2008 Registration Document - Rexel

Rexel North America, Inc. is a defendant in these casesdue to the liability guarantee granted to the acquirer ofWestburne, Inc. Rexel North America, Inc. has denied theallegations in these lawsuits based on the argument thatit believes that the liability in relation to the presence ofasbestos in the products sold is mainly incumbent upontheir manufacturers. A number of these claims have beendismissed or settled, and all such settlement amountspayable by Rexel have been for small sums that werecovered in their entirety by its insurance policies.At December 31, 2008, 6 claims that could potentially triggerRexel North America, Inc.’s indemnification obligations tothe purchaser, remained pending, compared to 18 claimsas at December 31, 2007 and 49 claims as at December31, 2006. The Rexel Group believes that it is likely that themajority of these 6 claims will be rejected or will be settledfor amounts that will be covered by Rexel’s insurancepolicies, although it cannot provide any assurances to thiseffect.Rexel, Inc. (United States)Rexel Inc., as transferee of the electrical product distributionactivities of Westburne, Inc. in the United States, along withmore than 100 other companies, is or has once been namedas a defendant, or is implied, in a number of proceedingsin Louisiana, New York, New Jersey and Texas relating toexposure to asbestos containing materials. In Louisiana,a subsidiary of Rexel, Inc. has assumed defence in thecontext of several asbestos-related proceedings broughtagainst a third party pursuant to an indemnity obligationarising from a settlement agreement dated 1986.As at December 31, 2007, Rexel, Inc. and its subsidiarieshave been cleared of all responsibility for the claims filedin New Jersey and Texas. In 2007, Rexel, Inc. obtained astipulated dismissal without prejudice of all claims pendingin New Jersey relating to exposure to asbestos containingmaterials.As at December 31, 2008, 40 claims initiated by 180claimants remained pending before Louisiana jurisdictions,compared to 39 claims initiated by 160 claimants as atDecember 31, 2007 and 40 claims initiated by 208 claimantsas at December 31, 2006.As at December 31, 2008, 33 proceedings before Louisianacourts involving 171 plaintiffs were related to the allegedexposure to asbestos containing materials as a result ofgeneral contracting work carried out on the premises ofthird-party companies by employees of the Westburne Inc.businesses purchased by Rexel, Inc. and its subsidiaries,at the same time such claimants were present, at varioustimes, notably between 1950 and 1970. The otherdefendants in these cases are companies that are notaffiliated with the Rexel Group and include the owners andlessees of the concerned premises, the manufacturersof the structures and products that allegedly containedasbestos and other distributors and contractors. Legal feeswith respect to these product-liability proceedings that areassessed to Rexel, Inc. and its subsidiaries are covered bygeneral liability insurance policies issued by four insurancecompanies and are assumed by these insurance companiespursuant to a cost sharing agreement entered into betweenthese companies, subject to the terms and conditions ofthe relevant policies. To date, settlements arising fromcases similar to these pending cases have been completelycovered pursuant to this cost sharing agreement. Rexel,Inc. and its subsidiaries have denied the allegations in theselawsuits based on the argument that their liability has notbeen proved and that the liability relating to the claims inquestion is mainly incumbent upon defendants other thanRexel, Inc., such as the owners and lessees of the relevantpremises, as well as the manufactures of the structuresinstalled in these premises.The other 7 pending cases in Louisiana at December 31,2008 were initiated by 9 plaintiffs who were or claim to havebeen employees of businesses acquired by a subsidiary ofRexel, Inc. The claimants have also invoked the liability ofthird parties. The liability of Rexel, Inc.’s subsidiary resultsfrom an indemnification obligation arising from a transactionentered into in 1986 between a company acquired previouslyand a third party. These claimants allege that that wereexposed to asbestos containing materials while they werecarrying out general contracting work on the premises ofthird parties, including petrochemical installations. Mostof these procedures are in the initial stages of discovery.The Rexel Group believes that Rexel, Inc.’s subsidiary couldbe held liable in these cases only to the extent that theclaimants can prove that they were previously employedby the company and that there is a causal link betweentheir employment and the alleged harm. Rexel, Inc. and itssubsidiary anticipate partial indemnity and contribution fromthe relevant insurance company for legal fees and potentialdamages arising from these proceedings.As at December 31, 2008, 2 cases currently pending inNew York involve plaintiffs (which are not related to Rexel)who claim liability for injuries relating to products sold by anumber of companies prior to 1985, including Rexel, Inc.The proceedings have been suspended since October 2003until the claimants can prove an asbestos-related illness,in accordance with the practice of New York State courts.There was no particular development in the proceedingspending in New York since then and in 2008. Given the highnumber of co-defendants and the state of the proceedings,the Rexel Group cannot predict the outcome of theseproceedings.Considering the wide range of these claims, their variousstates of advancement, the number of defendants and theabsence of specific individual demands, the Rexel Groupcannot give a quantitative estimate with respect to theclaims made and the potential risk encountered. As such,the Rexel Group cannot predict the outcome or financialimpact that it could be led to bear as a result of theseproceedings.In 2007, Rexel Inc. also settled 2 of these claims initiated by48 claimants and all such settlement amounts payable byRexel, Inc. have been for small sums.REXEL 2008 | PAGE 235