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					                                                                       1
 2   UNITED STATES BANKRUPTCY COURT
     SOUTHERN DISTRICT OF NEW YORK
 3   ------------------------------------x
 4
 5                 In the Matter                 Chapter 11
 6                        of                     Case #04-15739(PCB)
 7              QUIGLEY COMPANY, INC.
 8                          Debtor.
 9
10   ------------------------------------x
11                         March 17, 2005
12
13                        United States Custom House
                          One Bowling Green
14                        New York, New York 10004
15
16               Notice of Motion modifying the automatic stay,
     and granting relief from the preliminary injunction, to
17   permit the London insurers' prosecution of contribution
     action,    against    the   Allstate    Insurance Company; and,
18   approving the settlement agreement with London insurers.
19
20             B E F O R E :
21                        HON. PRUDENCE CARTER BEATTY,
22                        Bankruptcy Judge
23
24
25
                                                                       2

 1                            QUIGLEY COMPANY, INC.
 2
 3   A P P E A R A N C E S :
 4
 5
 6            SCHULTE, ROTH & ZABEL LLP
                   Attorneys for Debtor
 7                 919 Third Avenue
                   New York, New York 10022
 8
              BY:   MICHAEL L. COOK, ESQ.
 9
10
11
              GILBERT, HEINTZ & RANDOLPH LLP
12                 Attorneys for Pfizer, Inc.
                   1100 New York Avenue, NW
13                 Suite 700
                   Washington, DC 20005
14
              BY:   DAVID B. KILLALEA, ESQ.
15
16
17
              ROPES & GRAY LLP
18                 Attorneys for Lloyd's of London
                   One International Place
19                 Boston, Massachusetts 02110-2624
20             BY: KEVIN M. CUDDY, ESQ.
21
22
23
24
25

     BENJAMIN REPORTING   (212)374-1138   DOYLE REPORTING   (212)867-8220
                             A VERITEXT COMPANY
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 1                            QUIGLEY COMPANY, INC.
 2
 3   A P P E A R A N C E S (Continued) :
 4
 5
 6            TOGUT, SEGAL & SEGAL LLC
                   Attorneys for Albert Togut
 7                 as the Future
                     Claims Representative
 8                 One Penn Plaza
                   New York, New York 10119
 9
              BY:   SCOTT E. RATNER, ESQ.
10
11
12
              CADWALADER, WICKERSHAM & TAFT LLP
13                 Attorneys for Pfizer, Inc.
                   One World Financial Center
14                 New York, New York 10281
15            BY: JOHN H. BAE, ESQ.
16
17
18               CAPLIN & DRYSDALE
                    Attorneys for the
19                  Creditors' Committee
                    One Thomas Circle, NW
20                  Suite 1100
                    Washington, DC 20005
21
              BY:   RONALD E. REINSEL, ESQ.
22
23
24
25

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 1                            QUIGLEY COMPANY, INC.
 2
 3   A P P E A R A N C E S (Continued) :
 4
 5
 6            CUYLER BURK, LLP
                    Attorneys for the
 7                  Allstate Insurance Company
                    Parsippany Corporate Center
 8                  Four Century Drive
                    Parsippany, New Jersey 07054-4663
 9
              BY:   STEFANO V. CALOGERO, ESQ.
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

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1                           QUIGLEY COMPANY, INC.

2

3                  P R O C E E D I N G S.

4

5                    THE COURT:    You may be seated.    This is

6          Quigley.

7                    MR. COOK:    Good afternoon, Your Honor.

8          Michael Cook, for the Quigley Company.

9                    There are two substantive matters on the

10         calendar, only one of which is contested.

11                  The motion to extend Quigley's time to

12         remove the civil action is uncontested.

13                  It had been extended once before.         And,

14         given the filing of the plan, I'll mention a few

15         words about that in a minute.        Nobody proposed it.

16         It was granted before.

17                  THE COURT:     The question will be:      How many

18         hundreds of thousands of actions did you remove?

19         But I guess that's not what we're talking about now.

20                  MR. COOK:     That's why we wanted the extension.

21         We should be focusing on the plan.

22                  I'm happy to say that we have filed it; and

23         we have had extensive conversations, dialogs,

24         committees, and claims representatives, and these

25         gaps.

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1                            QUIGLEY COMPANY, INC.
2                  THE COURT:      Was that before you filed it?
3          Or is that going on now that you've filed it?
4                  MR. COOK:      They are continuing to fill in
5          the holes that are not planned right now.              For
6          things like estimates, and values of certain
7          distributed assets.
8                  THE COURT:      Who picked the four drugs that
9          you're going to take over?
10                 MR. COOK:      Pfizer.
11                 THE COURT:      Okay.    The victual drug.       It
12         is a great drug.       It comes by the pint.        That's
13         not going to be getting on it.          I don't understand
14         why anybody would take Valatin.           That's the one
15         that's not being marketed.
16                 Marketing agreements would reduce what you
17         would get, even if it were being marketed.              It's
18         just not clear to me why you're taking on a drug
19         that's not being marketed.
20                 MR. COOK:      That's why I mentioned the
21         evaluation process.
22                 THE COURT:      Can I make another point?         This
23         Gluconace product -- which is an oral hypoglycemic
24         drug -- this drug has a warning label on it, which
25         says that it can cause heart attacks.

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2                   THE COURT:     Particularly with more than a

3          temporary use.       It is meant for long-term use.

4                   This drug has a problem that is very similar

5          to the Bextra problem.         It's not clear to me if this

6          class of drug is new; or whether this is not a huge

7          problem.    But apparently, compared to using insulin,

8          this drug has considerably more problems.

9                   For heart problems, the Naiban is good for

10         what it is used for.      It's a fine drug.         I think

11         that there are two, out of the four, which require

12         a little more investigation, as to whether you would

13         want to take it or not.

14                  I realize that Gluconace is the biggest seller

15         of the three.     Nobody thought that Vioxx-twos would

16         be the Vioxx'es of the world.         I don't know if these

17         drugs are the older, diabetic drugs, or not.

18                  MR. COOK:    I can tell you that this is exactly

19         what is going on, in the evaluation process.

20                  THE COURT:    I told Mr. Forensky to give you

21         Vioxx-twos, as opposed to Vioxx.         I guess it's

22         selling reasonably well, for a fraction of the cost.

23                  It's just under a million dollars, I think.

24         Anyway, that's the only comment I have, about those

25         items.

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2                  MR. COOK:    What I would suggest, Your Honor,

3          is:   If we could schedule another status conference,

4          in roughly a month, we'll be in a better position,

5          I believe.

6                  The committee and the future claims

7          representatives will be able to tell you the status,

8          and make a recommendation, for the timing, and for

9          getting a plan that is set for solicitation.

10                 THE COURT:    Do you have any idea now, is that

11         going to be three months, or sixth months?

12                 MR. COOK:    The object of the exercise is to

13         have it done within three months.

14                 At that time, with a hearing on the disclosure

15         statements, at that point, within a month we'll have

16         a more precise sense of the timing.

17                 THE COURT:    There is another issue that came

18         up.   When I read these papers, I didn't quite realize

19         how much, or how many subsidiaries Quigley had.

20                 Like six or seven or eight pages of them.           Now

21         those subsidiaries are all part of the group that's

22         going to receive the releases.         Correct?

23                 MR. COOK:    Yes.      If they had anything to do

24         with Quigley's operations.

25                 THE COURT:    I'm not sure what that means.

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2                  MR. COOK:      To the extent that the plan
3          releases anybody, they would all be part of the
4          derivative liability.
5                  THE COURT:      Otherwise someone would have
6          to have some understanding, as to whether these
7          companies would have any independent problems.
8                  MR. COOK:      The plan itself would be aimed
9          at the derivative liability.
10                 THE COURT:      Okay.
11                 MR. COOK:      We can deal with the Calendar
12         Clerk, on a status conference, in roughly a month.
13                 THE COURT:      I would have to look at this,
14         to see whether I've found something.
15                 MR. COOK:      I was just reminded, Your Honor,
16         that the subsidiaries' documents are all from the
17         Pfizer subsidiaries.
18                 THE COURT:      I knew that they were Pfizer
19         subsidiaries.      But I was shocked at how many of
20         them there were.       I'm assuming that the releases,
21         if they have them at all, will only go to those
22         companies that had some dealings with Quigley.
23                 I don't know which one of the Pharmacia
24         Companies is the former Monsanto Chemical Company.
25         But it was spun off from the Solutia Company.

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 2                   THE COURT:    Which one got the Chemical

 3         business?      And which one was spun off what's now

 4         named Monsanto Chemical Company?        And which one's

 5         got the agricultural business?

 6                   There are a number of cleanup sites where

 7         there is a dispute, between Solutia and Pharmacia,

 8         as to whether or not one or the other is supposed

 9         to clean it up.

10                 I'm assuming that it wouldn't come under

11         the -- whatever releases we are giving wouldn't

12         release whatever claims Solutia has against

13         Pharmacia.

14                 MR. COOK:      That's why one key document is

15         going to be tighter, to even up the final process.

16                 The T.P.P. will have tighter and stricter

17         standards of injuries, or claims, with the

18         relationship with Quigley.       And that's how that

19         gets dealt with.

20                 THE COURT:      Did I mis-read it, or are the

21         trustees allowed to stay there for life?

22                 MR. COOK:      Your Honor, Mr. Bae is our trustee

23         expert.    He will explain it.

24                 MR. BAE:    Good afternoon, Your Honor.       John

25         Bae, on behalf of Pfizer.

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 2                   MR. BAE:    The trustee distributions do not

 3         contain the term for the trustee.         Certainly we

 4         should put in the term for the trustees.

 5                   THE COURT:     I would think so.    Otherwise, it

 6         is very difficult, with one trustee set aside.

 7                   MR. BAE:    I also represent Pharmacia.       The

 8         releases in this case do not, in any way, affect

 9         the claims.

10                 THE COURT:       Okay, that's good.

11                 MR. COOK:      Finally, we have the contested

12         matter, involving the --

13                 THE COURT:       Okay, I can give you Friday,

14         April 15th.     But I don't think that's a good idea.

15         How about April 18th at 2:30?        It's the following

16         Monday.

17                 MR. COOK:      That's fine, Your Honor.      Okay,

18         now, onto the insurer's Allstate matter, which is

19         a motion to modify the stay, and to approve the

20         settlements.     Pfizer's insurance saleman had been

21         handling these litigations, since the time Pfizer

22         was first named as defendant, in the year 2002.

23                 Quigley is not a party.        But, if Allstate

24         had its way, and if London Insurance had its way,

25         Quigley would be the subject of extensive discovery.

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 2                 MR. COOK:     They would have relived it with

 3         this litigation, and settled the matter.

 4                 THE COURT:     The problem I have is this:

 5         I read the papers from November, as well as the

 6         papers from today, and I have not gotten a clue

 7         about what the problem is.      There are not enough

 8         facts in this, when you're making this contribution.

 9         That's about all I've got from this.

10                 MR. COOK:     Since Mr. Killalea lived with it,

11         he will explain it.

12                 MR. KILLALEA:     David Killalea for Pfizer.

13         Your Honor, there are two motions to the subject

14         before you.     One is Quigley's motion.

15                 THE COURT:     I'm not interested in your

16         starting off by telling me what you want, only

17         with the settlement you want.

18                 I don't understand, fundamentally, what

19         the action is about, or even why the action exists,

20         because there is very little in the complaint that

21         would allow one, who wasn't a party to this misery,

22         to understand what the problem is.

23                 MR. KILLALEA:     I'd give you the background

24         as to how this action arose, but we were strangers

25         as to how this action arose.

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 2                 THE COURT:     How could you be strangers to

 3         this?

 4                 MR. KILLALEA:     Because, Your Honor, in the

 5         year 2001, they sued Allstate, making neither Pfizer

 6         nor Quigley a party to that action.

 7                 It was an inter-insurance company dispute.

 8         And each of them paid amounts on the Quigley and

 9         Pfizer matters.

10                 THE COURT:     What economic difference does it

11         make to re-allocate it?        So that, instead of Jones's

12         claim, you would pay Smith's claim?

13                 MR. KILLALEA:     Your Honor, they don't come in

14         ones and twos.     They come in multiples of millions.

15         So you would get a big batch of these claims that

16         would come in and then get processed.         And for some

17         of them, we have these verdicts.

18                 THE COURT:     But why do they have different

19         ramifications?

20                 MR. KILLALEA:     Because, we have a variety of

21         settlement agreements.

22                 THE COURT:     How many are there?

23                 MR. KILLALEA:     The first settlement agreement

24         is called:     "Agreement For Asbestos Related Claims."

25         There are 33 policy holders.

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 2                  MR. KILLALEA:     That's the Wellington

 3         Agreement.      There are close to twenty insurers.
 4         And the insurers such as London --

 5                  THE COURT:    Okay, let me ask you another
 6         question.      Why are the London insurers a package?

 7         Doesn't each one have only a fraction of the
 8         liability on each item?
 9                  MR. KILLALEA:     Yes, that's correct.

10                  THE COURT:    I know I have had some problems.
11         The largest three or four were based on a London

12         group.    So, I get to hear about these things.

13                  MR. KILLALEA:     We have some policies from

14         quote, unquote, "The London Group" that were
15         written entirely differently.

16                  THE COURT:    Okay, when you refer to "The

17         London Group," this group is not all of the London

18         insurers; you have only some of them?
19                  MR. KILLALEA:     The way the case was framed
20         was that certain of the underwriters at Lloyds of

21         London --

22                  THE COURT:     You haven't gotten them to
23         give you any syndicate numbers?
24                  MR. KILLALEA:     Did you say, "syndicate

25         numbers," Your Honor?

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 2                 THE COURT:     I'm saying to you that Lloyds

 3         of London is not just a single entity.            It's
 4         composed of syndicates.

 5                 You may have, and you apparently do have
 6         interests, from multiple syndicates, from more than

 7         one syndicate.      But, as to the others, you have no
 8         insurance from them?
 9                 MR. KILLALEA:      That's correct.       So Lloyds

10         of London paid, on the basis of the Wellington
11         Agreement, whoever subscribed.

12                 What the Wellington insurers had agreed to

13         do was to make sure that their policy holders had

14         millions of dollars.       If money was being allocated
15         to Allstate, but Allstate wasn't paying the London

16         insurers, then it would drop down, and pay earlier.

17                 THE COURT:     You were really nice guys then.

18         I don't know if you want to answer this question.
19                 Approximately how much insurance aggregate
20         total are we talking about, as opposed to Allstate?

21         Is it a billion, or four hundred million?

22                 MR. KILLALEA:      Lloyds of London is $275
23         million dollars.      Allstate is --
24                 THE COURT:     I'm asking you:    What was the

25         original amount?

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2                    MR. KILLALEA:   There is $275 million dollars

3          for Lloyds of London.

4                    There is between $70 and $80 million dollars

5          for Allstate.     Allstate wrote coverage from 1976 and

6          1977 through 1982.

7                    Lloyds of London wrote coverage from the

8          earliest dates.

9                    THE COURT:   I understand how complicated this

10         can be.    We're still talking about from $350 to $380

11         million dollars.

12                 MR. KILLALEA:     Lloyds of London paid out every

13         cent of its policy limits.

14                 THE COURT:     Was it paid to the claimants, or

15         paid to a trust?

16                 MR. KILLALEA:     It was paid to Pfizer, and to

17         Quigley, and to the defense lawyers, et cetera.

18                 Allstate today has $35.35 million dollars.

19         Allstate and Pfizer are currently engaged in coverage

20         litigation, in the State of Pennsylvania.

21                 And in 2000, effective in 1999, we entered

22         into a settlement agreement.      What the Wellington

23         Agreement does is --

24                 THE COURT:     Why were you having problems

25         with Allstate?

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 2                 MR. KILLALEA:      Why?   Because of Allstate

 3         Insurance Company, because they like holding onto
 4         their money more than they like paying it out.

 5                 THE COURT:     There is a necessity of
 6         determining what years it covers.

 7                 MR. KILLALEA:      Regarding the asbestos, the
 8         fight was over what allocation rule to apply.
 9                 Would it be in a narrow "pick and choose"

10         policy, or allocated over a broad period of years?
11                 And, if so, how broad a period of time?          The

12         New York Court of Appeals weighed in.

13                 They say that you probated, over the broad

14         period of years.
15                 Well, if you were to allocate, over a broad

16         period, of years of coverage, then we, as the

17         policy holders --

18                 THE COURT:     First in, first out.
19                 MR. KILLALEA:      We pick it and it pays; and
20         that's the law in some places.

21                 There was a case from the New York Court of

22         Appeals, and the 2000-something version.
23                 THE COURT:     That's too old.
24                 MR. KILLALEA:      The statute of limitations

25         has one run on precedent that old.

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2                    THE COURT:   So, did they pay out anything of

3          their $70 to $80 million dollars, prior to the time

4          that you got that judgment?

5                    MR. KILLALEA:    They had not paid out anything

6          on asbestos.      I don't know whether they actually paid

7          out on the other liability.

8                    THE COURT:    I'm trying to figure out whether

9          they were paying it at the same time.

10                 MR. CALOGERO:      Stefano Calogero for Allstate.

11         We are paying out for heart valves.

12                 THE COURT:      I'm not interested in heart

13         valves.    That has nothing to do with Quigley.

14                 MR. CALOGERO:      The total amount of limits we

15         did from heart valves.

16                 THE COURT:     I understand that.

17                 MR. CALOGERO:      Unlike Lloyds of London,

18         Allstate was never asked to pay out the asbestos

19         claims.    They didn't ask us.

20                 THE COURT:     I don't want to argue with you

21         about it.      I'm trying to find out more.

22                 MR. CALOGERO:      Those claims are over.     This

23         is not an argument.       I'm trying to explain that the

24         insurance was much broader than just the insurance

25         required for, the situation here, covering products.

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 2                 MR. CALOGERO:     The Allstate coverage could

 3         have been consumed.      And no asbestos coverage,

 4         those same limits.

 5                 THE COURT:     Okay.

 6                 MR. CALOGERO:     Quigley could have been left

 7         with no coverage.      As it happens, there is a good

 8         amount of coverage here.       And no other claims are

 9         drawing against that coverage, issued by Allstate.

10                 THE COURT:      Now, why has that $30 million

11         dollars not been paid out?      Is it because there

12         are no claims against which to charge it?

13                 MR. KILLALEA:     Quigley and Pfizer deferred

14         the billing, which we can do without.

15                 Expanding out, we wanted to leave an asset

16         for the benefit of the entire estate.

17                 This gets to the fundamental notion that it

18         is an asset of the estate.      The ability to control

19         our insurance assets.

20                 THE COURT:     I'm a little more understanding

21         that you believed Allstate.      But, what I don't

22         understand is what the London insurers have that

23         causes them to think they have a life with Allstate.

24                 MR. KILLALEA:     Northbrook is the company

25         that issued it.

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2                    MR. KILLALEA:        They think they paid more
3          quickly than they should have, and that Allstate
4          paid more slowly; and that they should be able to
5          even that out.
6                    THE COURT:      How?
7                    MR. KILLALEA:        In normal circumstances,
8          in a contribution case, what the insurers would
9          do is this:
10                  If there were two insurers, and if I paid
11         a million dollars, and you paid zero, and we both
12         wrote out policies, in the same amount, then you
13         should pay me back, half a million dollars.
14                  What that would do is this:          If Allstate
15         paid London half a million dollars, then they
16         would each have half a million dollars left, in
17         a million dollar policy.
18                  THE COURT:     As far as I can tell, London
19         paid out, up to the top.           What would happen if
20         we went back, and re-allocated it?
21                  MR. KILLALEA:         Then that would re-open the
22         limits.    If London had $100 million dollars of
23         limits, and paid it out, and then recovered.
24                  THE COURT:     You would get another $100
25         million dollars.

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2                   MR. KILLALEA:         I would have $10 million
3          dollars less from Allstate.
4                   THE COURT:      From your point of view, this
5          is not something that is helpful to you.               Or is
6          it something that seems to have no particular
7          effect on you?       And I'm not sure what the London
8          carriers think the effect on them is.
9                   MR. KILLALEA:         Their claim is in effect.
10         I'm not saying --
11                  THE COURT:      I'm just trying to find out
12         what the claim is.
13                  MR. KILLALEA:         I take it they will seek
14         to approve that $100 million dollars.
15                  THE COURT:      They can't pretend that
16         Allstate is liable for more than it is liable
17         for.    If Allstate was liable for $70 or $80
18         million dollars, then there was only a fraction
19         of that, which they could have had to pay out
20         sooner than they should have.
21                  MR. KILLALEA:         Your Honor, some fraction
22         of Allstate's limits was paid sooner to the
23         beneficiaries of Lloyds of London.
24                  And London would have had the value of
25         some of these amounts of money.

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2                   MR. KILLALEA:    I gather that London thinks

3          this is a single issue, based on interest alone.

4                   THE COURT:   But Allstate says there are no

5          liabilities they have for this type of allocation.

6                   MR. KILLALEA:    Allstate believes if the

7          contribution would proceed, then Allstate should

8          have won, on the merits of the case.

9                   MR. CALOGERO:    That's correct, Your Honor.

10                  THE COURT:   Well, I don't really understand

11         why I should let this litigation go forward at all.

12         I can't figure out how much money is involved in

13         this.    Somebody must be able to figure that out.

14                  MR. KILLALEA:    Your Honor, Counsel for

15         Lloyds of London is here.

16                  MR. CUDDY:   Kevin Cuddy for Lloyds of London.

17         I think Mr. Killalea has described what we're looking

18         for.    London paid out tens of millions of dollars.

19                  THE COURT:   And there was only an $80 million

20         dollar maximum that Allstate owed?

21                  MR. CUDDY:   That's correct, Your Honor.

22         London's position was that, if there was a

23         pre-judgment interest, which we were able to

24         obtain, under New York's law of allocation, then

25         London could collect additional dollars.

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2                   THE COURT:     Approximately how much money

3          do you think it is?

4                   MR. CUDDY:    The pre-judgment is somewhere

5          in the neighborhood of $5 million dollars.

6                   THE COURT:    Well, that doesn't seem like a

7          lot of money to me;       but I'm not in the insurance

8          business.      I mean, why is it that you shouldn't

9          just be charged?      Well, you didn't go in there

10         and verify that what you think is supposed to

11         be happening has happened.

12                  MR. CUDDY:    There was a Supreme Court

13         hearing in New York; and Allstate was in litigation

14         with Pfizer for years.

15                  Now, Pfizer is trying to recoup the dollars

16         that were negotiated, to be paid in a timely fashion.

17                  If Pfizer had ever reached a settlement, then

18         London's position would have been renegotiated; and

19         then, this settlement would have been worked out

20         differently.

21                  This money can be put into the "rainy day

22         fund."    The pre-judgment interest was of the years

23         that were paid, on Allstate's behalf.

24                  We filed our contribution action; and we need

25         to recoup the monies paid out on Allstate's behalf.

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2                   MR. CUDDY:   It was shared, under an equitable

3          distribution, across the land.       We are entitled to

4          the amounts which should have been paid earlier.

5                   THE COURT:   How can you be entitled to the

6          amounts paid earlier, if you, in fact, fully paid

7          out your coverage?

8                   It makes no sense to give you back your money.

9          It seems to me that the interest alone is sufficient

10         to satisfy the disproportionate payments.

11                  MR. CUDDY:   That's correct, Your Honor.       We

12         wouldn't get to keep it.       Instead of refreshing

13         those limits, there are claims, against the refreshed

14         amounts, and London's pre-judgment interest dollars.

15                  We agreed with Pfizer and Quigley that

16         whatever amounts we get, for a contribution, would

17         refresh our limits.      We are not trying to refresh

18         Pfizer and Quigley, and we will handle that, in

19         order to protect the estates.

20                  Those we do have an interest in; and the

21         settlements London has with Pfizer and Quigley.

22         That is why, for the last four years now --

23                  THE COURT:   How far have you gotten in your

24         pursuit while in arbitration; and, what was that

25         about?

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2                    MR. CUDDY:   Whether London was entitled to

3          go forth first, to Wellington; and that was resolved.

4                    THE COURT:   Was it resolved in your favor?

5                    MR. CUDDY:   Correct, Your Honor.      We're moving

6          forward with our attempts to get the contribution.

7                    THE COURT:   Why is Allstate the only one going

8          off, and the only one with any meaningful limits?

9          Wouldn't you have to include everyone else?          If you

10         had four people, each would have a 25 percent share.

11                 MR. CUDDY:     We do not need to bring in every

12         person.    Only if they were obligated to pay.

13                 THE COURT:     How much is that?   I'm saying

14         that, obviously, if you weren't the only carrier,

15         or group, they would have to pay considerably less

16         than your interest, considerably less.

17                 MR. CUDDY:     Your Honor, could you repeat

18         that please?

19                 THE COURT:     If four or five groups were

20         supposed to pay, and they all paid, except for

21         Allstate, then the amounts per person that Allstate

22         paid would be considerably less. And the amounts of

23         interest would also be less, because they wouldn't

24         owe any amounts of money.

25                 MR. CUDDY:     Except the other plaintiffs.

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2                  THE COURT:    I'm saying to you that you have

3          a frame, and five carriers.      One of them is Allstate.

4          The other four carriers forked over their money.

5          Okay?   And you're one of the four.       But, you can't

6          pretend that the other three didn't pay.

7                  MR. CUDDY:    We're not pretending that.

8                  THE COURT:    What I'm saying is that, in that

9          instance, Allstate had failed to pay one-fifth, not

10         one-half.

11                 MR. CUDDY:    We're seeking to get the interest

12         on that one-fifth.

13                 THE COURT:    Why would you be entitled to

14         recover, automatically, if one-fifth was paid, and

15         you have reached your limits?

16                 MR. CUDDY:    If Allstate has the amount that

17         has already been covered, then there's no additional

18         amount to get, in terms of re-opening our limits,

19         and paying that down.      The pre-judgment interest

20         amount should have been paid.

21                 THE COURT:    How did you ever go about trying

22         to calculate how much that was?        Was there a second

23         action in New York?      Was the Ohio action identical

24         to this action?     And why wasn't the Ohio action

25         part of it, at the same time?

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 2                  MR. CUDDY:    It involved different parties,

 3         different assured, but the same insurers.
 4                  THE COURT:    What happened in that action?

 5                  MR. CUDDY:    We prevailed in the phase of
 6         calculating the damages.

 7                  THE COURT:    Did it also involve Allstate?
 8                  MR. CUDDY:    In that action, we prevailed
 9         against Home Insurance Company.

10                  THE COURT:    But how are you calculating it?
11         What are you doing, to go through it and calculate

12         this?

13                  MR. CUDDY:    We had to find out if all monies

14         were coming in, and if all parties were involved,
15         and find out whatever law it is.

16                  Then you compare that to what would be

17         happening if Allstate neglected to pay.

18                  Then you're able to calculate the interest
19         on that amount.
20                  THE COURT:    But actually, you have to go

21         through each one, claim by claim.

22                  So, there may be a claim in your six; and
23         they weren't required to pay in your one, or your
24         two.    And then, you would have to know what the

25         coverage was.

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 2                 MR. CUDDY:     That's correct, Your Honor.

 3         And that's what the parties are all seeking to do

 4         now, and to pursue that, right here in New York.

 5                 THE COURT:     Well, let me hear again from

 6         somebody else.

 7                 MR. KILLALEA:     I think Mr. Calogero was

 8         mistaken.      Pfizer and Quigley haven't had any

 9         asbestos claims.      We sued Allstate in 1993.

10                 THE COURT:     I don't need to know that.

11                 MR. KILLALEA:     Could I just tell you why

12         Quigley and Pfizer believe granting is easy for

13         them?   Ultimately, it's a dispute.

14                 THE COURT:     As I understand it, Allstate

15         will owe them if London makes a recovery.

16                 MR. KILLALEA:     They have that claim, but

17         we disagreed with it.      If it is sorted out,

18         through agreement, it will be mandatory and

19         binding, but not in the contribution action.

20                 The settlement agreements I negotiated with

21         Jones were in 1999/2000.       All of them were disputed.

22                 When a dispute is subject to that, we have

23         to go to finding the A.D.R.       The exclusive means,

24         under the agreement, is something that Allstate

25         omits in its papers.

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 2                 THE COURT:     So why is Pfizer a party to

 3         the litigation at all?
 4                 MR. KILLALEA:      With Allstate, Pfizer

 5         didn't know what was happening, until it got
 6         served in this case.

 7                 THE COURT:     It's two years later.      How
 8         come they didn't manage to get themselves out?
 9                 MR. KILLALEA:      Why Pfizer and not Quigley

10         is a mystery to me.       They were both defendants
11         in the asbestos case.

12                 THE COURT:     As I understand it, the policy

13         holder is Pfizer.      You're a named insured, under

14         the policy.
15                 MR. KILLALEA:      Most of the dollars.

16                 THE COURT:     I'm saying that one could make

17         that distinction.      Let me hear from Allstate.

18                 MR. CALOGERO:      Your Honor, I just want to
19         work backwards.      What's really important is that
20         we follow under the settlement agreements.

21                 We have the right to deduct that $30 and a

22         half million dollars.
23                 Even if we paid London $5 million dollars,
24         we say that it's $5 million dollars less, in limits

25         that remain, for Quigley's claims.

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2                   MR. CALOGERO:         I understand the dispute,
3          that if we have to arbitrate that, it puts us
4          between a rock and a hard place.
5                   If we want to settle the litigation, and
6          pay the pre-judgment interest, then we will be
7          back here, to go to the arbitration.
8                   The injunction was to protect the estate.
9          That's why we feel it is best to leave things in
10         play right now.
11                  THE COURT:     I have not seen either
12         settlement.      And I understand that no one was to
13         make them public, or to see the settlements.
14                  There are two settlements.          I have some
15         idea of the way things might work.
16                  MR. CALOGERO:         Your Honor, we don't have a
17         problem with it.
18                  MR. COOK:     Quigley does not have a problem
19         with it.
20                  THE COURT:     Make sure it's delivered in a
21         sealed envelope, and sent directly to Chambers.
22                  MR. COOK:     On the settlement agreement
23         with London, Mr. Cuddy would have to address
24         whether London objects to it.
25                  MR. CUDDY:     I think that would be fine.

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2                  THE COURT:      Make sure that when it is
3          delivered, in the envelopes, it says on the back:
4                  "Sealed Documents - Confidential," so that
5          an ordinary person wouldn't chose to open them.
6                  THE COURT:      I'm going to put off a decision
7          on this, until the next day; by then, I'll have a
8          much better understanding.
9                  MR. CALOGERO:      Could I just add a couple of
10         things, Your Honor?
11                 THE COURT:      Yes.
12                 MR. CALOGERO:      First of all, regarding
13         Allstate, we had discussions with Pfizer back in
14         the early '90's.       We wanted to be able to have an
15         agreement.     But they never called upon us to pay.
16                 THE COURT:      This is why I don't want to see
17         these agreements.       I want to try to understand
18         whether Pfizer undertook to make these agreements,
19         which, in essence, may have not taken account of
20         a third parties rights.
21                 In which case, it may be Pfizer's problem,
22         and not yours.      I don't know.
23                 MR. KILLALEA:      I'm just saying that, if
24         that's correct, and they're always correct, then
25         you were supposed to pay earlier.

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 2                   MR. CALOGERO:    That's our position,

 3         Your Honor.      Nobody had asked us:    "Why don't
 4         you come in, and join the parties?"        Somehow,

 5         that never happened.
 6                   THE COURT:    I take it that the Wellington

 7         Agreement did not work out very well?
 8                   MR. COOK:    Hundreds of millions of dollars
 9         was paid for asbestos claims, without a hitch.

10                 THE COURT:      The question is not that you did
11         not get to pay the money out, but, did you pay the

12         right amount of money out?       If you paid too much

13         money out, then we can all agree, on a billion

14         dollars going to Quigley's claims.
15                 MR. COOK:      That's the problem with the tort

16         system.    I was going to address that last point,

17         between Pfizer, Quigley, and Allstate, in which

18         the Allstate policies had assessed whether Pfizer
19         and Quigley had the right to strike that agreement.
20                 THE COURT:      I think that they don't have to

21         put that in writing.       That debt was filed.

22                 I can't decide who is getting the worst side
23         of the deal.      Most of the time, I think it's
24         Allstate.      But sometimes, I think it's the London

25         insurers.

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2                  MR. COOK:     Your Honor, from the Pfizer

3          and Quigley perspectives, this contribution will

4          go forward someday, seeking equitable distribution,

5          as long as the preliminary injunction is there.

6                  THE COURT:     This was not reinstated by the

7          automatic stay.      I do not believe that you can

8          extend it.

9                  But I do believe that you can issue a

10         preliminary injunction, not necessarily by the

11         automatic stay.     But many of them would have been

12         done, because of all the actions of the team.

13                 This Court can't adjudicate on the merits.

14         It's really necessary to try to keep everybody in

15         the same place.

16                 MR. COOK:    Quigley believed the contribution

17         was against the estate.

18                 THE COURT:    I don't want to argue with you

19         about it, because you know, as far as I can see,

20         it's complicated.     And so, you could argue that it

21         was the automatic stay.

22                 If you took one solution, they couldn't charge

23         back against you.     Or, if you took the position that

24         they can charge back against you, then it does impact

25         your rights.

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 2                  MR. COOK:    The settlement agreements, which

 3         London does, eliminate the county that Quigley is

 4         most troubled by.

 5                  And even though London is out of the picture,

 6         our agreement arrangement is still with Allstate.

 7                  Now that arrangement works.     But for the

 8         settlement agreements, if their case is allowed to

 9         go forward, they will dismiss it.

10                  THE COURT:    I want to put it off for another

11         month.    Then, I'll decide which way to go.

12                  MR. COOK:    We will submit that properly.

13                  THE COURT:    Mr. Cook, is there anything else

14         we need to do today?

15                  MR. COOK:    No, Your Honor.

16                  THE COURT:    Thank you.

17                  MR. COOK:    Thank you, Your Honor.

18

19

20

21

22

23

24

25

     BENJAMIN REPORTING   (212)374-1138   DOYLE REPORTING   (212)867-8220
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1                                QUIGLEY COMPANY, INC.
2
3                              C E R T I F I C A T E
4
5          STATE OF NEW YORK             )
                                         )    ss.:
6          COUNTY OF KINGS               )
7
8                         I, VERONICA SOKOL, a Shorthand Reporter
9          and   Notary Public         within and for the State of
10         New York, do hereby certify:
11                        That    I reported the proceedings in the
12         within    entitled       matter,       and   that the within
13         transcript is a true record of such proceedings.
14                        I further certify that I am not related
15         to any of the parties             to   this action by blood
16         or marriage, and that I am in no way interested
17         in the outcome of this matter.
18                        IN   WITNESS       WHEREOF,    I   have hereunto
19         set my hand this _____ day of ___________, 2005.
20
21
22                                  ___________________________
                                              VERONICA SOKOL
23
24
25

     BENJAMIN REPORTING   (212)374-1138       DOYLE REPORTING   (212)867-8220
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          A              21:3,16,17 22:4,6    attempts 25:6         BURK 4:6
ability 19:18            22:7,20 23:13 25:7   Attorneys 2:6,12,18   business 10:3,5 23:8
able 8:7 20:4 22:13      25:21,21 26:3,9,16     3:6,13,18 4:6
                         27:7,17 28:9,14,24   automatic 1:16 33:7             C
  22:23 27:18 31:14
account 31:19            29:4,17 31:13          33:11,21           C 2:3 3:3 4:3 5:3
action 1:17 5:12         32:17,18,24 34:6     automatically 26:14    35:3,3
  12:19,19,24,25       Allstate's 21:22       Avenue 2:7,12        CADWALADER
  13:6 23:24 26:23       23:23,25             A.D.R 28:23            3:12
  26:23,24,24 27:4,8   amount 15:25 18:14                          calculate 26:22
                         19:8 20:12 26:16               B            27:11,18
  28:19 35:15
actions 5:18 33:12       26:18,20 27:19       B 1:20 2:14          calculating 27:6,10
add 31:9                 32:12                back 20:13,20 24:8   calendar 5:10 9:11
additional 22:25       amounts 13:8 21:25       30:7 31:3,13 33:23 called 13:24 31:15
  26:17                  24:4,6,14,16 25:21     33:24              Calogero 4:9 18:10
address 30:23 32:16      25:22,24             background 12:23       18:10,14,17,22
adjudicate 33:13       answer 15:18           backwards 29:19        19:2,6 22:9 28:7
affect 11:8            anybody 6:14 9:3       Bae 3:15 10:22,24      29:18 30:2,16 31:9
afternoon 5:7 10:24    Anyway 7:24              10:25 11:2,7         31:12 32:2
aggregate 15:19        apparently 7:7 15:5    Bankruptcy 1:2,22    CAPLIN 3:18
agree 32:13            Appeals 17:12,22       based 14:11 22:3     carrier 25:14
agreed 15:12 24:15     apply 17:8             basis 15:10          carriers 21:8 26:3,4
agreement 1:18         approve 11:19 21:14    batch 13:15          CARTER 1:21
  13:23,24 14:3        approving 1:18         BEATTY 1:21          case 1:6 11:8 14:19
  15:11 16:22,23       Approximately          behalf 10:25 23:23     17:21 20:8 22:8
  28:18,24 30:22         15:19 23:2             23:25                29:6,11 31:21 34:8
  31:15 32:7,19 34:6   April 11:14,15         believe 8:5 28:12    cause 6:25
agreements 6:16        arbitrate 30:3           33:7,9             causes 19:23
  13:21 28:20 29:20    arbitration 24:24      believed 19:21 33:16 cent 16:13
  31:17,18 34:2,8        30:7                 believes 22:6        Center 3:13 4:7
agricultural 10:5      argue 18:20 33:18      beneficiaries 21:23 Century 4:8
aimed 9:8                33:20                benefit 19:16        certain 6:6 14:20
Albert 3:6             argument 18:23         best 30:9            Certainly 11:3
allocate 17:15         arose 12:24,25         better 8:4 31:8      certify 35:10,14
allocated 15:14        arrangement 34:6,7     Bextra 7:5           cetera 16:17
  17:10                asbestos 13:24 17:7    big 13:15            Chambers 30:21
allocation 17:8 22:5     18:6,18 19:3 28:9    biggest 7:14         Chapter 1:5
  22:24                  29:11 32:9           billing 19:14        charge 19:12 33:22
allow 12:21            aside 11:6             billion 15:21 32:13    33:24
allowed 10:21 34:8     asked 18:18 32:3       binding 28:19        charged 23:9
Allstate 1:17 4:7      asking 15:24           blood 35:15          Chemical 9:24 10:2
  11:18,23 13:5        assessed 32:18         Boston 2:19            10:4
  15:15,15,20,23       asset 19:15,18         Bowling 1:13         choose 17:9
  16:5,5,18,19,25      assets 6:7 19:19       bring 25:11          chose 31:5
  17:2 18:10,18 19:2   assuming 9:20 10:10    broad 17:10,11,13    Circle 3:19
  19:9,21,23 20:3,14   assured 27:3             17:15              circumstances 20:7
                       attacks 6:25           broader 18:24        civil 5:12

         BENJAMIN REPORTING (212)374-1138 DOYLE REPORTING (212)867-8220
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claim 13:12,12 21:9       25:15,16,22            29:16 30:11,20     dialogs 5:23
  21:12 27:21,21,22     consumed 19:3            31:2,6,11,16 32:6  difference 13:10
  28:16                 contain 11:3             32:10,20 33:6,13   different 13:18 27:2
claimants 16:14         contested 5:10 11:11     33:18 34:10,13,16    27:3
claims 3:7 5:24 8:6     Continued 3:3 4:3      coverage 16:5,7,19   differently 14:15
  10:12,17 11:9         continuing 6:4           17:16 19:2,3,7,8,9   23:20
  13:15,24 18:19,22     contribution 1:17        24:7 27:25         difficult 11:6
  19:8,12 24:13 28:9      12:8 20:8 22:7       covered 26:17        directly 30:21
  29:25 32:9,14           23:24 24:16 25:6     covering 18:25       disagreed 28:17
class 7:6                 28:19 33:3,16        covers 17:6          disclosure 8:14
clean 10:9              control 19:18          Creditors 3:19       discovery 11:25
cleanup 10:6            conversations 5:23     Cuddy 2:20 22:16     discussions 31:13
clear 6:18 7:5          Cook 2:8 5:7,8,20        22:16,21 23:4,12   dismiss 34:9
Clerk 9:12                6:4,10,20 7:18 8:2     24:2,11 25:2,5,11  disproportionate
close 14:3                8:12,23 9:2,8,11       25:17,25 26:7,11     24:10
clue 12:6                 9:15 10:14,22          26:16 27:2,5,8,13  dispute 10:7 13:7
collect 22:25             11:11,17 12:2,10       28:2 30:23,25        28:13,22 30:2
come 10:10 13:13,14       30:18,22 32:8,15     currently 16:19      disputed 28:21
  13:16 29:8 32:4         33:2,16 34:2,12,13   Custom 1:13          distinction 29:17
comes 6:12                34:15,17             CUYLER 4:6           distributed 6:7
coming 27:14            Corporate 4:7                               distribution 24:3
comment 7:24            correct 8:22 14:9                D            33:4
committee 3:19 8:6        15:9 22:9,21 24:11   D 5:3                distributions 11:2
committees 5:24           25:5 28:2 31:24,24   damages 27:6         DISTRICT 1:2
companies 9:7,22,24     cost 7:22              dates 16:8           document 10:14
company 1:7,17 2:1      Counsel 22:14          David 2:14 12:12     documents 9:16
  3:1 4:1,7 5:1,8 6:1   county 34:3 35:6       day 23:21 31:7         31:4
  7:1 8:1 9:1,24,25     couple 31:9              35:19              doing 27:11
  10:1,4 11:1 12:1      Court 1:2 5:5,17 6:2   DC 2:13 3:20         dollar 20:17 22:20
  13:1,7 14:1 15:1        6:8,11,22 7:2,20     deal 9:11 32:23      dollars 7:23 15:14
  16:1 17:1,3 18:1        8:10,17,25 9:5,10    dealings 9:22          15:23 16:2,4,11,18
  19:1,24 20:1 21:1       9:13,18 10:2,20      dealt 10:19            18:3 19:11 20:11
  22:1 23:1 24:1          11:5,10,13 12:4,15   debt 32:21             20:13,15,16,22,25
  25:1 26:1 27:1,9        13:2,10,18,22 14:5   Debtor 1:8 2:6         21:3,14,18 22:18
  28:1 29:1 30:1          14:10,16,22 15:2     decide 32:22 34:11     22:25 23:5,15
  31:1 32:1 33:1          15:17,24 16:9,14     decision 31:6          24:14 29:15,22,23
  34:1 35:1               16:24 17:5,12,18     deduct 29:21           29:24 32:8,14
compare 27:16             17:21,23 18:2,8,12   defendant 11:22      drawing 19:9
compared 7:7              18:16,20 19:5,10     defendants 29:10     Drive 4:8
complaint 12:20           19:20 20:6,18,24     defense 16:17        drop 15:16
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         BENJAMIN REPORTING (212)374-1138 DOYLE REPORTING (212)867-8220
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1982 16:6
1993 28:9
1999 16:21
1999/2000 28:21
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2000 16:21
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2001 13:5
2002 11:22
2005 1:11 35:19
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90's 31:14
919 2:7




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