The Stephan Co. - Chapter 11 Plan Terms

Stephan Co.'s reorganization plan establishes a section 524(g) talc personal injury trust funded by a $1 million Non-Debtor Affiliate promissory note (5% interest, five-year maturity, guaranteed by the reorganized debtor and secured by 50.1% of its equity), residual cash from the professional fee escrow account (itself funded by the FFIC insurance settlement), and assigned insurance rights under non-settling insurer policies, whereby existing equity retains ownership subject to the trust's collateral pledge while all talc personal injury claimants are channeled exclusively to the trust under a court-approved injunction requiring 75% numerical and two-thirds dollar-amount acceptance from voting Class 4 claimholders.

Plan Terms

Overview

The Stephan Co., as debtor and debtor in possession, together with the Non-Debtor Affiliates propose this plan of reorganization for the resolution of claims against and interests in the Debtor pursuant to section 1121(a) of the Bankruptcy Code.
- "Debtor" means The Stephan Co., and includes any entity that was, at any time, merged or consolidated with the Debtor, including, without limitation, Old 97 Company.
- "Non-Debtor Affiliates" means (a) all current and former Affiliates of the Debtor and (b) all former Affiliates and predecessors of the Debtor, and their respective successors and assigns, solely in their respective capacities as such. Without limiting the foregoing, Non-Debtor Affiliates shall include those entities identified as Non-Debtor Affiliates in the Plan Supplement, but shall specifically include 614 Barber Supply, Inc., Bowman Beauty & Barber Supply, Inc. and Morris Flamingo-Stephan, Inc.
- "Plan Proponents" means, collectively, the Debtor and the Non-Debtor Affiliates.
The "Talc Claimants' Committee" means both (i) the official committee of asbestos and/or talc personal injury claimants appointed in the Chapter 11 Case, as such committee may be reconstituted from time to time, and its members (solely in their respective capacities as such) and (ii) the ad hoc committee of Talc Claimants that served as the predecessor to the official committee of talc personal injury claimants prior to the Petition Date and its members (solely in their respective capacities as such).
The "Future Claimants' Representative" means the person appointed by the Bankruptcy Court (or any court-appointed alternative or successor), in his or her capacity as the court-appointed legal representative for all Future Demand Holders pursuant to sections 105(a) and 524(g) of the Bankruptcy Code.
"Settling Insurer" means FFIC, Fireman's Fund Insurance Company and any other Insurer that is party to an Insurance Settlement Agreement. A Settling Insurer's predecessors, successors, assigns, and Affiliates shall receive the benefits and protections afforded to a Settling Insurer under this Plan.
"Protected Party" means (i) the Debtor, (ii) the Reorganized Debtor, (iii) the Non-Debtor Affiliates, (iv) any Settling Insurer, (v) Representatives of any of the parties included in (i) through (iv), solely in their capacity as such, or a successor-in-interest of any of the parties included in (i) through (v), solely in their capacity as such, and (vi) any and all Insureds.

Restructuring Transactions

On the Effective Date, the Reorganized Debtor Stock shall be deemed issued (or reissued) to treasury and Holders of the Debtor's Equity, subject to the terms of the Debtor Guaranty and Pledge and Security Agreement. As set forth in this Plan, section 1145 of the Bankruptcy Code shall apply to any such issuance or reissuance.
The sequence of the foregoing transactions and other Restructuring Transactions to be effectuated on the Effective Date will be set forth in the Implementation Step Plan, which plan shall be in form and substance reasonably acceptable to the Debtor, the Non-Debtor Affiliates, any Settling Insurer, the Talc Claimants' Committee, and the Future Claimants' Representative.
"Restructuring Transaction" means each action by the Reorganized Debtor necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan, including (a) the execution and delivery of appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution, or liquidation, certificates of incorporation, operating agreements, by-laws, or other documents containing terms that are consistent with the terms of the Plan and that satisfy the applicable requirements of applicable law; (b) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any asset, property, right, liability, debt or obligation on terms consistent with the terms of the Plan; (c) the filing of appropriate certificates or articles of incorporation, reincorporation, merger, consolidation, conversion, or dissolution pursuant to applicable state law; (d) the execution and delivery of the applicable documents and instruments included in the Plan Supplement; and (e) all other actions the Debtor or Reorganized Debtor determine to be necessary or appropriate, including making filings or recordings that may be required by applicable law.
"Implementation Step Plan" means that certain Implementation Step Plan to be filed with the Bankruptcy Court not less than ten (10) days prior to the Effective Date, which Implementation Step Plan shall set forth the restructurings, transfers, and other transactions that the Plan Proponents determine to be necessary or appropriate to effectuate the Plan, including, without limitation, the execution and delivery of the Talc Personal Injury Trust and the Non-Debtor Contribution and the Debtor Contribution to the Talc Personal Injury Trust in compliance with the Bankruptcy Code and other applicable law and, to the maximum extent possible, in a tax efficient manner.

Non-Debtor Affiliates Contribution

On or prior to the Effective Date, the Non-Debtor Affiliates will contribute, or cause to be contributed, to the Talc Personal Injury Trust, the Trust Note as the Non-Debtor Affiliates Contribution.
In addition, effective automatically upon the occurrence of the Effective Date, the Non-Debtor Affiliates will release certain claims pursuant to the Related Party Release (which release shall not include the Financing Amount or Intercompany Claims). The Non-Debtor Affiliates Contribution (i.e., the Trust Note and Related Party Release) will be made in settlement of any and all causes of action the Debtor may have against the Non-Debtor Affiliates or Related Parties and in consideration for the Non-Debtor Affiliates (and their Representatives) being included as a Protected Party in connection with the Talc Personal Injury Channeling Injunction as set forth herein and the Confirmation Order.
As part of the Non-Debtor Affiliates Contribution, the Non-Debtor Affiliates will waive, release, and discharge any and all Claims (other than Financing Facility Claim and Intercompany Claims which are Allowed and will be satisfied as set forth in Classes 5 and 6, respectively, above), suits, causes of action, controversies, demands, rights, Liens, indemnities, guarantees, and judgments held by one or more Non-Debtor Affiliates against the Debtor, the Talc Claimants' Committee, the Future Claimants' Representative, and each of their respective predecessors, successors, assigns, and Affiliates and its and their respective parents, subsidiaries, heirs, executors, estates, servants, nominees and Representatives, in each case solely in its capacity as such (the "Related Party Release"). The Related Party Release will be effectuated and effective automatically upon the occurrence of the Effective Date.
As further consideration for the benefits afforded in connection with this Plan, the Non-Debtor Affiliates will upon occurrence of a Settling Insurer's Insurance Settlement Trigger Date waive, release, and forever discharge such Settling Insurer (and the other Settling Insurer Releasees of such Settling Insurer) from any and all past, present, and future: (i) Talc Personal Injury Claims; (ii) Claims or Causes of Action that, directly or indirectly, are under, arise out of, relate to, or connect with such Settling Insurer's Settling Insurer Policies or any other Claims or Causes of Action that are covered or alleged to be covered under any of such Settling Insurer's Settling Insurer Policies, including any Channeled Claims, Barred Claims, reimbursement obligations for Conditional Payments under the MSPA, and all Claims and Causes of Action that, directly or indirectly, arise from, relate to, or are in connection with the Talc Personal Injury Claims or the Chapter 11 Case.
"Non-Debtor Affiliates Contribution" means the Trust Note in the amount of One Million Dollars ($1,000,000) executed and delivered by the Non-Debtor Affiliates to and payable to the Talc Personal Injury Trust.
"Trust Note" means a promissory note issued by the Non-Debtor Affiliates to the Talc Personal Injury Trust in the original principal sum of One Million Dollars ($1,000,000) bearing interest at 5 percent (5%) per annum with a five-year maturity. Principal and interest payments shall be paid on an annual basis. The Trust Note shall be guaranteed by the Reorganized Debtor pursuant to the Debtor Guaranty and such Debtor Guaranty shall be secured by a lien on 50.1% of the stock of Reorganized Debtor which stock shall be issued pursuant to this Plan for such purpose. The Trust Note shall be prepayable in whole or in part at any time at par plus accrued interest without any prepayment premium or penalty.

Debtor Contribution

On the Effective Date, or as soon as practicable thereafter, the Debtor or Reorganized Debtor (as applicable) will transfer, or cause to be transferred, to the Talc Personal Injury Trust, the Debtor Contributed Cash, the Debtor Guaranty, the Pledge and Security Agreement and the Talc Personal Injury Insurance Assets (collectively, the "Debtor Contribution").
"Debtor Contributed Cash" means the amount remaining in the Professional Fee Escrow Account after payment in full of all Allowed Professional Fees and the Financing Facility Claim, which amount shall be contributed to the Talc Personal Injury Trust.
"Debtor Guaranty" means the Debtor's unconditional guaranty of the Trust Note.
"Pledge and Security Agreement" means the Pledge and Security Agreement providing not less than 50.1% of the Interests in the Reorganized Debtor as of the Effective Date as collateral security for the Debtor Guaranty, in substantially the form included in the Plan Supplement, to be dated as of the Effective Date, by and among the Reorganized Debtor and the Talc Personal Injury Trust.
The Debtor Guaranty of the Trust Note shall be secured by a lien on 50.1% of the stock of the Reorganized Debtor (the "Collateral Stock"), and on the Effective Date, the Reorganized Debtor shall deliver certificates (or the legal equivalent thereof) representing 50.1% of the Reorganized Debtor's stock to the Talc Personal Injury Trust to be held by the Talc Personal Injury Trustee in accordance with the Debtor Guaranty and Pledge and Security Agreement. Upon payment in full of the Trust Note in accordance with its terms, the Collateral Stock shall be free of any security interest and shall be returned to the Debtor to be held in treasury, subject to any subsequent vote of the Reorganized Debtor's Board.

Talc Personal Injury Trust

On the Effective Date, the Talc Personal Injury Trust shall be established in accordance with the Plan Documents, the Talc Personal Injury Trust Documents, and section 524(g) of the Bankruptcy Code and managed pursuant to the terms and conditions of the Talc Personal Injury Trust Documents. On the Effective Date, the Cooperation Agreement shall become effective and the Debtor's talc and asbestos-related records shall be treated in accordance therewith.
The purpose of the Talc Personal Injury Trust shall be (a) to assume all liabilities and responsibility for all Channeled Claims and, with respect to the Settling Insurers and Settling Insurer Releasees, all Barred Claims, and (b) to, among other things: (i) direct the processing, liquidation, and payment of all compensable Talc Personal Injury Claims in accordance with this Plan, the Talc Personal Injury Trust Agreement, the Talc Personal Injury Trust Distribution Procedures, and the Confirmation Order; (ii) preserve, hold, manage, and maximize the assets of the Talc Personal Injury Trust for use in paying and satisfying Talc Personal Injury Claims; and (iii) qualify at all times as a qualified settlement fund. The Talc Personal Injury Trust shall use the Talc Personal Injury Trust's assets and income to resolve Talc Personal Injury Claims in accordance with the Talc Personal Injury Trust Agreement and the Talc Personal Injury Trust Distribution Procedures in such a way that Holders of Talc Personal Injury Claims are treated fairly, equitably, and reasonably in light of the finite assets available to satisfy such Claims, and shall otherwise comply in all respects with the requirements of a trust established pursuant to sections 105(a) and 524(g)(2)(B) of the Bankruptcy Code.
On the Effective Date, all right, title, and interest in and to the Talc Personal Injury Trust Assets, and any proceeds thereof, will be transferred to, and vested in, the Talc Personal Injury Trust, free and clear of all Claims, Demands, Interests, Encumbrances, and other interests of any Entity, without any further action of the Bankruptcy Court or any Entity, but subject to (a) the remaining provisions of this Section IV.D. and (b) Section VIII.L. hereof.
"Talc Personal Injury Trust" means the personal injury trust established pursuant to section 524(g) of the Bankruptcy Code and in accordance with the Plan, the Confirmation Order, and the Talc Personal Injury Trust Agreement, which trust shall constitute a "qualified settlement fund" under section 468B of the Internal Revenue Code.
"Talc Personal Injury Trust Assets" means, collectively: (a) the Talc Personal Injury Trust Contributions; (b) all other assets, rights, and benefits assigned, transferred or conveyed to the Talc Personal Injury Trust in connection with the Plan or any Plan Documents; and (c) all proceeds of the foregoing. For the avoidance of doubt, Talc Personal Injury Trust Assets shall specifically exclude all Settling Insurer Policies, all Claims, Demands, or Causes of Action against a Settling Insurer settled, sold, and/or released pursuant to the Insurance Settlement Agreement with such Settling Insurer (including, for the avoidance of doubt, Extra-Contractual Claims and Released Insurance Claims), and all other Purchased Property and Related Insurance Claims.
"Talc Personal Injury Trust Contributions" means, collectively, the Debtor Contribution, the Non-Debtor Affiliates Contribution and the Talc Personal Injury Insurance Assets.

Talc Personal Injury Trustee

The individual nominated by the Talc Claimants' Committee and the Future Claimants' Representative to serve as the initial Talc Personal Injury Trustee shall be identified in an exhibit to the Plan Supplement. On the Effective Date, such individual shall be appointed as the Talc Personal Injury Trustee pursuant to the Plan, the Confirmation Order, and the Talc Personal Injury Trust Agreement, and all costs and expenses of the Talc Personal Injury Trustee shall be paid by the Talc Personal Injury Trust. All subsequent Talc Personal Injury Trustees shall be appointed in accordance with the terms of the Talc Personal Injury Trust Agreement. For purposes of performing the duties and fulfilling the obligations under the Talc Personal Injury Trust Agreement and the Plan, the Talc Personal Injury Trustee shall be deemed to be a party or parties in interest within the meaning of section 1109(b) of the Bankruptcy Code.
"Talc Personal Injury Trustee" means the individual set forth in the Talc Personal Injury Trust Agreement and appointed pursuant to the Confirmation Order to serve as the trustee for the Talc Personal Injury Trust in accordance with the terms of the Plan and the Talc Personal Injury Trust Agreement, and any successor trustee thereto appointed in accordance with the Talc Personal Injury Trust Agreement.

Post-Effective Date Future Claimants' Representative

Subject to approval of the Bankruptcy Court, on the Effective Date, the person previously appointed as the Future Claimant's Representative shall be appointed, pursuant to the Plan, the Confirmation Order, and the Talc Personal Injury Trust Agreement, as the Post-Effective Date Future Claimants' Representative (all costs and expenses of the Post-Effective Date Future Claimants' Representative shall be paid by the Talc Personal Injury Trust). The Post-Effective Date Future Claimants' Representative shall have the functions, duties, and rights provided in, and shall serve in accordance with, the Talc Personal Injury Trust Agreement. In addition to the foregoing, the Post-Effective Date Future Claimants Representative also may, at his or her option, participate in any: (a) appeal of the Confirmation Order; (b) hearing on a Professional Fee Claim; and (c) adversary proceeding pending on the Effective Date to which the Future Claimants' Representative is a party as of the Effective Date. Successor Post-Effective Date Future Claimants' Representatives will be appointed as provided in the Talc Personal Injury Trust Agreement.
"Post-Effective Date Future Claimants' Representative" means, subject to approval of the Bankruptcy Court, on and after the Effective Date, the person appointed by the Bankruptcy Court in his or her capacity as the post-Effective Date legal representative for all Future Demand Holders, or any successor thereto appointed pursuant to the Talc Personal Injury Trust Agreement.

Talc Personal Injury Trust Advisory Committee

The five (5) individuals nominated by the Talc Claimants' Committee to serve as the initial members of the Talc Personal Injury Trust Advisory Committee shall be identified in the Plan Supplement. The Confirmation Order shall constitute an order of the Bankruptcy Court appointing the initial members of the Talc Personal Injury Trust Advisory Committee. The Talc Personal Injury Trust Advisory Committee shall have the functions, duties, and rights provided in, and shall serve in accordance with, the Talc Personal Injury Trust Agreement, and all costs and expenses of the Talc Personal Injury Trust Advisory Committee shall be paid by the Talc Personal Injury Trust as set forth in the Talc Personal Injury Trust Agreement. Successor members of the Talc Personal Injury Trust Advisory Committee will be appointed as provided in the Talc Personal Injury Trust Agreement.
"Talc Personal Injury Trust Advisory Committee" means the advisory committee established pursuant to the terms of the Plan and the Talc Personal Injury Trust Agreement and identified in the Talc Personal Injury Trust Agreement.

Channeling Injunction

Pursuant to section 524(g) of the Bankruptcy Code, from and after the Effective Date, the sole recourse of any Holder of a Channeled Claim on account of such Channeled Claim shall be to the Talc Personal Injury Trust pursuant to this Section VIII.C.1. of the Plan and the Talc Personal Injury Trust Distribution Procedures, and such Holder shall have no right whatsoever at any time to assert its Channeled Claim against any Protected Party or any property or interest in property of any Protected Party. On and after the Effective Date, all present and future Holders of Channeled Claims shall be permanently and forever stayed, restrained, barred and enjoined from taking any of the following actions for the purpose of, directly, indirectly, or derivatively, collecting, recovering, or receiving payment of, on, or with respect to any Channeled Claim other than from the Talc Personal Injury Trust pursuant to the Talc Personal Injury Trust Agreement and the Talc Personal Injury Trust Distribution Procedures.
"Talc Personal Injury Channeling Injunction" means the injunction provided for in Section VIII.C. of this Plan.
"Channeled Claim" means any Demand, Talc Personal Injury Claim, Medicare Claim, Extra-Contractual Claim, or any other Claim or Cause of Action against the Debtor or any Protected Party arising from or related in any way to a Talc Personal Injury Claim or any of the Settling Insurer Policies, whenever and wherever arising or asserted, whether sounding in tort, contract, warranty, or any other theory of law, equity, or admiralty, including without limitation all Claims, Demands, and Causes of Action by way of direct action, subrogation, contribution, indemnity, alter ego, successor liability, derivative claims, statutory or regulatory action, or otherwise, and Claims, Demands, or Causes of Action for exemplary or punitive damages, for attorneys' fees and other expenses, or for any equitable remedy. For the avoidance of doubt, a Channeled Claim includes any Claim, Demand, or Cause of Action against a Protected Party based on allegations that it is an alter ego and/or successor of a Person that is not a Protected Party or that the Protected Party's corporate veil should be pierced on account of Claims, Demands, or Causes of Action against an Entity that is not a Protected Party or based on any other theory under which the legal separateness of any Entity and any other Entity may be disregarded to impose liability for a Claim, Demand, or Cause of Action on either such Entity.
The assignment, transfer, and conveyance of the Talc Personal Injury Trust Assets (inclusive of the Non-Debtor Affiliates Contribution) to the Talc Personal Injury Trust on the Effective Date supports the imposition of the Talc Personal Injury Channeling Injunction in favor of all of the Protected Parties as of the Effective Date. Without limiting the generality of the foregoing, payment by a Settling Insurer of its Insurance Settlement Amount further supports ratification of the Settling Insurer Injunction and imposition of the Talc Personal Injury Channeling Injunction in favor of such Settling Insurer.

Insurance Entity Injunction

In order to protect the Talc Personal Injury Trust and to preserve the Talc Personal Injury Trust Assets, pursuant to the equitable jurisdiction and power of the Bankruptcy Court, the Bankruptcy Court shall issue the Insurance Entity Injunction; provided, however, that the Insurance Entity Injunction is not issued for the benefit of any Non-Settling Insurer, and no Non-Settling Insurer is a third-party beneficiary of the Insurance Entity Injunction.
Subject to the provisions of Sections VIII.C. and VIII.D.1. of the Plan, all Entities that have held or asserted, that hold or assert, or that may in the future hold or assert any Claim, Demand or Cause of Action (including any Talc Personal Injury Claim or any Claim or Demand for or respecting any Talc Personal Injury Trust Expense) against any Insurer based upon, attributable to, arising out of, or in any way connected with a Transferred Policy, a Settling Insurer Policy, or any Talc Personal Injury Claim (including Indirect Talc Personal Injury Claims and Demands), whenever and wherever arising or asserted, whether in the United States of America or anywhere else in the world, whether sounding in tort, contract, warranty, or any other theory of law, equity, or admiralty, shall be stayed, restrained, and enjoined from taking any action for the purpose of directly or indirectly collecting, recovering, or receiving payments, satisfaction, or recovery with respect to any such Claim, Demand, or Cause of Action including, without limitation.
"Insurance Entity Injunction" means the injunction provided for in Section VIII.D. of this Plan.

Settling Insurer Injunction

Pursuant to sections 105(a), 363, 524(g)(4)(A)(ii)(III), and 1123 of the Bankruptcy Code, and in consideration of the undertakings of the Settling Insurers under the Insurance Settlement Agreements, including the Settling Insurers' purchase of the Purchased Property free and clear of all Claims, Liens, Encumbrances, Demands, and Causes of Action pursuant to section 363(f) of the Bankruptcy Code, the Plan hereby incorporates by reference, adopts, and ratifies (and the Confirmation Order shall adopt and ratify) the Settling Insurer Injunction set forth in the Sale Order(s) in all respects.
"Supplemental Settling Insurer Injunction" or "Settling Insurer Injunction" means the permanent injunction provided for in the FFIC Settlement Agreement Approval Order and ratified in Section VIII.H. of this Plan.

Insurance Settlement Agreements

"Insurance Settlement Agreement" means each of (a) the FFIC Settlement Agreement and (b) any other settlement agreement that is either i) agreed to by the Plan Proponents and any Insurer, and approved by an order of the Bankruptcy Court (including the Confirmation Order) entered on or prior to the Effective Date, or (ii) agreed to after the Effective Date by the Talc Personal Injury Trustee and any Insurer.
"FFIC" means Fireman's Fund Insurance Company of Wisconsin.
"FFIC Settlement Agreement" means the Settlement Agreement, Release, and Insurance Policy Buyback by and between FFIC and the Debtor.
The Bankruptcy Court shall have entered an order approving the FFIC Settlement Agreement, which order shall be in form and substance acceptable to FFIC in its sole and absolute discretion (the "FFIC Settlement Agreement Approval Order").
Each Insurance Settlement Agreement is effective and binding upon the Talc Personal Injury Trust, the Talc Personal Injury Trustee, all Entities who have notice (including constructive notice, to the extent applicable), and any of the foregoing Entities' successors and assigns, upon entry of the Sale Order approving such Insurance Settlement Agreement and satisfaction of all conditions precedent. Payment of a Settling Insurer's Insurance Settlement Amount, and the releases by the Debtor (including on behalf of any Insured) of such Settling Insurer shall occur and/or be effective according to the terms of such Settling Insurer's Insurance Settlement Agreement. The Insurance Settlement Agreements shall survive the confirmation, effectiveness, and consummation of the Plan. The rights of the parties under any Insurance Settlement Agreement shall be determined exclusively under the applicable Insurance Settlement Agreement and those provisions of the Sale Order approving such Insurance Settlement Agreement. No provision of the Plan or Confirmation Order shall be interpreted to affect or limit the protections afforded to any Settling Insurer by (i) such Settling Insurer's Insurance Settlement Agreement (and corresponding Sale Order), including without limitation the Settling Insurer Injunction, or (ii) the Debtor Discharge Injunction, Insurance Entity Injunction, and/or Talc Personal Injury Channeling Injunction.
In consideration of the Talc Personal Injury Channeling Injunction and releases and other covenants set forth herein, upon a Settling Insurer's Insurance Settlement Trigger Date, each of the Non-Debtor Affiliates: (a) ratifies the releases of such Settling Insurer set forth in such Settling Insurer's Insurance Settlement Agreement; and (b) ratifies and further consents to the sale of the Purchased Property to such Settling Insurer in accordance with such Settling Insurer's Insurance Settlement Agreement and to the contribution of the proceeds therefrom to the Professional Fee Escrow Account and the Talc Personal Injury Trust, as set forth herein.
Neither the Insurance Settlement Agreements nor any of the Settling Insurers' actions or inactions in this Chapter 11 Case shall be construed as support for the Insurance Assignment, the Talc Personal Injury Trust Distribution Procedures, or any findings or determinations (including those that will or may be set forth in the Confirmation Order) related to either, and no party shall in any proceeding argue that the Settling Insurers agreed to or acquiesced in such findings or determinations, the Insurance Assignment, or the Talc Personal Injury Trust Distribution Procedures; the Settling Insurers take no position on any of the foregoing.

Releases

Except as otherwise expressly provided in the Plan or the Confirmation Order, on the Effective Date, for good and valuable consideration, the adequacy of which is hereby confirmed, the Debtor, the Reorganized Debtor, and any Entity seeking to exercise the rights of the Estate, in each case, whether individually or collectively, including, without limitation, any successor to the Debtor or any Estate representative appointed or selected pursuant to the applicable provisions of the Bankruptcy Code, shall, and shall be deemed to, completely and forever release, waive, and discharge, unconditionally, the Non-Estate Representative Released Parties from any and all claims, obligations, suits, judgments, remedies, damages, Demands, debts, rights, Causes of Action, and liabilities which the Debtor, its Estate, or the Reorganized Debtor is entitled to assert, whether known or unknown, liquidated or unliquidated, fixed or contingent, foreseen or unforeseen, matured or unmatured, existing or hereafter arising, in law, equity or otherwise, whether direct, indirect, or derivative, based upon, attributable to, or arising out of, in whole or in part, any act or omission, transaction, or occurrence taking place on or prior to the Effective Date (including prior to the Petition Date) (other than the rights under the Plan, the Plan Documents, and the contracts, instruments, releases, and other agreements or documents delivered or to be delivered hereunder) and, including, without limitation, the Non-Estate Representative Released Party Claims.
Except as otherwise expressly provided in the Plan or the Confirmation Order, on the Effective Date, for good and valuable consideration, the adequacy of which is hereby confirmed, the Debtor, the Reorganized Debtor, and any Entity seeking to exercise the rights of the Estate, in each case whether individually or collectively, including, without limitation, any successor to the Debtor or any Estate representative appointed or selected pursuant to the applicable provisions of the Bankruptcy Code, shall, and shall be deemed to, completely and forever release, waive and discharge, unconditionally, the Released Parties from any and all claims, obligations, suits, judgments, remedies, damages, Demands, debts, rights, Causes of Action, and liabilities which the Debtor, its Estate, or Reorganized Debtor is entitled to assert, whether known or unknown, liquidated or unliquidated, fixed or contingent, foreseen or unforeseen, matured or unmatured, existing or hereafter arising, in law, equity, or otherwise, whether direct, indirect, or derivative, based upon, attributable to, arising out of, in whole or in part, any act or omission, transaction, or occurrence taking place on or prior to the Effective Date (including prior to the Petition Date) (other than the rights under the Plan, the Plan Documents, any Insurance Settlement Agreement, and the contracts, instruments, releases and other agreements or documents delivered or to be delivered hereunder); provided, however, that nothing contained in this Section VIII.F.2. is intended to operate as a release of any liability based upon gross negligence or willful misconduct as determined by a Final Order.
"Debtor Release" means the releases of the Released Parties and the Non-Estate Representative Released Parties, respectively, provided for in Section VIII.F. below.
"Released Parties" means each of: (a) the Debtor; (b) the Reorganized Debtor; (c) the Talc Claimants' Committee, solely in its capacity as such; (d) the Future Claimants' Representative, solely in his capacity as such; (e) to the fullest extent permitted by applicable law, with respect to each of the foregoing Entities in clauses (a) through (d), each such Entity's Representatives; and (f) upon occurrence of a Settling Insurer's Insurance Settlement Trigger Date, such Settling Insurer and all other Settling Insurer Releasees of such Settling Insurer.
"Non-Estate Representative Released Parties" means (a) the Non-Debtor Affiliates, and (b) any Representative of the Entities set forth in clause (a) of this definition.
On the Effective Date, the Debtor and the Reorganized Debtor are deemed to release and waive all Preference Actions.
"Preference Action" means any actual or potential claim or cause of action to avoid, pursuant to section 547 of the Bankruptcy Code, or similar applicable state or federal statutes and common law, a transfer of property of the Debtor, whether or not litigation has been commenced with respect to such claim as of the Effective Date. Pursuant to Section VIII.F.4. of this Plan, all Preference Actions are released.

Exculpation

Upon the Effective Date, none of the Exculpated Fiduciaries shall have or incur any liability based on any act or omission of the Exculpated Fiduciaries occurring or which is alleged to have occurred between November 14, 2025 to the Effective Date to any Entity for any act or omission in connection with, related to, or arising out of the: (1) Chapter 11 Case; (2) negotiation, formulation and preparation of the Chapter 11 Case, Plan and the other Plan Documents, and any of the terms and/or settlements and compromises reflected in the Plan and the other Plan Documents; (3) solicitation of votes in favor of the Plan and pursuit of confirmation of the Plan; (4) consummation of the Plan; (5) releases and injunctions contained in the Plan; or (6) management or operation of the Debtor during the Chapter 11 Case, except for Claims or Causes of Action arising out of or related to any act or omission by any Entity that is determined in a Final Order of a court of competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence, but in all respects such Entities shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan. For the avoidance of doubt, nothing in this paragraph shall impact or modify the scope of the (a) discharge injunction as set forth in Section VIII.B. of the Plan, (b) the Talc Personal Injury Channeling Injunction as set forth in Section VIII.C. of the Plan, or (c) the Insurance Entity Injunction as set forth in Section VIII.D. of the Plan.
"Exculpated Fiduciaries" means each of: (a) the Debtor; (b) the Talc Claimants' Committee, and its members, solely in their respective capacities as such; (c) the Future Claimants' Representative; and (d) with respect to each of the foregoing Entities in clauses (a) through (c), each such Entity's directors, officers, and professionals, in each case solely in their capacity as such.

Gatekeeper Injunction

To the extent permitted by law, no Enjoined Party may commence or pursue against any Protected Party (a) a Talc Personal Injury Claim or (b) any other Claim or Cause of Action that arose, arises from, or is related to a Talc Personal Injury Claim, the Chapter 11 Case, the negotiation of the Plan, the administration of the Plan or property to be distributed under the Plan, the wind-down or reorganization of the business of the Debtor, the Reorganized Debtor, the administration of the Talc Personal Injury Trust, or the transactions in furtherance of the foregoing without the Bankruptcy Court (i) first determining, after notice and a hearing, that such Claim or Cause of Action represents a colorable Claim or Cause of Action against a Protected Party and (ii) subject in all respects to the injunctions contained herein (including the Talc Personal Injury Channeling Injunction and Insurance Entity Injunction) or in any Sale Order (including the Settling Insurer Injunction) specifically authorizing such Enjoined Party to bring such Claim or Cause of Action against any such Protected Party. The Bankruptcy Court will have concurrent jurisdiction (x) to determine whether a Claim or Cause of Action is colorable and, to the extent legally permissible, (y) to adjudicate the underlying colorable Claim or Cause of Action.
"Enjoined Party" means all Entities who have held, hold, or may hold Claims, Causes of Action, or Demands that have been released or discharged or are subject to injunction or exculpation, including, without limitation, under the Talc Personal Injury Channeling Injunction, the Insurance Entity Injunction, or the Settling Insurer Injunction, pursuant to this Plan, the Confirmation Order, or the Sale Order(s).

Indemnification

The Talc Personal Injury Trust shall defend, indemnify, and hold harmless each Settling Insurer, as set forth in such Settling Insurer's Insurance Settlement Agreement, from each and every one of the following "Indemnified Claims": any and all Channeled Claims, Barred Claims, and Claims, Causes of Action, or Demands otherwise enjoined by or subject to the Settling Insurer Injunction and/or such Settling Insurer's Insurance Settlement Agreement, including all such Claims, Causes of Action, and Demands made by (i) any Entity claiming to be an Insured (as a named insured, additional insured, or otherwise) under any of the Settling Insurer Policies; (ii) any Entity who has made, will make, or can make (a) a Related Insurance Claim, (b) a Released Insurance Claim, or (c) a Talc Personal Injury Claim (including without limitation Indirect Talc Personal Injury Claims and Demands); and (iii) any Entity who has actually or allegedly acquired or been assigned the right to make a Claim (or bring a Cause of Action or Demand) under or with respect to any of the Settling Insurer Policies. For the avoidance of doubt, to the extent this Section VIII.L. (including the subsections set forth immediately below) conflicts or is inconsistent with the provisions of any Insurance Settlement Agreement that relate to Indemnified Claims, the provisions of the applicable Insurance Settlement Agreement will control and govern.
Each Settling Insurer shall have the right (but not the obligation) to defend any Indemnified Claims brought or made against such Settling Insurer and shall do so in good faith. Each Settling Insurer (a) may, upon receipt of an Indemnified Claim brought or made against such Settling Insurer, undertake the defense of the Indemnified Claim but is not required to do so and (b) agrees to notify the Talc Personal Injury Trustee as soon as practicable of such Indemnified Claim(s) and of the Settling Insurer's choice of counsel. If a Settling Insurer declines to defend an Indemnified Claim brought or made against it, the Talc Personal Injury Trust shall undertake the defense thereof.
The Talc Personal Injury Trust shall reimburse all reasonable and necessary attorneys' fees, expenses, costs, and amounts incurred by each Settling Insurer defending an Indemnified Claim. Such Settling Insurer may settle or otherwise resolve the Indemnified Claim only with the prior consent of the Talc Personal Injury Trustee, which consent shall not be unreasonably withheld. The Talc Personal Injury Trust may settle or otherwise resolve an Indemnified Claim only with the prior consent of the applicable Settling Insurer, which consent shall not be unreasonably withheld. A Settling Insurer's defense, settlement, or other resolution of any Indemnified Claim brought or made against such Settling Insurer shall not diminish the obligations of the Talc Personal Injury Trust to indemnify the Settling Insurer for the Indemnified Claim, as set forth in this Section VIII.L.
The indemnification and hold harmless undertaking set forth in this Section VIII.L. also extends to and for the benefit of the other Settling Insurer Releasees, all of which are third-party beneficiaries of the terms hereof.

Financing Facility

"Financing Amount" means the entire outstanding amount (inclusive of principal and accrued interest) owed by the Debtor to Non-Debtor Affiliates based on the amounts funded from the Non-Debtor Affiliates to the Debtor on and after September 1, 2025 under the Financing Facility prior to and as of the Effective Date.
"Financing Facility" means that certain unsecured loan facility by and between the Non-Debtor Affiliates, as Lender, and the Debtor, as Borrower dated as of September 1, 2025 and evidencing the obligation to repay the Financing Amount.
"Financing Facility Claim" means the Financing Amount as of the Effective Date, which amount shall be deemed an Allowed Claim and treated pursuant to Class 5 of the Plan.
The Financing Facility Claim shall be Allowed in the amount of the Financing Amount, which Claim, at the option of the Holders thereof, shall be (i) paid in full as of the Effective Date; or (ii) Reinstated in full in the ordinary course in accordance with the terms of the Financing Facility or as otherwise agreed to between the Reorganized Debtor and the Non-Debtor Affiliates.

Professional Fees

The Reorganized Debtor shall fund from the Insurance Settlement Amounts paid by FFIC the Professional Fee Escrow Account with Cash equal to the aggregate Professional Fee Reserve Amount for all Retained Professionals plus the Financing Amount. The Professional Fee Escrow Account shall be maintained in trust for the Retained Professionals and the Holders of Class 5 Claims. Such funds in the Professional Fee Escrow Account shall not constitute property of the Debtor's Estate or property of the Reorganized Debtor. The amount of Professional Fee Claims owing to the Retained Professionals on and after the Effective Date shall be paid in Cash to such Retained Professionals from funds held in the Professional Fee Escrow Account, without interest or other earnings therefrom, as soon as reasonably practicable after such Claims are Allowed by a Bankruptcy Court order. When all Allowed Professional Fee Claims and the Financing Amount have been paid in full, amounts remaining in the Professional Fee Escrow Account, if any, shall be paid to the Talc Personal Injury Trust and shall be considered part of the Debtor Contributed Cash.
"Professional Fee Escrow Account" means an account in an amount equal to the Professional Fee Reserve Amount plus the Financing Amount funded from the Insurance Settlement Amount paid by FFIC and maintained by the Reorganized Debtor (or its agent) solely for the purpose of paying all Allowed and unpaid Professional Fee Claims, all Allowed and unpaid fees and expenses of the Claims Agent under section 156 of the Bankruptcy Code, and the Financing Amount.
"Professional Fee Reserve Amount" means the aggregate amount of all fees, costs, and expenses accrued, incurred and unpaid, or projected to be incurred by (a) Retained Professionals and (b) the Claims Agent under section 156 of the Bankruptcy Code from the Petition Date through the Effective Date as estimated in good faith and in accordance with Section II.B. by the Retained Professionals and approved by the Debtor, in consultation with the Non-Debtor Affiliates, the Talc Claimants' Committee, and the Future Claimants' Representative.
The Debtor shall, on or prior to the Effective Date, pay (or reserve for in the Professional Fee Escrow Account with respect to the Professional Fee Reserve Amount) the accrued and unpaid reasonable and documented fees and expenses incurred prior to the Effective Date by the Talc Claimants' Committee and the Future Claimants' Representative and their respective professionals. The Professional Fee Escrow Account may also be utilized to reserve for, fund and pay Allowed post-Effective Date fees and expenses, including professional fees and expenses, of the Talc Claimants' Committee and the Future Claimants' Representative; provided, that for the avoidance of doubt, (a) any such amounts funded into the Professional Fee Escrow Account shall reduce the Debtor Contributed Cash, and (b) to the extent that the Professional Fee Escrow Account is insufficient to pay all outstanding and unpaid Allowed Professional Fees of the Talc Claimants' Committee and Future Claimants' Representative, any such outstanding and unpaid amounts from and after the Effective Date shall be paid and satisfied solely by the Talc Personal Injury Trust.

Classification and Treatment

Class 1 — Priority Non-Tax Claims (Unimpaired; Presumed to Accept): Except to the extent a Holder of an Allowed Priority Non-Tax Claim has been paid prior to the Effective Date or agrees to a different treatment, each Holder of an Allowed Priority Non-Tax Claim shall receive, in full satisfaction, settlement, and discharge of, and in exchange for such Priority Non-Tax Claim, Cash to be paid by the Reorganized Debtor in an amount equal to the unpaid portion of such Allowed Priority Non-Tax Claim on the later of: (i) the Effective Date; and (ii) the date the Priority Non-Tax Claim becomes an Allowed Priority Non-Tax Claim, or as soon thereafter as practicable. All Allowed Priority Non-Tax Claims not due and payable on or before the Effective Date shall be paid in the ordinary course of business in accordance with the terms thereof.
Class 2 — Secured Claims (Unimpaired; Presumed to Accept): Class 2 consists of all Secured Claims of the Debtor arising out of Debtor's prepetition guarantees of the debts of Non-Debtor Affiliates to the extent such guarantees are wholly or partially Secured. Except to the extent a Holder of an Allowed Secured Claim has been paid prior to the Effective Date or agrees to a different treatment, each Holder of an Allowed Secured Claim shall receive, in full satisfaction, settlement, and discharge of, and in exchange for such Secured Claim, (i) Reinstatement of such Claim; or (ii) Cash to be paid by the Reorganized Debtor in an amount equal to the unpaid portion of such Allowed Secured Claim on the later of: (y) the Effective Date; and (z) the date the Secured Claim becomes an Allowed Secured Claim, or as soon thereafter as practicable. All Allowed Secured Claims not due and payable on or before the Effective Date shall be paid by the Reorganized Debtor in the ordinary course of business in accordance with the terms thereof or shall be Reinstated.
Class 3 — General Unsecured Claims (Unimpaired; Presumed to Accept): Except to the extent a Holder of an Allowed General Unsecured Claim agrees to different treatment of that General Unsecured Claim, each Holder of an Allowed General Unsecured Claim shall be Reinstated and paid in the ordinary course of business in accordance with the terms and conditions of the particular transaction or agreement giving rise to such General Unsecured Claim, or otherwise provided such treatment to render it Unimpaired, or as otherwise agreed to between the parties.
Class 4 — Talc Personal Injury Claims (Impaired; Entitled to Vote): As of the Effective Date, the Talc Personal Injury Trust shall automatically, and without further act, deed, or court order, fully assume: (i) liability for all Talc Personal Injury Claims (including Demands); and (ii) the liability (if any) of the Settling Insurers for all Barred Claims. All Talc Personal Injury Claims and other Channeled Claims shall be channeled solely and exclusively to the Talc Personal Injury Trust in accordance with, and to the extent set forth in, Articles IV and VIII below, the applicable Plan Documents and the Confirmation Order. Each Talc Personal Injury Claim shall be resolved in accordance with the terms, provisions, and procedures of the Talc Personal Injury Trust Agreement and the Talc Personal Injury Trust Distribution Procedures. The Talc Personal Injury Trust shall be funded in accordance with the provisions of Section IV.E. below. The sole recourse of the Holder of a Talc Personal Injury Claim (including Future Demand Holders) or other Channeled Claim on account of such Talc Personal Injury Claim or Channeled Claim shall be to the Talc Personal Injury Trust, and each such Holder shall have no right whatsoever at any time to assert its Talc Personal Injury Claim or Channeled Claim against any Protected Party. Without limiting the generality of the foregoing, and notwithstanding anything therein or herein to the contrary, the Talc Personal Injury Channeling Injunction, Insurance Entity Injunction, and Settling Insurer Injunction prohibit any Entity from asserting, enforcing, or attempting to assert or enforce any Channeled Claim or Barred Claim against any Settling Insurer Releasee or the property or assets of a Settling Insurer Releasee.
Class 5 — Financing Facility Claim (Unimpaired; Presumed to Accept): The Financing Facility Claim shall be Allowed in the amount of the Financing Amount, which Claim, at the option of the Holders thereof, shall be (i) paid in full as of the Effective Date; or (ii) Reinstated in full in the ordinary course in accordance with the terms of the Financing Facility or as otherwise agreed to between the Reorganized Debtor and the Non-Debtor Affiliates.
Class 6 — Intercompany Claims (Unimpaired; Deemed to Accept): On or after the Effective Date, all Intercompany Claims shall be Reinstated and paid in the ordinary course of business in accordance with the terms and conditions of the particular transaction or agreement giving rise to such Intercompany Claim, or otherwise provided such treatment to render it Unimpaired, or as otherwise agreed to between the parties.
Class 7 — Debtor Equity Interests (Unimpaired; Deemed to Accept): On the Effective Date Holders of Debtor Equity Interests shall retain such interests. Equity in Reorganized Debtor will be reinstated and deemed reissued. In addition, new stock will be issued such that the new stock (the Collateral Stock) will equal at least 50.1% of all issued stock. The Collateral Stock will be returned to treasury upon full payment of the Trust Note or, should the board of directors of Reorganized Stephan Co. so vote and/or elect, distributed pro rata to holders of equity interests as of such date.

Conditions Precedent

The Bankruptcy Court shall have entered an order, acceptable in form and substance to the Plan Proponents, approving the Disclosure Statement as containing adequate information within the meaning of section 1125 of the Bankruptcy Code.
The Confirmation Order shall be acceptable in form and substance to the Debtor, the Non-Debtor Affiliates, the Talc Claimants' Committee, the Future Claimants' Representative, and the Settling Insurers.
"Confirmation Order Outside Date" means June 30, 2026, which date may be further extended without seeking leave to the Bankruptcy Court by consent of the Debtor, the Non-Debtor Affiliates, the Talc Claimants' Committee, and the Future Claimants' Representative.
"Plan Effective Date Outside Date" means July 30, 2026.
Notwithstanding the foregoing, the obligations of the Non-Debtor Affiliates to support the Plan and to contribute the Trust Note, shall expire if (a) the Plan is not approved by the required number of voting claimants under the terms of the Bankruptcy Code, (b) the Confirmation Order is not entered by the Confirmation Order Outside Date, or (c) the Effective Date does not occur by the Plan Effective Date Outside Date, unless the Debtor, the Non-Debtor Affiliates, the Talc Claimants' Committee, and the Future Claimants' Representative otherwise agree in writing.

Voting

The Bankruptcy Court shall be asked to issue the Talc Personal Injury Channeling Injunction if the Plan has been accepted by at least two-thirds (2/3) in amount of those Holders of Class 4 Claims actually voting on the Plan, in accordance with section 1126(c) of the Bankruptcy Code, and seventy-five percent (75%) in number of those Holders of Class 4 Claims actually voting on the Plan, in accordance with section 524(g)(2)(B)(ii)(IV)(bb) of the Bankruptcy Code.