest Forgiveness

	January 23, 2004	 	50 percent	 	-0-
	January 23, 2005	 	25 percent	 	50 percent
	January 23, 2006	 	25 percent	 	100 percent

In
the event that, after January 23, 2001 and before January 23, 2006, the executive terminates employment with the company by reason of death, disability or involuntary termination by
the company without cause, the executive shall be forgiven a prorated amount of the loan principal and accrued interest forgiveness percentages set forth above based upon his actual period of
employment by the company during the period January 23, 2001 (or his last Applicable Forgiveness Date, if later) to the next Applicable Forgiveness Date following such termination. The
provisions of paragraph 11 of the Loan Program shall apply to the remaining unforgiven loan principal and accrued interest amounts. 

        (b)    Stock Price Forgiveness.    In addition to any loan principal and interest forgiveness provided under
paragraph 12(a) above based upon length of service, if the company stock has traded on the NYSE at or above the price per share ("Price") set forth below (to be appropriately adjusted for any
stock dividends or splits or recapitalizations that hereafter occur) for at least five consecutive trading days during the 12-month period immediately preceding an Applicable Forgiveness
Date on which the executive remains employed by the company, the following additional percentages of the original loan principal amount and the amount of accrued interest as of such date shall be
forgiven: 

	Applicable Forgiveness Date
	 	Price
	 	Additional

Original Loan

Principal Forgiveness
	 	Additional

Accrued Interest

Forgiveness

	January 23, 2004	 	$	16.00	 	25 percent	 	50 percent
	 	 	 	20.00	 	50 percent	 	100 percent
	January 23, 2005	 	 	18.00	 	25 percent	 	50 percent

        (c)    Certain Terminations after November 2, 2001.    In the event the executive terminates employment with
the company after November 2, 2001 by reason of death, disability, involuntary termination by the company without cause or termination by the executive for good reason following a Change in
Control, the executive shall be forgiven (i) an amount of original loan principal equal to the excess of the executive's cost basis in the shares of company stock purchased under the Loan
Program over the fair market value of such shares on such employment termination date, to the extent such amount exceeds the amount of original loan principal forgiveness made under paragraphs 12(a)
and 12(b) above on or before such date plus any amounts paid outside of the Loan Program as severance that are determined by the amount of loss on company stock purchased under the Loan Program and
(ii) 100 percent of the executive's accrued loan interest under the Loan Program as of such employment termination date. For purposes of this paragraph 12(c), the following
definitions shall apply: 

        (1)  "cause"
shall mean (i) knowing and significant misconduct including, without limitation, knowing violation of laws or regulations, that demonstratively injures or
damages the company or (ii) knowing and continued failure to perform, after notice and opportunity to correct, the key duties of his or her position with the company. 

2

 

        (2)  "good
reason" shall mean (I) a diminution in the executive's position, authority, duties or responsibilities, (ii) a reduction in the executive's base
salary or annual incentive opportunity, (iii) a reduction in other employee benefits of the executive not generally applicable to all employees in a
similar position or (iv) a requirement that the executive's employment be based at a location more than 25 miles from its current location. 

        (3)  "Change
in Control" shall have the same meaning as set forth in Section 2.5 of the Louisiana-Pacific Corporation Deferred Compensation Plan as in effect
November 3, 2001. 

        (4)  "fair
market value" shall mean the mean between the high and low trading prices per share of company stock on the New York Stock Exchange on the applicable termination
of employment date or, if the company stock was not traded on that date, on the next preceding day on which such stock is traded. 

        (d)    Stock Ownership.    Notwithstanding paragraphs (a), (b) and (c) above, no amount of loan
principal or interest shall be forgiven on a forgiveness date if the executive no longer owns on such date, directly or beneficially, all of the shares of company stock originally purchased under the
Loan Program. 

        14.    Loan Forgiveness—Income Taxes.    In the event of loan forgiveness under
Paragraph 12 above, the executive shall be required to make arrangements satisfactory to the company for payment of all withholding and payroll taxes due in connection with such forgiveness. At
the option of the executive, or at the option of the company if no other arrangement for tax payment by the executive is made, income and other taxes that become payable by the executive with respect
to such loan forgiveness and which are required to be withheld and paid over by the company may be satisfied by the transfer by the executive to the company of shares of company stock purchased under
the Loan Program equal in fair market value to the amount of the tax obligation. 

        15.    Dividends.    Dividends paid on company stock that is subject to a loan under the Loan
Program shall be paid to the executive. Shares issued as a result of a stock dividend or split or recapitalization shall be issued in the name of the executive and held pursuant to the custody
agreement referred to in Paragraph 15 below. 

        16.    Loan Documents.    As a condition of receiving the loan or any extension thereof, the
executive shall execute a promissory note and such other agreements as may be required by the company including, subject to applicable law, a custody agreement with respect to the stock purchased
under the Loan Program and agreement authorizing the company to deduct any loan amount due and payable from any amounts owed by the company to the executive as compensation or otherwise. 

        17.    Securities Laws.    Purchases and sales of company stock pursuant to the Loan Program
shall comply in all respects to federal and state securities laws and L-P's policies on insider trading. 

        18.    Effective Date.    The Loan Program is effective November 24, 1999 as to
executives who are covered executives under Paragraph 2 above during the period November 24, 1999 to January 23, 2000. The Loan Program is effective November 24, 2000 for
all other executives who are covered executives under Paragraph 2 above during the period November 24, 2000 to January 23, 2001. 

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LOUISIANA-PACIFIC CORPORATION EXECUTIVE LOAN PROGRAM As Amended and Restated November 3, 2001

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