____________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Marion Merrell Dow Inc.
____________________________________________________________
(Name of issuer)
Common Stock, par value $0.10 per share
____________________________________________________________
(Title of class of securities)
569790-10-8
____________________________________________________________
(CUSIP number)
Copy to:
Harry R. Benz Roger S. Aaron, Esq.
Hoechst Corporation Skadden, Arps, Slate,
Meagher & Flom
Route 202-206 919 Third Avenue
P.O. Box 2500 New York, New York 10022
Somerville, New Jersey
08876-1258
____________________________________________________________
(Name, address and telephone number of person
authorized to receive notices and communications)
May 3, 1995
____________________________________________________________
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the
subject of this Schedule 13D, and is filing this schedule
because of Rule 13d-1 (b)(3) or (4), check the following box
[ ].
Check the following box if a fee is being paid with the
statement [X].
____________________________________________________________
CUSIP NO. 569790-10-8
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Hoechst Corporation
22-1862783
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK, AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
8 SHARED VOTING POWER
-0-
BENEFICIALLY
9 SOLE DISPOSITIVE POWER
OWNED BY EACH -0-
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
196,865,790 shares of common stock
12 CHECK BOX IF THE AGGREGATE AMOUNT IN BOX (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
71.0%
14 TYPE OF REPORTING PERSON
CO
CUSIP NO. 569790-10-8
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
H Pharma Acquisition Corp.
51-0363736
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK, AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY EACH 9 SOLE DISPOSITIVE POWER
-0-
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
196,865,790 shares of common stock
12 CHECK BOX IF THE AGGREGATE AMOUNT IN BOX (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
71.0%
14 TYPE OF REPORTING PERSON
CO
ITEM 1. SECURITY AND ISSUER.
The class of equity securities to which this
Statement on Schedule 13D (this "Statement") relates is
the common stock, par value $0.10 per share (the "Common
Stock" or the "Shares"), of Marion Merrell Dow Inc., a
Delaware corporation (the "Company"). The address of the
principal executive offices of the Company is 9300 Ward
Parkway, Kansas City, Missouri 64114.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c), (f) This Statement is filed jointly
by Hoechst Corporation, a Delaware corporation
("Parent"), and H Pharma Acquisition Corp., a Delaware
corporation ("Acquisition"). Each of Parent and
Acquisition is a wholly owned subsidiary of Hoechst
Aktiengesellschaft, a German corporation ("Hoechst AG").
Parent is a holding company for the U.S. operations of
Hoechst AG, a multinational pharmaceutical and chemical
company headquartered in Frankfurt, Germany. Acquisition
is a recently organized corporation that has not
conducted any business except in connection with the
Transaction (as defined below). The address of each of
Parent's and Acquisition's principal offices is Route
202-206, Somerville, New Jersey 08876-1258.
(d)-(e) During the past five years, neither
Parent nor Acquisition nor, to their knowledge, any of
the persons listed on Schedule 1 hereto, has been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). During the past
five years, neither Parent nor Acquisition nor, to their
knowledge, any of the persons listed on Schedule 1
hereto, has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction
and as a result of such proceeding been subject to a
judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER
CONSIDERATION.
The total amount of funds required by
Acquisition to consummate the Transaction (as defined
below) and to pay related fees and expenses is estimated
to be approximately $7.1 billion. Acquisition expects to
obtain such funds from initial equity contributions from
Hoechst AG totalling $2.5 billion, plus additional
funding to Acquisition by Parent. This additional
funding is expected to be in the form of further equity
contributions and/or loans. Parent expects to obtain the
funds to make such equity contributions and/or loans from
general corporate funds and/or through borrowings from
commercial banks or other sources. Parent has received
preliminary indications of interest from numerous
commercial banks with respect to their providing debt
financing for the Transaction. However, no agreements
have been entered into with respect to any such third
party loans.
ITEM 4. PURPOSE OF THE TRANSACTION.
(a)-(j) Parent and Acquisition have entered
into (i) an Agreement and Plan of Merger, dated as of May
3, 1995 (the "Merger Agreement"), by and among Parent,
Acquisition, the Company and The Dow Chemical Company, a
Delaware corporation ("DCC"), and (ii) a Stock Purchase
Agreement, dated as of May 3, 1995 (the "Stock Purchase
Agreement"), by and among Parent, Acquisition, DCC, RH
Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of DCC ("RHAC"), and Dow Holdings Inc.,
a Delaware corporation and a wholly owned subsidiary of
DCC ("DHI" and, collectively with DCC and RHAC, "Dow").
Pursuant to the Stock Purchase Agreement, Dow
has agreed to sell all of the 196,865,790 shares
(collectively, "Dow Shares") of Common Stock owned by Dow
to Acquisition for $25.75 per Share in cash. The
purchase and sale of the Dow Shares pursuant to the Stock
Purchase Agreement is subject to the satisfaction or
waiver of certain conditions including, among others,
termination or expiration of the applicable waiting
periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and under
Regulation (EEC) No. 4064/89 of the European Community.
The Dow Shares represent approximately 71.0% of the
outstanding Shares as of April 28, 1995.
Pursuant to the Merger Agreement, Acquisition
has agreed to merge with and into the Company, with the
Company continuing as the surviving corporation (the
"Merger"). In the Merger, each outstanding Share (other
than Shares owned by Parent, Acquisition or any of their
subsidiaries, Shares held in the treasury of the Company
or any of its subsidiaries, and Shares the holders of
which properly exercise dissenters' rights under the
General Corporation Law of the State of Delaware), would
be converted into the right to receive $25.75 in cash,
plus, in the event the Dow Shares are purchased by
Parent, Acquisition or their affiliates at least one day
prior to the effective date (the "Effective Date") of the
Merger, an additional cash amount equal to $0.25
multiplied by a fraction (i) the numerator of which is
the number of whole days from the record date for the
regular quarterly cash dividend on the Shares next
preceding the Effective Date (excluding such record date)
to and including the Effective Date, and (ii) the
denominator of which is the number of whole days in the
full quarter in which the Effective Date occurs
(collectively, the "Merger Consideration"). As a result
of the Merger, the Company would become a wholly owned
subsidiary of Parent. The Common Stock is currently
registered pursuant to Section 12(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
and the Company files reports pursuant thereto with the
Securities and Exchange Commission and the New York Stock
Exchange, Inc. (the "NYSE"). Following the consummation
of the Merger, the registration of the Common Stock under
the Exchange Act would be terminated and the Shares would
no longer be listed on the NYSE or otherwise publicly
traded. Closing under the Merger Agreement is
conditioned upon, among other things, (i) Acquisition,
Parent or their affiliates having purchased the Dow
Shares, and (ii) the Merger Agreement having been adopted
by the Company's stockholders. Pursuant to the Merger
Agreement, each of DCC, Parent and Acquisition has agreed
to vote (and to cause each of its respective affiliates
to vote) all Shares held by it (or its affiliates) in
favor of adoption of the Merger Agreement.
The Merger Agreement provides that upon
consummation of the Merger, each outstanding option
(including any related stock appreciation right)(an
"Employee Option") issued, awarded or granted pursuant to
the Company's 1992 Incentive Compensation Plan, the 1985
Associate Stock Option Plan or the Non-Qualified Employee
Stock Option Plan (the "Company Plans") to purchase
Shares will be eliminated by the Company, and each holder
of an eliminated Employee Option will be entitled to
receive from the Company in consideration for the
elimination of such Employee Option an amount in cash
(less applicable withholding taxes) equal to the product
of (i) the number of Shares previously subject to such
Employee Option and (ii) the excess, if any, of the
Merger Consideration over the exercise price per Share
previously subject to such Employee Option. Each
Employee Option the exercise price per Share of which is
equal to or greater than the Merger Consideration will be
eliminated in consideration for a cash payment equal to
the product of $0.01 multiplied by the number of Shares
previously subject to such Employee Option. The Merger
Agreement also provides that each outstanding performance
share ("Performance Share") granted under the Company's
1992 Incentive Compensation Plan will become fully vested
in accordance with the terms of the Incentive Plan and,
upon consummation of the Merger, will, unless previously
paid and eliminated in accordance with the terms thereof,
be eliminated by the Company, and each holder of an
eliminated Performance Share will be entitled to receive
from the Company an amount in cash (less applicable
withholding taxes) equal to the product of (i) the Merger
Consideration and (ii) the number of Performance Shares
previously held by such holder.
In the Merger Agreement, the Company has agreed
to redeem, immediately prior to the Merger, all of the
outstanding shares of its Series A ESOP Convertible
Preferred Stock (the "Series A Preferred Shares") at the
applicable cash redemption price determined in accordance
with the Company's Restated Certificate of Incorporation.
The Company and Parent have held discussions with the
trustee of the Marion Merrell Dow Associate Stock
Ownership Plan ("ASOP") Trust (which holds the Series A
Preferred Shares) with respect to a possible transaction
in which the Company would repurchase the Series A
Preferred Shares in exchange for consideration consisting
of cash and the assumption by the Company of the ASOP's
obligations under the 9.11% Guaranteed Amortizing ESOP
Notes due August 1, 2005 which were previously issued by
the ASOP. No definitive agreements with respect to any
such ASOP transaction have been reached. However, Parent
expects to continue discussions with respect to such
transaction.
The Merger Agreement also provides that,
promptly upon the purchase by Acquisition of the Dow
Shares, Acquisition will be entitled to designate up to
that number of directors, rounded up to the nearest whole
number, on the Board of Directors of the Company as will
make the percentage of the directors designated by
Acquisition equal to the percentage of outstanding Shares
held by Acquisition and its affiliates (other than the
Company and its subsidiaries). The Company has agreed
to, upon Acquisition's request following its purchase of
the Dow Shares, increase the size of its Board of
Directors or use its reasonable best efforts to secure
the resignation of such number of directors as is
necessary to enable Acquisition's designees to be elected
to the Company's Board of Directors.
The transactions contemplated by the Merger
Agreement and the Stock Purchase Agreement, including the
Merger and the purchase of the Dow Shares by Acquisition,
are collectively referred to in this Statement as the
"Transaction."
The purpose of the Stock Purchase Agreement is
to enable Parent to acquire control of the Company and
the purpose of the Merger Agreement is to enable Parent
to acquire the entire equity interest in the Company.
Roussel Uclaf S.A. ("Roussel"), a French
societe anonyme which is a majority-owned subsidiary of
Hoechst AG, has entered into an agreement dated as of May
3, 1995 with certain affiliates of DCC (the "Purchase
Agreement"), to acquire the pharmaceutical business
operated by DCC and its affiliates in Argentina, Brazil,
Mexico and elsewhere in Latin America (the "Latin
American Pharma Business"). Pursuant to and subject to
the terms and conditions of the Purchase Agreement,
Roussel and/or its designated affiliates will purchase
the assets of the Latin American Pharma Business (other
than real property and certain other specified assets)
for $140 million, subject to adjustment as provided in
the Purchase Agreement. The assets to be acquired
include: (i) all of the capital stock of Merrell Lepetit
Farmaceutica Industrial LTDA, a limited company organized
under the laws of Brazil, (ii) certain assets owned by
Latin American Pharmaceutical Inc., a Delaware
corporation, which assets include all of the capital
stock of Laboratorios Lepetit de Mexico S.A. de C.V., a
corporation organized under the laws of Mexico and (iii)
certain assets owned by Dow Quimica Argentina S.A., a
corporation organized under the laws of Argentina.
Closing under the Purchase Agreement is conditioned upon,
among other things, Hoechst AG having acquired, directly
or indirectly, at least a majority of the Shares
outstanding on a fully diluted basis.
Following the Transaction, it is expected that
the Company's businesses and operations will be
integrated with the other pharmaceutical businesses and
operations of Hoechst AG.
The descriptions set forth in this Statement
of the Merger Agreement, the Stock Purchase Agreement and
the Purchase Agreement do not purport to be complete and
are qualified in their entirety by reference to the
Merger Agreement, the Stock Purchase Agreement and the
Purchase Agreement, copies of which are filed as Exhibits
1, 2 and 3, respectively, to this Statement.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Parent and Acquisition beneficially own an
aggregate of 196,865,790 Shares, which is the number of
Dow Shares which Acquisition has agreed to purchase from
Dow pursuant to the Stock Purchase Agreement. Such
Shares represent approximately 71.0% of the outstanding
Shares as of April 28, 1995. Except as set forth in this
Item 5(a), neither Parent nor Acquisition nor, to their
knowledge, any of the persons listed on Schedule 1
hereto, beneficially owns any Shares.
(b) As of the date of this Statement, Parent
and Acquisition do not have voting or dispositive power
with respect to the Dow Shares. After acquiring the Dow
Shares, Acquisition would have sole voting and
dispositive power with respect to all of the Dow Shares.
(c) Except as disclosed herein, there have
been no transactions in the class of securities reported
on that were effected during the past sixty (60) days by
Parent or Acquisition. To the knowledge of Parent or
Acquisition, there have been no transactions in the class
of securities reported on during the past sixty (60) days
by any of the persons listed on Schedule 1.
(d)-(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE
ISSUER.
The descriptions of the Merger Agreement and
the Stock Purchase Agreement set forth in Item 4 of this
Statement are incorporated herein by reference. In
addition, pursuant to the Stock Purchase Agreement, Dow
has agreed that, as long as the Stock Purchase Agreement
is in effect, it shall vote, or cause to be voted, all of
the Dow Shares in favor of the approval and adoption of
the Merger Agreement and the transactions contemplated
thereby. Dow has also agreed that as long as the Stock
Purchase Agreement is in effect, in any meeting of the
stockholders of the Company, however called, it shall
vote, or cause to be voted, all of the Dow Shares: (i)
against any action or agreement that would result in a
breach in any material respect of any covenant,
representation or warranty or any other obligation of the
Company or DCC under the Merger Agreement or of Dow under
the Stock Purchase Agreement; and (ii) against any action
or agreement that would impede, interfere with or
discourage the transactions contemplated by the Merger
Agreement, including, without limitation: (1) any
extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company or
any of its subsidiaries, (2) a sale or transfer of a
material amount of assets of the Company or any of its
subsidiaries or the issuance of securities by the Company
or any of its subsidiaries, (3) any change in the Board
of Directors of the Company (other than as contemplated
by the Merger Agreement as described in Item 4 of this
Statement), (4) any change in the present capitalization
or dividend policy of the Company (other than as
contemplated by the Merger Agreement) or (5) any other
material change in the Company's corporate structure or
business. The Stock Purchase Agreement also provides
that, upon the purchase and sale of the Dow Shares
pursuant to the Stock Purchase Agreement, Dow shall grant
Acquisition an irrevocable proxy to vote all the Dow
Shares at any meeting of the stockholders of the Company,
however called. In the Stock Purchase Agreement, Dow has
also agreed not to (either directly or indirectly): (i)
sell, transfer, pledge, assign, hypothecate or otherwise
dispose of the Dow Shares; (ii) grant any proxies with
respect to the Dow Shares, deposit the Dow Shares into a
voting trust or enter into a voting agreement with
respect to such Dow Shares; or (iii) take any action
which would make any representation or warranty of Dow in
the Stock Purchase Agreement untrue or incorrect in any
material respect.
Other Agreements. In connection with the
transactions contemplated by the Merger Agreement and the
Stock Purchase Agreement, the following additional
agreements were executed on May 3, 1995. Pursuant to an
Indemnity Agreement, Parent has agreed to indemnify DCC
from and after the earlier of the purchase by Acquisition
of the Dow Shares and the Effective Date in respect of
DCC's existing guaranty in favor of the investors in
Carderm Capital L.P., in which subsidiaries of the
Company hold a controlling interest. Pursuant to a Tax
Allocation Agreement, DCC, Parent and the Company have
agreed to an allocation of certain tax liabilities.
Pursuant to separate Computerized Process Control
Software Agreements, affiliates of DCC and affiliates of
the Company have agreed to leases of certain process
control software owned by affiliates of DCC. Pursuant to
an Insurance Separation Agreement, Parent, the Company,
DCC and three wholly owned insurance subsidiaries of DCC
have agreed to certain matters regarding insurance,
reinsurance and related topics. Pursuant to a
Manufacturing Agreement Amendment between DCC, the
Company and Merrell Dow Pharmaceuticals, Inc., a wholly
owned subsidiary of the Company ("MDPI"), the terms of a
manufacturing arrangement and ground lease relating to a
manufacturing facility in Midland, Michigan were modified
and DCC agreed to repurchase the facility upon the
termination of the manufacturing arrangement at a
purchase price of 60% of the residual book value of the
facility at the time of termination. Pursuant to a
Second Amendment to Master Service Agreements between
DCC, the Company and MDPI, certain research and
development services provided by DCC were modified and
DCC agreed to purchase certain physical assets owned by
either the Company or MDPI upon the termination of the
research services arrangements at a purchase price of 60%
of the residual book value of the assets at the time of
termination of the research services arrangements.
Pursuant to a Third Amendment to Master Service
Agreements between DCC, the Company and MDPI, certain
services provided globally by DCC to subsidiaries of the
Company were terminated and certain other services
provided by DCC to specific subsidiaries of the Company
were extended under similar terms to existing agreements.
Pursuant to two letter agreements entered into by DCC and
the Company, the parties set forth (i) a non-exclusive
list of agreements to be reached prior to the date of the
purchase of Dow Shares and (ii) certain agreements
regarding employment matters in Italy. The above
descriptions do not purport to be complete and are
qualified in their entirety by reference to each of the
foregoing agreements, copies of which are filed as
Exhibits 6 through 16 hereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Agreement and Plan of Merger, dated as of
May 3, 1995, by and among Marion Merrell
Dow Inc., The Dow Chemical Company,
Hoechst Corporation and H Pharma
Acquisition Corp.
Exhibit 2. Stock Purchase Agreement, dated as of May
3, 1995, among Hoechst Corporation, H
Pharma Acquisition Corp., The Dow Chemical
Company, RH Acquisition Corp. and Dow
Holdings Inc.
Exhibit 3. Purchase Agreement, dated as of May 3,
1995, among Latin American Pharmaceutical
Inc., Dow Quimica Argentina S.A., Dow
Quimica Mexicana S.A., Dow Productos
Quimicos LTDA, Mineracao e Quimica de
Nordeste, Dow Quimica S.A., Merrell
Lepetit Farmaceutica Industrial LTDA,
Laboratorios Lepetit de Mexico S.A. de
C.V. and Roussel Uclaf S.A.
Exhibit 4. Press Release, dated May 4, 1995, issued
by Hoechst AG.
Exhibit 5. Joint Press Release, dated May 4, 1995,
issued by Hoechst AG, Marion Merrell Dow
Inc. and The Dow Chemical Company.
Exhibit 6. Insurance Separation Agreement, dated as
of May 3, 1995, among Marion Merrell Dow
Inc., The Dow Chemical Company, Dorinco
Reinsurance Company, Dorintal Reinsurance
Ltd., Timber Insurance Ltd. and Hoechst
Corporation.
Exhibit 7. Indemnity Agreement, dated as of May 3,
1995, between Hoechst Corporation and The
Dow Chemical Company.
Exhibit 8. Tax Allocation Agreement, dated as of May
3, 1995, among The Dow Chemical Company,
Hoechst Corporation and Marion Merrell Dow
Inc.
Exhibit 9. Computerized Process Control Software
Agreement (Leases and Services), dated as
of May 3, 1995, between Rofan Services
Inc. and Marion Merrell Pharmaceuticals
Inc.
Exhibit 10. Computerized Process Control Software
Agreement (Leases and Services), dated as
of May 3, 1995, between Rofan Automation
and Information Systems B.V. and Gruppo
Lepetit S.p.A.
Exhibit 11. Computerized Process Control Software
Agreement (Leases and Services), dated as
of May 3, 1995, between Rofan Automation
and Information Systems B.V. and
Biochimica Del Salento S.p.A.
Exhibit 12. Manufacturing Agreement Amendment, dated
as of May 3, 1995, between The Dow
Chemical Company and Merrell Dow
Pharmaceuticals, Inc.
Exhibit 13. Second Amendment to Master Service
Agreements, dated as of May 3, 1995,
between Marion Merrell Dow Inc., The Dow
Chemical Company and Marion Merrell
Pharmaceuticals, Inc.
Exhibit 14. Third Amendment to Master Service
Agreements, dated as of May 3, 1995,
between Marion Merrell Dow Inc., The Dow
Chemical Company and Merrell Dow
Pharmaceuticals, Inc.
Exhibit 15. Letter Agreement, dated as of May 3, 1995,
between The Dow Chemical Company and
Merrell Dow Pharmaceuticals, Inc. and
Marion Merrell Dow Inc.
Exhibit 16. Letter Agreement, dated as of May 3, 1995,
between The Dow Chemical Company and
Marion Merrell Dow Inc.
Exhibit 17. Joint Filing Agreement, dated as of May
11, 1995, between Hoechst Corporation and
H Pharma Acquisition Corp.
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
HOECHST CORPORATION
By: /s/ Harry R. Benz
Title: Secretary and Treasurer
Date: May 12, 1995
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
H PHARMA ACQUISITION CORP.
By: /s/ David A. Jenkins
Title: Vice President and Secretary
Date: May 12, 1995
SCHEDULE 1
CERTAIN INFORMATION RELATING
TO DIRECTORS AND EXECUTIVE OFFICERS
1. DIRECTORS AND EXECUTIVE OFFICERS OF HOECHST
AG. The following table sets forth the name, business
address, present principal occupation or employment of
each member of the Supervisory Board and the Board of
Management (substantially the same as directors and
executive officers) of Hoechst AG. All of the members of
the Supervisory Board and the Board of Management are
citizens of Germany except for Messrs. Furgler, Hussain,
and Drew who are citizens of Switzerland, Kuwait and the
United States, respectively. Unless otherwise indicated,
the business address of each of the individuals named
below is Hoechst AG, 65926 Frankfurt Main, Germany, and
each occupation set forth opposite the individual's name
refers to employment with Hoechst AG.
Name and Business Address Principal Present Occupation
SUPERVISORY BOARD
Erhard Bouillon Chairman of the Supervisory
Board
Rolf Brand Deputy Chairman of the
Supervisory Board
Oswald Bommel Member of the Supervisory
Board
Willi Esser Mechanic; Member of the
Central Works Council of
Hoechst AG
Dr.-Ing. E.h. Member of the Super-
Werner H. Dieter visory Board
Mannesmann AG
Postfach 10 36 41
40027 Dusseldorf
Germany
Dietrich-Kurt Frowein Member of the Board of
Commerzbank AG Management of Commerzbank AG
Postfac 10 05 05
60005 Frankfurt am Main
Germany
Dr. iur. Dr. h.c. mult. Member of the Super-
Kurt Furgler visory Board
DoufourstraBe 34
Scoitzerland
CH-9000 St. Gallen
Switzerland
Prof. Dr. rer. nat. Member of the Supervisory
Dr.-Ing. E.h. Board
Heinz Harnisch
Dr. rer. nat. Graduate Chemist; Chairman of
Ingolf Hornke the Senior Executives'
Committee of Hoechst AG
Hani Abdul-Aziz Hussain Managing Director - Marketing
Kuwait Petroleum Corp. Petrochemical Industries Co.
P.O. Box 26565 (K.S.C.), Kuwait
Safat -- Kuwait
Hermann-Heinz Konrad Graduate Engineer; Deputy
Chairman of the Senior
Executives' Committee of
Hoechst AG
Rainer Kumlehn Electrician; Regional Head of
IG Chemie-Papier the IG Chemie-Papier-
Keramik Hessen Keramik Hessen
Wilhelm-Lerner-StraBe 69-7
60329 Frankfurt am Main
Germany
Prof. Dr. rer. nat. University of Konstanz;
Dr. rer. nat. h.c. Biology Department
Hubert Markl
HollanderstraBe 22
78465 Konstanz
Germany
Juergen Sarrazin Chairman of the Board of
Dresdner Bank AG Managing Directors of
Jergen-Ponto Platz Dresdner Bank AG
D-60301 Frankfurt am Main
Germany
Egon Schaefer Electrician; Deputy Chairman
IG Chemie-Papier-Keramik of IG Chemie-Papier-Keramik
Postfach 30
30030 Hannover
Germany
Dr. jur. Chairman of the Board of
Hans-Juergen Schinzler Management of Muenchener
Muenchener Ruckversicherungs-
Ruckversicherungs- Gesellschaft
Gesellschaft
80791 Munchen
Germany
Konrad Starnecker Skilled Chemical Plant Opera-
Furstbert 1 tive; Member of the Central
84556 Kastl, Kr. Altotting Works Council of Hoechst AG
Germany
Wolfgang Vetter Fitter; Member of the Central
LinkstraBe 1 Germany Works Council of
65933 Frankfurt am Main Works Council of Hoechst AG
Kurt F. Viermetz Vice-Chairman of J.P.
J.P. Morgan & Co. Inc. Morgan & Co. Inc.
60 Wall Street
New York, New York
102600-0060
Arnold Weber Chairman of the Central Works
Rauenthaler 31 Council of Hoechst AG
60529 Frankfurt am Main
Germany
BOARD OF MANAGEMENT
Juergen Dormann Chairman of the Board
of Management
Dr. Ernest H. Drew, Ph.D Member of the Board of
Management; Chemicals,
Specialty Chemicals, Technical
Polymers Divisions
Prof. Dr. rer. nat. Member of the Board of
Utz-Hellmuth Felcht Management; Director of
Personnel; Research; Herberts,
SGL Carbon, Hoechst CeramTec
Dr. jur. Member of the Board of
Martin Fruehauf Management; Finance and
Accounts, Legal Matters,
Patents, Taxes, Insurance
Dr. rer. pol. Deputy Chairman of the
Guenter Metz Board of Management;
Fibres and Fibre
Intermediates, Plastics and
Films Divisions; the Americas
Dipl.-Kfm. Member of the Board
Justus Mische of Management; Europe, Africa;
Materials Management
Dr. rer. nat. Member of the Board
Karl-Gerhard Seifert of Management; Pharmaceutical
and Diagnostics Divisions;
Schwarzkopf
Dr.-Ing. Member of the Board
Ernst Schadow of Management; Messer
Griesheim, Uhde; Engineering
and Environmental Protection;
Hoechst Site
Dipl.-Ing. Horst Waesche Member of the Board of
Management; Asia; AgrEvo;
Hoechst Veterinar; Informatics
and Communication
2. DIRECTORS AND EXECUTIVE OFFICERS OF HOECHST
CORPORATION. The following table sets forth the name and
present principal occupation or employment of each director
and executive officer of Hoechst Corporation. All such
directors and officers are citizens of the United States,
except Messrs. Engels, Felcht, Fruehauf, Metz, Schmieder,
Seifert and Warning who are citizens of Germany. The
business address of Messrs. Benz, Engels, Kennedy, Harris,
Schmieder and Warning is Hoechst Celanese Corporation
("HCC"), Route 202-206, P.O. Box 2500, Somerville, New
Jersey 08876-1258, and the business address of Messrs.
Drew, Felcht, Fruehauf, Metz and Seifert is Hoechst AG,
65926 Frankfurt Main and Germany.
Name/Position with Parent Principal Present Occupation
Harry R. Benz Senior Vice President -
Director, Secretary and Finance, Chief Financial
Treasurer Officer and Director - HCC
Dr. Ernest H. Drew, Ph.D. See "Directors and Exec-
Director utive Officers of Hoechst AG"
Karl G. Engels President, Chief Executive
Director Officer and Director - HCC
Prof. Dr. rer. nat. Utz- See "Directors and Exec-
Hellmuth Felcht utive Officers of Hoechst AG"
Director
Dr. jur. Martin Fruehauf See "Directors and Executive
Director Officers of Hoechst AG"
Thomas F. Kennedy Executive Vice President and
Director Director - HCC
William B. Harris Senior Vice President and
Director Director - HCC
Dr. rer. pol. Guenter Metz See "Directors and Executive
Chairman of the Board and Officers of Hoechst AG"
President
Dr. Klaus Schmieder Vice President and Treasurer
Assistant Treasurer - HCC
Dr. rer. nat. Karl-Gerhard See "Directors and Executive
Seifert Officers of Hoechst AG"
Director
Dr. Klaus Warning Vice President and Director -
Director HCC
3. DIRECTORS AND EXECUTIVE OFFICERS OF H PHARMA
ACQUISITION CORP. The following table sets forth the name
and present principal occupation or employment of each
director and executive officer of H Pharma Acquisition Corp.
All such directors and officers are citizens of the United
States, except Mr. Schmieder who is a citizen of Germany.
The business address of each of the individuals named below
is Route 202-206, P.O. Box 2500, Somerville, New Jersey
08876-1258.
Name/Position with Principal Present Occupation
Acquisition
Harry R. Benz See "Directors and Executive
Director and President Officers of Hoechst
Corporation"
David A. Jenkins Vice President - General Counsel
Director, Vice President and Director - HCC
and Secretary
Dr. Klaus Schmieder See "Directors and Executive
Vice President and Officers of Hoechst
Treasurer Corporation"
Karen J. Weiner Vice President and General
Vice President and Counsel, Life Sciences Group -
Assistant Secretary HCC
EXHIBIT INDEX
Exhibit 1. Agreement and Plan of Merger, dated as of May
3, 1995, by and among Marion Merrell Dow
Inc., The Dow Chemical Company, Hoechst
Corporation and H Pharma Acquisition Corp.
Exhibit 2. Stock Purchase Agreement, dated as of May 3,
1995, among Hoechst Corporation, H Pharma
Acquisition Corp., The Dow Chemical Company,
RH Acquisition Corp. and Dow Holdings Inc.
Exhibit 3. Purchase Agreement, dated as of May 3, 1995,
among Latin American Pharmaceutical Inc., Dow
Quimica Argentina S.A., Dow Quimica Mexicana
S.A., Dow Productos Quimicos LTDA, Mineracao
e Quimica de Nordeste, Dow Quimica S.A.,
Merrell Lepetit Farmaceutica Industrial LTDA,
Laboratorios Lepetit de Mexico S.A. de C.V.
and Roussel Uclaf S.A.
Exhibit 4. Press Release, dated May 4, 1995, issued by
Hoechst AG.
Exhibit 5. Joint Press Release, dated May 4, 1995,
issued by Hoechst AG, Marion Merrell Dow Inc.
and The Dow Chemical Company.
Exhibit 6. Insurance Separation Agreement, dated as of
May 3, 1995, among Marion Merrell Dow Inc.,
The Dow Chemical Company, Dorinco Reinsurance
Company, Dorintal Reinsurance Ltd., Timber
Insurance Ltd. and Hoechst Corporation.
Exhibit 7. Indemnity Agreement, dated as of May 3, 1995,
between Hoechst Corporation and The Dow
Chemical Company.
Exhibit 8. Tax Allocation Agreement, dated as of May 3,
1995, among The Dow Chemical Company, Hoechst
Corporation and Marion Merrell Dow Inc.
Exhibit 9. Computerized Process Control Software
Agreement (Leases and Services), dated as of
May 3, 1995, between Rofan Services Inc. and
Marion Merrell Pharmaceuticals Inc.
Exhibit 10. Computerized Process Control Software
Agreement (Leases and Services), dated as of
May 3, 1995, between Rofan Automation and
Information Systems B.V. and Gruppo Lepetit
S.p.A.
Exhibit 11. Computerized Process Control Software
Agreement (Leases and Services), dated as of
May 3, 1995, between Rofan Automation and
Information Systems B.V. and Biochimica Del
Salento S.p.A.
Exhibit 12. Manufacturing Agreement Amendment, dated as
of May 3, 1995, between The Dow Chemical
Company and Merrell Dow Pharmaceuticals, Inc.
Exhibit 13. Second Amendment to Master Service
Agreements, dated as of May 3, 1995, between
Marion Merrell Dow Inc., The Dow Chemical
Company and Marion Merrell Pharmaceuticals,
Inc.
Exhibit 14. Third Amendment to Master Service Agreements,
dated as of May 3, 1995, between Marion
Merrell Dow Inc., The Dow Chemical Company
and Merrell Dow Pharmaceuticals, Inc.
Exhibit 15. Letter Agreement, dated as of May 3, 1995,
between The Dow Chemical Company and Merrell
Dow Pharmaceuticals, Inc. and Marion Merrell
Dow Inc.
Exhibit 16. Letter Agreement, dated as of May 3, 1995,
between The Dow Chemical Company and Marion
Merrell Dow Inc.
Exhibit 17. Joint Filing Agreement, dated as of May 11,
1995, between Hoechst Corporation and H
Pharma Acquisition Corp.
EXHIBIT 1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of
May 3, 1995, is by and among Marion Merrell Dow Inc., a
Delaware corporation (the "Company"), The Dow Chemical
Company, a Delaware corporation ("DCC"), Hoechst
Corporation, a Delaware corporation ("Parent"), and H
Pharma Acquisition Corp., a Delaware corporation
("Acquisition").
WHEREAS, the Boards of Directors of Parent,
Acquisition, DCC and the Company have each approved the
acquisition of the Company by Parent upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, upon the terms
and subject to the conditions of this Agreement, (i)
Acquisition would be merged (the "Merger") with and into
the Company in accordance with the General Corporation
Law of the State of Delaware ("Delaware Law") and (ii)
each share of common stock, par value $0.10 per share, of
the Company (the "Shares"), issued and outstanding
immediately prior to the Effective Time (as defined
herein) would, except as otherwise expressly provided
herein, be converted into the right to receive the Merger
Consideration (as defined herein); and
WHEREAS, simultaneously with the execution and
delivery hereof, Parent, Acquisition, DCC, RH Acquisition
Corp., a Delaware corporation and a wholly owned
subsidiary of DCC ("RHAC"), and Dow Holdings Inc., a
Delaware corporation and a wholly owned subsidiary of DCC
("DHI" and, collectively with DCC and RHAC, "Dow") are
entering into a stock purchase agreement (the "Stock
Purchase Agreement") pursuant to which Dow has agreed,
among other things, to sell to Acquisition all of the
196,865,790 Shares held by Dow (the "Dow Shares").
NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, the
Company, DCC, Parent and Acquisition hereby agree as
follows.
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time
and upon the terms and subject to the conditions of this
Agreement and Delaware Law, Acquisition shall be merged
with and into the Company, whereupon the separate
corporate existence of Acquisition shall cease and the
Company shall continue as the surviving corporation (the
"Surviving Corporation"). At Acquisition's option,
subject to Section 9.2 hereof, the Merger may be
structured so that any direct subsidiary of Parent other
than Acquisition is merged with and into the Company. In
the event of such election, the parties agree to execute
an appropriate amendment to this Agreement in order to
reflect such election.
Section 1.2 Effective Time; Closing. As soon
as practicable after the satisfaction or waiver of the
conditions set forth in Article VII, the parties hereto
will file a certificate of merger with the Secretary of
State of the State of Delaware and make all other filings
or recordings required by Delaware Law in connection with
the Merger. The Merger shall become effective at such
time as the certificate of merger is duly filed with the
Secretary of State of the State of Delaware (the
"Effective Time"). Prior to such filing, a closing (the
"Closing") shall be held at the offices of Skadden, Arps,
Slate, Meagher & Flom, 919 Third Avenue, New York, New
York 10022, or such other place as the parties shall
agree, for the purpose of confirming the satisfaction or
waiver of the conditions set forth in Article VII. The
date on which the Closing occurs is referred to herein as
the "Closing Date".
Section 1.3 Effects of the Merger; Subsequent
Actions. (a) The Merger shall have the effects set forth
in Delaware Law. Without limiting the generality of the
foregoing, and subject thereto and any other applicable
laws, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and
Acquisition shall vest in the Surviving Corporation, and
all debts, liabilities, restrictions, disabilities and
duties of the Company and Acquisition shall become the
debts, liabilities, restrictions, disabilities and duties
of the Surviving Corporation.
(b) If, at any time after the Effective
Time, the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary
or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title
or interest in, to or under any of the rights, properties
or assets of the Company or Acquisition acquired or to be
acquired by the Surviving Corporation as a result of or
in connection with the Merger, or otherwise to carry out
this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of the Company or
Acquisition, all such deeds, bills of sale, assignments,
assumption agreements and assurances and to take and do,
in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any
and all right, title and interest in, to and under such
rights, properties or assets of the Surviving Corporation
or otherwise to carry out this Agreement.
Section 1.4 Certificate of Incorporation and
By-Laws. (a) The Certificate of Incorporation of
Acquisition in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with
applicable law; provided that the name of the Surviving
Corporation as set forth in its Certificate of
Incorporation shall be changed to a new name to be
determined by Acquisition prior to the Effective Time.
(b) The By-Laws of Acquisition in effect
at the Effective Time shall be the By-Laws of the
Surviving Corporation until amended in accordance with
applicable law.
Section 1.5 Directors. The directors of
Acquisition at the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation
and until his or her successor is duly elected and
qualified.
Section 1.6 Officers. The officers of the
Company at the Effective Time, and any additional
individuals designated by Parent, shall be the initial
officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation
and until his or her successor is duly appointed and
qualified.
Section 1.7 Conversion of Shares. At the
Effective Time, by virtue of the Merger and without any
action on the part of Parent, Acquisition, the Company or
the holder of any of the following securities:
(a) Each Share issued and outstanding
immediately prior to the Effective Time (other than
Shares to be cancelled pursuant to Section 1.7(b) hereof
and Dissenting Shares (as hereinafter defined)), shall by
virtue of the Merger and without any action on the part
of the holder thereof be converted into the right to
receive the Merger Consideration (as defined below),
without interest thereon. As used herein, "Merger
Consideration" means the sum (rounded up to the nearest
$0.01) of $25.75 in cash plus an Additional Contingent
Amount (as defined below); provided, that the Additional
Contingent Amount shall be payable only if Acquisition,
Parent or their affiliates purchase the Dow Shares at
least one (1) day prior to the Effective Time. As used
herein, "Additional Contingent Amount" means a cash
amount equal to $0.25 multiplied by a fraction (i) the
numerator of which shall be the number of whole days from
the record date for the regular quarterly cash dividend
on the Shares next preceding the date on which the
Effective Time occurs (excluding such record date) to and
including the date on which the Effective Time occurs and
(ii) the denominator of which shall be the number of
whole days in the full quarter during which the Effective
Time occurs.
(b) Each Share which is issued and
outstanding immediately prior to the Effective Time and
owned by Parent or Acquisition or any direct or indirect
subsidiary of Parent or Acquisition, or which is held in
the treasury of the Company or any of its subsidiaries,
shall be cancelled and retired and no payment of any
consideration shall be made with respect thereto.
(c) Each share of Common Stock, par value
$0.01 per share, of Acquisition issued and outstanding
immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid
and nonassessable share of Common Stock, par value $0.01
per share, of the Surviving Corporation.
Section 1.8 Company Plans. (a) Effective as
of the Effective Time, each outstanding option (including
any related stock appreciation right)(an "Employee
Option") issued, awarded or granted pursuant to the
Company's 1992 Incentive Compensation Plan, the 1985
Associate Stock Option Plan or the Non-Qualified Employee
Stock Option Plan (the "Company Plans") to purchase
Shares shall be eliminated by the Company, and each
holder of an eliminated Employee Option shall be entitled
to receive from the Company (or, at Parent's option, any
subsidiary of the Company) in consideration for the
elimination of such Employee Option an amount in cash
(less applicable withholding Taxes (as defined in Section
3.10 hereof)) equal to the product of (i) the number of
Shares previously subject to such Employee Option and
(ii) the excess, if any, of the Merger Consideration over
the exercise price per Share previously subject to such
Employee Option; provided, that each Employee Option the
exercise price per Share of which is equal to or greater
than the Merger Consideration shall be eliminated in
consideration for a cash payment equal to the product of
$0.01 multiplied by the number of Shares previously
subject to such Employee Option.
(b) Each outstanding performance share
("Performance Share") granted under the Company's 1992
Incentive Compensation Plan (the "Incentive Plan") shall
become fully vested in accordance with the terms of the
Incentive Plan and, effective as of the Effective Time,
shall, unless theretofore paid and eliminated in
accordance with the terms thereof, be eliminated by the
Company, and each holder of an eliminated Performance
Share shall be entitled to receive from the Company (or,
at Parent's option, any subsidiary of the Company) an
amount in cash (less applicable withholding Taxes) equal
to the product of (i) the Merger Consideration and (ii)
the number of Performance Shares previously held by such
holder.
Section 1.9 Stockholders' Meeting. The
Company, acting through its Board of Directors (the
"Board"), shall in accordance with applicable law as soon
as practicable following the date hereof:
(i) subject to applicable law,
duly call, give notice of, convene and hold an
annual or special meeting of its stockholders
(the "Stockholders' Meeting") for the purpose
of considering and taking action upon this
Agreement;
(ii) subject to the fiduciary
duties of the Board under applicable law,
include in the Proxy Statement (as defined in
Section 3.7) the recommendation of the Board
that stockholders of the Company vote in favor
of adoption of this Agreement and the
transactions contemplated hereby; and
(iii) subject to the fiduciary
duties of the Board under applicable law, use
its reasonable best efforts to obtain the
necessary approvals by its stockholders of this
Agreement and the transactions contemplated
hereby.
At such meeting, each of DCC, Parent and
Acquisition will vote (and will cause each of their
respective affiliates to vote) all Shares owned by it (or
their respective affiliates) in favor of adoption of this
Agreement and the transactions contemplated hereby.
ARTICLE II
DISSENTING SHARES; EXCHANGE OF SHARES
Section 2.1 Dissenting Shares.
Notwithstanding anything in this Agreement to the
contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in
favor of the Merger or consented thereto in writing and
who has demanded appraisal for such Shares in accordance
with Section 262 of Delaware Law ("Dissenting Shares")
shall not be converted into a right to receive the Merger
Consideration unless such holder fails to perfect or
withdraws or otherwise loses his right to appraisal. If,
after the Effective Time, such holder fails to perfect or
withdraws or loses his right to appraisal, such Shares
shall be treated as if they had been converted as of the
Effective Time into a right to receive the Merger
Consideration without interest thereon. The Company
shall give Acquisition prompt notice of any demands
received by the Company for appraisal of Shares, and,
prior to the Effective Time, Acquisition shall have the
right to participate in all negotiations and proceedings
with respect to such demands. Prior to the Effective
Time, the Company shall not, except with the prior
written consent of Acquisition, make any payment with
respect to, or settle or offer to settle, any such
demands.
Section 2.2 Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall designate a
bank or trust company reasonably acceptable to the
Company to act as paying agent (the "Paying Agent") in
effecting the exchange for the Merger Consideration of
certificates (the "Certificates") that, prior to the
Effective Time, represented Shares. Upon the surrender
of each such Certificate formerly representing Shares,
together with a properly completed letter of transmittal,
the Paying Agent shall pay the holder of such Certificate
the Merger Consideration multiplied by the number of
Shares formerly represented by such Certificate, in
exchange therefor, and such Certificate shall forthwith
be cancelled. Until so surrendered and exchanged, each
such Certificate (other than Certificates representing
Dissenting Shares or Shares held by Parent, Acquisition
or the Company, or any direct or indirect subsidiary
thereof) shall represent solely the right to receive the
Merger Consideration. No interest shall be paid or
accrue on the Merger Consideration. If the Merger
Consideration (or any portion thereof) is to be delivered
to any person other than the person in whose name the
Certificate formerly representing Shares surrendered in
exchange therefor is registered, it shall be a condition
to such exchange that the Certificate so surrendered
shall be properly endorsed or otherwise be in proper form
for transfer and that the person requesting such exchange
shall pay to the Paying Agent any transfer or other Taxes
required by reason of the payment of the Merger
Consideration to a person other than the registered
holder of the Certificate surrendered, or shall establish
to the satisfaction of the Paying Agent that such Tax has
been paid or is not applicable.
(b) Prior to the Effective Time, Parent
or Acquisition shall deposit, or cause to be deposited,
in trust with the Paying Agent the Merger Consideration
to which holders of Shares shall be entitled at the
Effective Time pursuant to Section 1.7(a) hereof;
provided that no such deposit shall relieve Parent of its
obligation to pay the Merger Consideration pursuant to
Section 1.7(a).
(c) The Merger Consideration shall be
invested by the Paying Agent, as directed by Parent,
provided such investments shall be limited to direct
obligations of the United States of America, obligations
for which the full faith and credit of the United States
of America is pledged to provide for the payment of
principal and interest, commercial paper rated of the
highest quality by Moody's Investors Services, Inc. or
Standard & Poor's Corporation, or certificates of deposit
issued by a commercial bank having at least
$1,000,000,000 in assets; provided, that no loss on
investment made pursuant to this Section 2.2(c) shall
relieve Parent or Acquisition of its obligation to pay
the Merger Consideration pursuant to Section 1.7(a).
(d) Promptly following the date which is
six months after the Effective Time, the Paying Agent
shall deliver to Parent all cash and documents in its
possession relating to the transactions described in this
Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly
representing a Share may surrender such Certificate to
the Surviving Corporation and (subject to applicable
abandoned property, escheat and similar laws) receive in
exchange therefor the Merger Consideration, without any
interest thereon.
(e) Promptly after the Effective Time,
the Paying Agent shall mail to each record holder of
Certificates that immediately prior to the Effective Time
represented Shares a form of letter of transmittal and
instructions for use in surrendering such Certificates
and receiving the Merger Consideration in exchange
therefor.
(f) After the Effective Time, there shall
be no transfers on the stock transfer books of the
Surviving Corporation of any Shares. If, after the
Effective Time, Certificates formerly representing Shares
are presented to the Surviving Corporation or the Paying
Agent, they shall be cancelled and exchanged for the
Merger Consideration, as provided in this Article II,
subject to applicable law in the case of Dissenting
Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent
and Acquisition as follows:
Section 3.1 Organization and Qualification;
Subsidiaries. (a) Each of the Company and its
subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate
its properties and to carry on its business as now being
conducted, except where the failure to be so organized,
existing and in good standing or to have such power and
authority would not, individually or in the aggregate,
have a material adverse effect on the business, results
of operations (on an annualized basis) or financial
condition of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Effect"). Without limiting
the generality of the foregoing definition of "Material
Adverse Effect", such definition shall specifically
include adverse consequences to earnings or financial
condition in excess of $75 million to the Company and its
subsidiaries, taken as a whole, but shall specifically
exclude adverse consequences to earnings and financial
condition of $75 million or less unless such adverse
consequences also constitute a material adverse effect on
the business, results of operations (on an annualized
basis) or financial condition of the Company and its
subsidiaries, taken as a whole. "Material Adverse
Effect" shall not mean or include any of the events set
forth on Schedule 3.1(a) or any of the transactions
effected pursuant to this Agreement.
(b) Each of the Company and its
subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction (including
any foreign country) in which the property owned, leased
or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or
licensed and in good standing would not, individually or
in the aggregate, have a Material Adverse Effect.
(c) The Company has heretofore furnished
or made available to Parent complete and correct copies
of the Company's Restated Certificate of Incorporation
and By-Laws and the equivalent organizational documents
of each of its subsidiaries, each as amended to the date
hereof, as requested by Parent. Such Restated
Certificate of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect.
The Company is not in violation of any of the provisions
of its Restated Certificate of Incorporation or By-Laws
and no subsidiary of the Company is in violation of any
of the provisions of such subsidiary's equivalent
organizational documents.
(d) The Company has heretofore furnished
or made available to Parent a complete and correct list
of the subsidiaries of the Company, which list sets forth
the amount of capital stock of or other equity interests
in such subsidiaries owned by the Company, directly or
indirectly. Except as set forth in Schedule 3.1(d), no
entity in which the Company owns, directly or indirectly,
less than a 50% equity interest is, individually or when
taken together with all other such entities, material to
the business of the Company and its subsidiaries, taken
as a whole.
Section 3.2 Capitalization of the Company and
its Subsidiaries. The authorized capital stock of the
Company consists of (i) 350,000,000 Shares of which, as
of April 28, 1995, 277,097,048 Shares were issued and
outstanding (including 1,992,600 Shares subject to
restrictions issued pursuant to employee benefit plans of
the Company and its subsidiaries or otherwise) and (ii)
8,000,000 shares of Preferred Stock, par value $1.00 per
share, of which, as of April 28, 1995, 2,769,670 shares
of Series A ESOP Convertible Preferred Stock (the "Series
A Preferred Shares") were issued and outstanding. All
outstanding shares of capital stock of the Company have
been validly issued, and are fully paid, nonassessable
and free of preemptive rights. As of April 28, 1995,
Employee Options to purchase an aggregate of 22,213,415
Shares were outstanding and the weighted average exercise
price of such Employee Options was $22.86 per Share. As
of April 28, 1995, 2,769,670 Shares were reserved for
issuance upon conversion of the Series A Preferred
Shares. Each Series A Preferred Share is convertible
into one Share. Except as set forth above or in Schedule
3.2, and except as a result of the exercise of Employee
Options outstanding as of April 28, 1995, there are
outstanding (i) no shares of capital stock or other
voting securities of the Company, (ii) no securities of
the Company convertible into or exchangeable for shares
of capital stock or voting securities of the Company,
(iii) no options, subscriptions, warrants, convertible
securities, calls or other rights to acquire from the
Company, and no obligation of the Company to issue,
deliver or sell any capital stock, voting securities or
securities convertible into or exchangeable for capital
stock or voting securities of the Company and (iv) no
equity equivalents, performance shares, interests in the
ownership or earnings of the Company or other similar
rights issued by the Company (collectively, "Company
Securities"). Except as set forth on Schedule 3.2 or as
contemplated by this Agreement, there are no outstanding
obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any Company
Securities, other than the Company's obligations
hereunder and under the Restated Certificate of
Incorporation of the Company to redeem the Series A
Preferred Shares. Except as set forth in Schedule 3.2,
each of the outstanding shares of capital stock of each
of the Company's subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and is directly or
indirectly owned by the Company, free and clear of all
security interests, liens, claims, pledges, charges,
voting agreements or other encumbrances of any nature
whatsoever (collectively, "Liens"). Except as set forth
in Schedule 3.2, there are no existing options, calls or
commitments of any character relating to the issued or
unissued capital stock or other equity securities of any
subsidiary of the Company.
Section 3.3 Authority Relative to this
Agreement; Fairness Opinion. The Company has all
necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby. The Board, at a meeting duly called and held on
May 3, 1995, (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger,
are in the best interests of the stockholders of the
Company (other than DCC, Parent, Acquisition or their
affiliates), (ii) approved this Agreement and the
transactions contemplated hereby, including the Merger,
(iii) resolved, subject to their fiduciary duties under
applicable law, to recommend that the stockholders of the
Company approve and adopt this Agreement and the Merger
and (iv) resolved to redeem, effective immediately prior
to the Merger, all of the outstanding Series A Preferred
Shares. Lehman Brothers Inc. ("Lehman Brothers") has
delivered to the Board its written opinion dated May 3,
1995 to the effect that, as of the date of such opinion,
the consideration to be received by the holders of Shares
(other than DCC, Parent, Acquisition or their affiliates)
pursuant to the Merger is fair to such holders from a
financial point of view. As of the date hereof, the
Company has been authorized by Lehman Brothers to permit
the inclusion of such fairness opinion in the Proxy
Statement referred to in Section 3.7. The execution,
delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board and no
other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than,
with respect to the Merger, the approval and adoption of
this Agreement by the holders of a majority of the
outstanding Shares and Series A Preferred Shares (voting
together as a single class) and the filing of the
appropriate merger documents as required by Delaware
Law). The Board has taken all action necessary with
respect to the transactions contemplated hereby and by
the Stock Purchase Agreement so as to render inapplicable
to such transactions, including, without limitation, the
Merger and the purchase of Shares pursuant to the Stock
Purchase Agreement, the restrictions on business
combinations contained in Section 203 of the Delaware Law
and the supermajority voting requirements contained in
Article Fifteenth of the Company's Restated Certificate
of Incorporation. This Agreement has been duly and
validly executed and delivered by the Company and,
assuming it constitutes a valid and binding agreement of
the other parties hereto, constitutes a legal, valid and
binding agreement of the Company enforceable against the
Company in accordance with its terms.
Section 3.4 Non-Contravention; Required
Filings and Consents. (a) Except as set forth in
Schedule 3.4, the execution, delivery and performance by
the Company of this Agreement and the consummation of the
transactions contemplated hereby (including the Merger)
do not and will not (i) contravene or conflict with the
Restated Certificate of Incorporation or By-Laws of the
Company or the equivalent organizational documents of any
of its subsidiaries; (ii) assuming that all consents,
authorizations and approvals contemplated by subsection
(b) below have been obtained and all filings described
therein have been made, contravene or conflict with or
constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding
upon or applicable to the Company, any of its
subsidiaries or any of their respective properties; (iii)
conflict with, or result in the breach or termination of
any provision of or constitute a default (with or without
the giving of notice or the lapse of time or both) under,
or give rise to any right of termination, cancellation,
or loss of any benefit to which the Company or any of its
subsidiaries is entitled under any provision of any
agreement, contract, license or other instrument binding
upon the Company, any of its subsidiaries or any of their
respective properties, or allow the acceleration of the
performance of, any obligation of the Company or any of
its subsidiaries under any indenture, mortgage, deed of
trust, lease, license, contract, instrument or other
agreement to which the Company or any of its subsidiaries
is a party or by which the Company or any of its
subsidiaries or any of their respective assets or
properties is subject or bound; or (iv) result in the
creation or imposition of any Lien on any asset of the
Company or any of its subsidiaries, except in the case of
clauses (ii), (iii) and (iv) for any such contraventions,
conflicts, violations, breaches, terminations, defaults,
cancellations, losses, accelerations and Liens which
would not individually or in the aggregate have a
Material Adverse Effect or be reasonably expected to
prevent the consummation by the Company of the
transactions contemplated by this Agreement.
(b) The execution, delivery and
performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby
(including the Merger) by the Company require no action
by or in respect of, or filing with, any governmental
body, agency, official or authority (either domestic or
foreign) other than (i) the filing of a certificate of
merger in accordance with Delaware Law; (ii) compliance
with any applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), Regulation (EEC) No. 4064/89 of the European
Community (the "EC Merger Regulation"), and the Canadian
Competition Act; (iii) the filing of a notice pursuant to
Section 721 of the Defense Production Act of 1950, as
amended ("Exon-Florio"); (iv) compliance with any
applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and state
securities, takeover and Blue Sky laws; and (v) such
actions or filings which, if not taken or made, would not
individually or in the aggregate have a Material Adverse
Effect or be reasonably expected to prevent the
consummation by the Company of the transactions
contemplated by this Agreement.
Section 3.5 SEC Reports. (a) The Company has
filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since
January 1, 1992. The Company has made available to
Parent, in the form filed with the SEC, the Company's (i)
Annual Reports on Form 10-K for the fiscal years ended
December 31, 1994, 1993 and 1992, (ii) Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1994, June
30, 1994 and September 30, 1994, (iii) all proxy
statements relating to meetings of the Company's
stockholders since December 31, 1992 and (iv) all other
reports or registration statements (other than reports on
Form 10-Q not referred to in (ii) above) filed by the
Company with the SEC since December 31, 1992
(collectively, the "SEC Reports"). The SEC Reports were
prepared in accordance with all applicable requirements
of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act. As of their
respective dates, none of the SEC Reports, including,
without limitation, any financial statements or schedules
included therein, contained any untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made, not misleading.
The audited consolidated financial statements and
unaudited consolidated interim financial statements of
the Company included in the SEC Reports fairly present,
in conformity with generally accepted accounting
principles applied on a consistent basis (except as may
be indicated in the notes thereto), the consolidated
financial position of the Company and its consolidated
subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end
adjustments and the lack of footnote disclosure (to the
extent permitted by SEC rules) in the case of any
unaudited interim financial statements and subject to any
subsequent reclassification as indicated in SEC Reports
filed prior to the date hereof). The Company has
heretofore provided or made available complete and
correct copies of each of the SEC Reports to Parent.
(b) Except as disclosed in the SEC
Reports filed prior to the date of this Agreement or as
set forth in Schedule 3.5(b), the Company and its
subsidiaries have no liabilities of any nature (whether
accrued, absolute, contingent or otherwise), except for
liabilities incurred in the ordinary course of business
since December 31, 1994 or liabilities which would not,
individually or in the aggregate, have a Material Adverse
Effect.
Section 3.6 Absence of Certain Changes; Net
Cash Position; Derivatives. (a) Since December 31, 1994,
except as disclosed in the SEC Reports filed prior to the
date of this Agreement or as set forth in Schedule
3.6(a), neither the Company nor any of its subsidiaries
has (i) declared, set aside or paid any dividend or other
distribution (whether in cash, stock, or property or any
combination thereof) in respect of its capital stock
(other than cash dividends declared and paid on the
Series A Preferred Shares in accordance with their terms
and on the Shares to holders of record on March 31, 1995
in the amount of $0.25 per Share), (ii) entered into,
adopted or amended or materially increased the benefits
paid or payable under any severance, termination or
deferred compensation agreement or arrangement with any
director, officer or employee, (iii) changed any of the
accounting principles or practices used by the Company,
except as required as a result of a change in law, SEC
guidelines or generally accepted accounting principles,
(iv) settled litigations for amounts in excess of $3
million in the aggregate, or (v) except as previously
disclosed to Parent, entered into any transaction, or
conducted its business or operations, except in the
ordinary course of business consistent with past practice
or where such transactions or conduct would not,
individually or in the aggregate, have a Material Adverse
Effect. Since December 31, 1994, there has not been any
material adverse change in the business, results of
operations (on an annualized basis) or financial
condition of the Company and its subsidiaries, taken as a
whole. For purposes of this Section 3.6(a), "material
adverse change" shall be construed without reference to
the definition of Material Adverse Effect and shall not
mean or include any of the events set forth in Schedule
3.1(a) or any of the transactions effected pursuant to
this Agreement.
(b) As of the date of this Agreement,
subject to the last sentence of this Section 3.6(b), the
Net Cash of the Company and its subsidiaries is at least
$250 million. As used herein, "Net Cash" means the
excess of (i) the sum of the cash, cash equivalents,
short term investments, notes receivable (excluding trade
notes receivable) and long term readily marketable
financial assets of the Company and its subsidiaries over
(ii) the sum of the accounts payable to DCC and its
affiliates (other than the Company and its subsidiaries),
dividends payable, notes payable (excluding trade notes
payable), long term debt (including current portion of
long term debt) and any other balance sheet liabilities
for borrowed money of the Company and its subsidiaries,
in each case determined in conformity with generally
accepted accounting principles. The accounts payable to
DCC and its affiliates (other than the Company and its
subsidiaries) included in the $250 million Net Cash
referred to above total $58 million and are as of March
31, 1995.
(c) Schedule 3.6(c) sets forth a complete
and correct list of all Derivative Financial Instruments
(including the face, contract or notional amount of and
any open position relating to such Derivative Financial
Instruments and a brief summary of the nature and terms
thereof) as of April 30, 1995 to which the Company or any
of its subsidiaries is a party or by which the Company or
any of its subsidiaries or any of their respective assets
or properties is subject or bound (including, without
limitation, funds of the Company or any of its
subsidiaries invested by any other person). For purposes
of this Agreement, "Derivative Financial Instrument"
means any futures, forward, swap, option or swaption
contract, or any other financial instrument with similar
characteristics and/or generally characterized by the
financial community as a "derivative" security.
Section 3.7 Proxy Statement; Schedule 13E-3.
The proxy or information statement or similar materials
distributed to the Company's stockholders in connection
with the Merger, including any amendments or supplements
thereto (the "Proxy Statement"), shall not, at the time
filed with the SEC, at the time mailed to the Company's
stockholders, at the time of the Stockholders' Meeting or
at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they are made, not misleading. Notwithstanding the
foregoing, the Company makes no representation or
warranty with respect to any information provided by
Parent or Acquisition specifically for use in the Proxy
Statement. The Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder. None of
the information provided by the Company specifically for
use in any Rule 13e-3 Transaction Statement on Schedule
13E-3 required to be filed with the SEC under the
Exchange Act in connection with the Merger (the "Schedule
13E-3") will at the time the Schedule 13E-3 or any
amendments thereto are filed with the SEC, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 3.8 Finder's Fee. No broker, finder,
investment banker or other intermediary (other than
Lehman Brothers) is entitled to any brokerage, finder's
or other fee or commission in connection with the
transactions contemplated by this Agreement or by the
Stock Purchase Agreement based upon arrangements made by
and on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all
agreements between the Company and Lehman Brothers
pursuant to which Lehman Brothers would be entitled to
any payment relating to the transactions contemplated
hereby or by the Stock Purchase Agreement.
Section 3.9 Absence of Litigation. Except as
disclosed in the SEC Reports filed prior to the date
hereof, as of the date hereof, there is no action, suit,
claim, investigation or proceeding pending against, or to
the knowledge of the Company, threatened against, the
Company or any of its subsidiaries or any of their
respective properties before any court or arbitrator or
any administrative, regulatory or governmental body, or
any agency or official which, individually or in the
aggregate, would reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the SEC
Reports filed prior to the date of this Agreement or in
Schedule 3.9, as of the date hereof, there is no action,
suit, claim, investigation or proceeding pending against,
or to the knowledge of the Company, threatened against,
the Company or any of its subsidiaries or any of their
respective properties before any court or arbitrator or
any administrative, regulatory or governmental body, or
any agency or official which (i) challenges or seeks to
prevent, enjoin, alter or delay the Merger or any of the
other transactions contemplated hereby or by the Stock
Purchase Agreement; or (ii) alleges criminal action or
inaction. Without limiting the generality of the
foregoing, as of the date hereof, there is no action,
suit, claim, investigation or proceeding relating to
debarment or potential debarment pending against, or to
the knowledge of the Company, threatened against, the
Company or any of its subsidiaries before the Health Care
Financing Administration, the Department of Defense, the
Inspector General of the Department of Health and Human
Services or any similar state agency which, individually
or in the aggregate, would reasonably be expected to have
a Material Adverse Effect. Except as disclosed in the
SEC Reports filed prior to the date of this Agreement, as
of the date hereof, neither the Company nor any of its
subsidiaries nor any of their respective properties is
subject to any order, writ, judgment, injunction, decree,
determination or award having, or which would reasonably
be expected to have, a Material Adverse Effect or which
would prevent or delay the consummation of the
transactions contemplated hereby.
Section 3.10 Taxes. Except as set forth in
the SEC Reports filed prior to the date of this Agreement
or in Schedule 3.10(a), (a) the Company and its
subsidiaries have filed, been included in or sent, all
material returns, material declarations and reports and
information returns and statements required to be filed
or sent by or relating to any of them relating to any
Taxes (as defined below) with respect to any material
income, properties or operations of the Company or any of
its subsidiaries (collectively, "Returns"); (b) as of the
time of filing, the Returns correctly reflected in all
material respects the facts regarding the income,
business, assets, operations, activities and status of
the Company and its subsidiaries and any other material
information required to be shown therein; (c) the Company
and its subsidiaries have timely paid or made provision
for all material Taxes that have been shown as due and
payable on the Returns that have been filed; (d) the
Company and its subsidiaries have made or will make
provision for all material Taxes payable for any periods
that end before the Effective Time for which no Returns
have yet been filed and for any periods that begin before
the Effective Time and end after the Effective Time to
the extent such Taxes are attributable to the portion of
any such period ending at the Effective Time; (e) the
charges, accruals and reserves for taxes reflected on the
books of the Company and its subsidiaries are adequate
under generally accepted accounting principles to cover
the Tax liabilities accruing or payable by the Company
and its subsidiaries in respect of periods prior to the
date hereof; (f) neither the Company nor any of its
subsidiaries is delinquent in the payment of any material
Taxes or has requested any extension of time within which
to file or send any material Return (other than
extensions granted to the Company for the filing of its
Returns as set forth in Schedule 3.10(a)), which Return
has not since been filed or sent; (g) no material
deficiency for any Taxes has been proposed, asserted or
assessed in writing against the Company or any of its
subsidiaries (or any member of any affiliated or combined
group of which the Company or any of its subsidiaries is
or has been a member for which either the Company or any
of its subsidiaries could be liable) other than those
Taxes being contested in good faith by appropriate
proceedings and set forth in Schedule 3.10(b) (which
shall set forth the nature of the proceeding, the type of
return, the deficiencies proposed, asserted or assessed
and the amount thereof, and the taxable year in
question); (h) neither the Company nor any of its
subsidiaries has granted any extension of the limitation
period applicable to any material Tax claims other than
those Taxes being contested in good faith by appropriate
proceedings; (i) neither the Company nor any of its
subsidiaries is subject to liability for Taxes of any
person (other than the Company or its subsidiaries),
including, without limitation, liability arising from the
application of U.S. Treasury Regulation section 1.1502-6
or any analogous provision of state, local or foreign
law; and (j) neither the Company nor any of its
subsidiaries is or has been a party to any material tax
sharing agreement with any corporation which is not
currently a member of the affiliated group of which the
Company is currently a member.
"Tax" means with respect to any person (i) any
net income, gross income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp,
occupation, premium, property, value-added, windfall
profits, custom duty or other tax, governmental fee,
capital stock, social security (or similar),
unemployment, disability, transfer, registration,
alternative or add-on minimum, estimated or other like
assessment or charge of any kind whatsoever, together
with any interest and any penalty, addition to tax or
additional amount imposed by any taxing authority
(domestic or foreign) on such person and (ii) any
liability of the Company or any subsidiary for the
payment of any amount of the type described in clause (i)
as a result of being a member of an affiliated or
combined group.
Section 3.11 Employee Benefits. (a) Schedule
3.11(a) contains a true and complete list of each bonus,
deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay,
hospitalization or other medical, dental, life,
disability or other insurance, supplemental unemployment
benefits, profit-sharing, pension, savings or retirement
plan, program, agreement or arrangement, and each other
employee benefit plan, program, agreement or arrangement,
sponsored, maintained or contributed to or required to be
contributed to by the Company or by any trade or
business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be
deemed a "single employer" within the meaning of section
4001 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), for the benefit of any
employee or terminated employee of the Company or any
ERISA Affiliate (the "Plans"). Schedule 3.11(a)
identifies each of the Plans that is an "employee benefit
plan," as that term is defined in section 3(3) of ERISA
(the "ERISA Plans").
(b) With respect to each Plan, the
Company has heretofore delivered or made available to
Parent true and complete copies of each of the following
documents (to the extent applicable):
(i) a copy thereof;
(ii) a copy of the most recent
annual report and actuarial report, if required
under ERISA, and the most recent report
prepared with respect thereto in accordance
with Statement of Financial Accounting
Standards No. 87, Employer's Accounting for
Pensions;
(iii) a copy of the most recent
actuarial report prepared with respect thereto
in accordance with Statement of Financial
Accounting Standards No. 106, Employer's
Accounting for Non-Pension Postretirement
Benefits;
(iv) a copy of the most recent
Summary Plan Description;
(v) if the Plan is funded
through a trust or any third party funding
vehicle, a copy of the trust or other funding
agreement and the latest financial statements
thereof; and
(vi) the most recent
determination letter received from the Internal
Revenue Service with respect to each Plan
intended to qualify under section 401(a) of the
Internal Revenue Code of 1986, as amended (the
"Code").
(c) With respect to each ERISA Plan
subject to Title IV of ERISA, no material liability
(other than liabilities for premiums due the Pension
Benefit Guaranty Corporation ("PBGC") (which premiums
have been paid when due)) under Title IV of ERISA has
been incurred by the Company or any ERISA Affiliate that
has not been satisfied in full, and, to the knowledge of
the Company, no condition exists that presents a material
risk to the Company or any ERISA Affiliate of incurring a
material liability under such Title. To the extent this
representation applies to sections 4064, 4069 or 4204 of
Title IV of ERISA, it is made not only with respect to
each ERISA Plan but also with respect to any employee
benefit plan, program, agreement or arrangement subject
to Title IV of ERISA to which the Company or any ERISA
Affiliate made, or was required to make, contributions
during the five (5)-year period ending on the Effective
Time.
(d) The PBGC has not instituted
proceedings to terminate any ERISA Plan and, to the
knowledge of the Company, no condition exists that
presents a material risk that such proceedings will be
instituted.
(e) Except as set forth on Schedule
3.11(e), with respect to each ERISA Plan subject to Title
IV of ERISA, the present value of accrued benefits under
such plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan
did not exceed, as of its latest valuation date, the then
current value of the assets of such plan allocable to
such accrued benefits.
(f) Neither the Company nor any ERISA
Affiliate, nor, to the knowledge of the Company, any
ERISA Plan, nor any trust created thereunder, nor any
trustee or administrator thereof has engaged in a
transaction in connection with which the Company or any
ERISA Affiliate, any ERISA Plan, any such trust, or any
trustee or administrator thereof, or any party dealing
with any ERISA Plan or any such trust could be subject to
either a civil penalty assessed pursuant to section 409
or 502(i) of ERISA or a Tax imposed pursuant to section
4975 or 4976 of the Code, except for such penalties and
Taxes which would not, individually or in the aggregate,
have a Material Adverse Effect.
(g) No ERISA Plan or any trust
established thereunder has incurred any "accumulated
funding deficiency" (as defined in section 302 of ERISA
and section 412 of the Code), whether or not waived, as
of the last day of the most recent fiscal year of such
ERISA Plan ended prior to the Effective Time; and all
contributions required to be made with respect thereto
(whether pursuant to the terms of any ERISA Plan or
otherwise) on or prior to the Effective Time have been
timely made.
(h) No ERISA Plan is a "multiemployer
pension plan," as defined in section 3(37) of ERISA, nor
is any ERISA Plan a plan described in section 4063(a) of
ERISA.
(i) To the knowledge of the Company, each
Plan has been operated and administered in all material
respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code.
(j) Each ERISA Plan intended to be
"qualified" within the meaning of section 401(a) of the
Code has been drafted with the intention to be so
qualified and has been submitted to the Internal Revenue
Service along with a request for a favorable
determination letter on or before the date hereof, and it
is anticipated that each such plan will be modified so as
to incorporate any conforming amendments requested or
required by the Internal Revenue Service as a condition
to the issuance of such favorable determination letter.
(k) To the Company's knowledge, except as
reasonably estimated and as set forth on Schedule
3.11(k), no amounts payable under the Plans as a result
of the consummation of the transactions contemplated by
this Agreement will fail to be deductible for federal
income tax purposes by application of section 280G of the
Code.
(l) Except as set forth on Schedule
3.11(l), no Plan provides benefits, including without
limitation death or medical benefits (whether or not
insured), with respect to current or former employees of
the Company or any ERISA Affiliate beyond their
retirement or other termination of service (other than
(i) coverage mandated by applicable law or (ii) death
benefits or retirement benefits under any "employee
pension plan," as that term is defined in section 3(2) of
ERISA).
(m) Except as provided in Schedule
3.11(m), the consummation of the transactions
contemplated by this Agreement will not (i) entitle any
current or former employee or officer of the Company or
any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly
provided in this Agreement or (ii) accelerate the time of
payment or vesting, or increase the amount of
compensation due any such employee or officer.
(n) There are no pending or, to the
knowledge of the Company, threatened claims by or on
behalf of any Plan, by any employee or beneficiary
covered under any such Plan, or otherwise involving any
such Plan (other than routine claims for benefits).
(o) The Company has reserved the right to
amend or terminate any Plan which is a welfare benefit
plan, as that term is defined in section 3(l) of ERISA.
Section 3.12 Compliance. Neither the Company
nor any of its subsidiaries is in violation of, or has
violated, any applicable provisions of (i) any laws,
rules, statutes, orders, ordinances or regulations or
(ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise, or other
instrument or obligations to which the Company or any of
its subsidiaries is a party or by which the Company or
any of its subsidiaries or its or any of their respective
properties are bound or affected, which, individually or
in the aggregate, would have or be reasonably expected to
have a Material Adverse Effect.
Section 3.13 Environmental Matters. (a) Except
as set forth in Schedule 3.13 and to the knowledge of the
Company, the Company and its subsidiaries are in
compliance with all applicable Environmental Laws (which
compliance includes, but is not limited to, the
possession by the Company and its subsidiaries of all
permits and other governmental authorizations required
under applicable Environmental Laws, and compliance with
the terms and conditions thereof), except for any
noncompliance that individually or in the aggregate would
not reasonably be expected to have a Material Adverse
Effect. Except as set forth in Schedule 3.13, neither
the Company nor any of its subsidiaries has received any
communication (written or oral), whether from a
governmental authority, citizens group, employee or
otherwise, that alleges that the Company is not in such
compliance, and there are no past or present actions,
activities, circumstances, conditions, events or
incidents that would prevent or interfere with such
compliance in the future.
(b) Except as set forth in Schedule 3.13,
there is no Environmental Claim pending or, to the
knowledge of the Company, threatened against the Company
or any of its subsidiaries, or, to the knowledge of the
Company, against any person or entity whose liability for
any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually
or by operation of law, which individually or in the
aggregate would reasonably be expected to have a Material
Adverse Effect.
(c) Except as set forth in Schedule 3.13, there
are no past or present actions, activities,
circumstances, conditions, events or incidents
(including, without limitation, the release, emission,
discharge, presence or disposal of any Hazardous
Material) which could form the basis of any Environmental
Claim against the Company or any of its subsidiaries, or,
to the knowledge of the Company, against any person or
entity whose liability for any Environmental Claim the
Company or any of its subsidiaries has or may have
retained or assumed either contractually or by operation
of law, which individually or in the aggregate would
reasonably be expected to have a Material Adverse Effect.
(d) Except as set forth in Schedule 3.13,
neither the Company nor any of its subsidiaries has, and
to the knowledge of Company, no other person has
Released, placed, stored, buried or dumped Hazardous
Materials on, beneath or adjacent to any property owned,
operated or leased or formerly owned, operated or leased
by the Company or any of its subsidiaries, and neither
the Company nor any of its subsidiaries has received
notice that it is a potentially responsible party for the
Cleanup of any property, whether or not owned or operated
by the Company or any of its subsidiaries, which
individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect.
(e) The Company and its subsidiaries have
delivered or otherwise made available for inspection to
Parent true, complete and correct copies and results of
any material reports, studies, analyses, tests or
monitoring possessed or initiated by the Company or any
of its subsidiaries pertaining to Hazardous Materials in,
on, beneath or adjacent to the property owned or leased
by the Company or any of its subsidiaries or regarding
the Company's and its subsidiaries' compliance with
applicable Environmental Laws.
(f) Except as set forth in Schedule 3.13, no
transfers of permits or other governmental authorizations
under Environmental Laws, and no additional permits or
other governmental authorizations under Environmental
Laws, will be required to permit the Company and its
subsidiaries or the Surviving Corporation and its
subsidiaries, as the case may be, to be in full
compliance with all applicable Environmental Laws for the
period immediately following the transactions
contemplated hereby, as conducted by the Company and its
subsidiaries immediately prior to the date hereof. To
the extent that such transfers or additional permits and
other governmental authorizations are required, the
Company and its subsidiaries agree to use reasonable best
efforts to effect such transfers and obtain such permits
and other governmental authorizations at the time such
transfers, permits and other governmental authorizations
are required by law.
(g) The following terms as used in this Section
shall have the following meanings:
"Cleanup" means all actions required by
governmental entities or Environmental Laws to: (1)
cleanup, remove, treat or remediate Hazardous Materials
in the indoor or outdoor environment; (2) prevent the
Release of Hazardous Materials so that they do not
migrate, endanger or threaten to endanger public health
or welfare of the indoor or outdoor environment; (3)
perform pre-remedial studies and investigations and post-
remedial monitoring and care; or (4) respond to any
government requests for information or documents in any
way relating to cleanup, removal, treatment or
remediation or potential cleanup, removal, treatment or
remediation of Hazardous Materials in the indoor or
outdoor environment.
"Environmental Claim" means any claim, action,
cause of action, investigation or notice (written or
oral) by any person or entity alleging potential
liability (including, without limitation, potential
liability for investigatory costs, Cleanup costs,
governmental response costs, natural resources damages,
property damages, personal injuries, or penalties)
arising out of, based on or resulting from (a) the
presence, or Release into the indoor or outdoor
environment, of any Hazardous Materials at any location,
whether or not owned or operated by the Company or any of
its subsidiaries or (b) circumstances forming the basis
of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means all federal, state,
local and foreign laws and regulations relating to
pollution or protection of human health or the
environment, including without limitation, laws relating
to Releases or threatened Releases of Hazardous Materials
into the indoor or outdoor environment (including,
without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) or otherwise
relating to the manufacture, processing, distribution,
use, treatment, storage, Release, disposal, transport or
handling of Hazardous Materials and all laws and
regulations with regard to recordkeeping, notification,
disclosure and reporting requirements respecting
Hazardous Materials.
"Hazardous Materials" means all substances
defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. SECTION 300.5, or defined
as such by, or regulated as such under, any Environmental
Law.
"Release" means any release, spill, emission,
discharge, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration
into the indoor or outdoor environment (including,
without limitation, ambient air, surface water,
groundwater and surface or subsurface strata) or into or
out of any property, including the movement of Hazardous
Materials through or in the air, soil, surface water,
groundwater or property.
Section 3.14 Intellectual Property. Except to
the extent that the inaccuracy of any of the following
(or the circumstances giving rise to such inaccuracy)
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, and except as
disclosed in the SEC Reports filed prior to the date of
this Agreement or as set forth in Schedule 3.14: (1) the
Company and each of its subsidiaries owns, or is licensed
or has the right to use (in each case, free and clear of
any Liens), all Intellectual Property (as defined below)
used in or necessary for the conduct of its business as
currently conducted; (2) to the knowledge of the Company,
the use of any Intellectual Property by the Company and
its subsidiaries does not infringe on or otherwise
violate the rights of any person; (3) to the knowledge of
the Company, no product (or component thereof) or process
used, sold or manufactured by and/or for, or supplied to,
the Company or any of its subsidiaries infringes or
otherwise violates the Intellectual Property of any other
person; and (4) to the knowledge of the Company, no
person is challenging, infringing on or otherwise
violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company and its
subsidiaries. For purposes of this Agreement
"Intellectual Property" shall mean trademarks, service
marks, brand names, certification marks, trade dress,
assumed names, trade names and other indications of
origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in
any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such
registration or application; inventions, discoveries and
ideas, whether patentable or not in any jurisdiction;
patents, applications for patents (including, without
limitation, divisions, continuations, continuations in
part and renewal applications), and any renewals,
extensions or reissues thereof, in any jurisdiction;
nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the
use or disclosure thereof by any person; writings and
other works, whether copyrightable or not in any
jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
Section 3.15 Significant Agreements. Schedule
3.15 sets forth a complete and correct list of all
contracts, agreements and commitments (oral or written)
between the Company or any of its subsidiaries, on the
one hand, and on the other hand, (i) DCC or any of its
affiliates (other than the Company and its subsidiaries)
(excluding contracts, agreements and commitments which
collectively are immaterial to the Company and except for
this Agreement and certain other agreements entered into
in connection with this Agreement and to which Parent is
a party or of which Parent is aware); (ii) Chugai
Pharmaceutical Co., Ltd. or any of its affiliates; or
(iii) Tanabe Seiyaku Co., Ltd. or any of its affiliates
(the contracts, agreements and commitments listed in
Schedule 3.15, collectively, the "Significant
Agreements"). The Company has heretofore furnished or
made available to Parent complete and correct copies of
the Significant Agreements, each as amended or modified
to the date hereof (including any waivers with respect
thereto). Except as set forth on Schedule 3.4 or
Schedule 3.15, each of the Significant Agreements is in
full force and effect and enforceable in accordance with
its terms; neither the Company nor any of its
subsidiaries has received any notice (written or oral) of
cancellation or termination of, or any expression or
indication of an intention or desire to cancel or
terminate, any of the Significant Agreements; no
Significant Agreement is the subject of, or, to the
knowledge of the Company, has been threatened to be made
the subject of, any arbitration, suit or other legal
proceeding; with respect to any Significant Agreement
which by its terms will terminate as of a certain date
unless renewed or unless an option to extend such
Significant Agreement is exercised, neither the Company
nor any of its subsidiaries has received any notice
(written or oral), or otherwise has any knowledge, that
any such Significant Agreement will not be so renewed or
that any such extension option will not be exercised; and
there exists no event of default or occurrence, condition
or act on the part of the Company or any of its
subsidiaries or, to the knowledge of the Company, on the
part of the other parties to the Significant Agreements
which constitutes or would constitute (with notice or
lapse of time or both) a breach of or default under any
of the Significant Agreements, except to the extent that
the inaccuracy of the foregoing insofar as it relates to
contracts, agreements and commitments referenced in
Section 3.15(i) would not, individually or in the
aggregate, have a Material Adverse Effect.
Section 3.16 Insurance. Schedule 3.16 sets
forth a complete and correct list of all material
insurance policies (including a brief summary of the
nature and terms thereof and any amounts paid or payable
to the Company or any of its subsidiaries thereunder)
providing coverage in favor of the Company or any of its
subsidiaries or any of their respective properties. Each
such policy is in full force and effect, no notice of
termination, cancellation or reservation of rights has
been received with respect to any such policy, there is
no default with respect to any provision contained in any
such policy, and there has not been any failure to give
any notice or present any claim under any such policy in
a timely fashion or in the manner or detail required by
any such policy, except for any such failures to be in
full force and effect, any such terminations,
cancellations, reservations or defaults, or any such
failures to give notice or present claims which,
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. The coverage
provided by such policies is, in the Company's judgment,
reasonable in scope and amount, in light of the risks
attendant to the business and activities of the Company
and its subsidiaries.
Section 3.17 Labor Matters. Except as set
forth in Schedule 3.17 and except for normal and
customary labor arrangements outside North America,
neither the Company nor any of its subsidiaries is a
party to any collective bargaining or other labor union
contract applicable to persons employed by the Company or
any of its subsidiaries, no collective bargaining
agreement is being negotiated by the Company or any of
its subsidiaries and the Company has no knowledge of any
material activities or proceedings of any labor union to
organize any of their respective employees. There is no
labor dispute, strike or work stoppage against the
Company or any of its subsidiaries pending or, to the
Company's knowledge, threatened which may interfere with
the respective business activities of the Company or any
of its subsidiaries, except where such dispute, strike or
work stoppage would not reasonably be expected to have a
Material Adverse Effect.
Section 3.18 FDA Matters.
(a) Schedule 3.18 sets forth a complete
and correct list of all products that are, directly or
indirectly, being researched in human subjects or
distributed for commercial sale by the Company or any of
its subsidiaries (the "Products")(including, on such
Schedule 3.18, a list of all material Licenses (as
defined below) for each Product that have been obtained
by the Company or any of its subsidiaries, or form the
basis for manufacturing, distribution, sale or human
research of a Product by the Company or any of its
subsidiaries).
(b) Except as set forth in Schedule 3.18,
(i) with respect to each Product: (A) the Company and its
subsidiaries have obtained all applicable approvals,
clearances, authorizations, licenses and registrations
required by United States or foreign governments or
government agencies, to permit the manufacture,
distribution, sale, marketing or human research of such
Product (collectively, "Licenses"); (B) the Company and
its subsidiaries are in full compliance with all terms
and conditions of each License in each country in which
such Product is marketed, and with all requirements
pertaining to the manufacture, distribution, sale or
human research of such Product which is not required to
be the subject of a License; (C) the Company and its
subsidiaries are in full compliance with all applicable
requirements (as set forth in relevant statutes and
regulations) regarding registration, licensure or
notification for each site (in any country) at which such
Product is manufactured, processed, packed, held for
distribution or from which it is distributed; and (D) to
the extent such product is intended for export from the
United States, the Company and its subsidiaries are in
full compliance with either all United States Food and
Drug Administration (hereafter, "FDA") requirements for
marketing or 21 U.S.C. 381(e) or 382; (ii) all
manufacturing operations performed by the Company and its
subsidiaries have been and are being conducted in full
compliance with the current good manufacturing practice,
including, but not limited to, the good manufacturing
practice regulations issued by FDA and counterpart
requirements in the European Union and other countries;
(iii) all nonclinical laboratory studies, as described in
21 C.F.R. 58.3(d), sponsored by the Company or any of its
subsidiaries have been and are being conducted in full
compliance with the good laboratory practice regulations
set forth in 21 C.F.R. Part 58 and counterpart
requirements in the European Union and other countries;
and (iv) the Company and its subsidiaries are in full
compliance with all reporting requirements for all
Licenses or plant registrations described in the
preceding clauses (b)(i)(A) and (b)(i)(C), including, but
not limited to, the adverse event reporting requirements
for drugs in 21 C.F.R. Parts 312 and 314 and for devices
in 21 C.F.R. Parts 812 and 803; except, in the case of
the preceding clauses (b)(i)(A) through (b)(i)(D),
inclusive, (b)(ii), (b)(iii) and (b)(iv), for any such
failures to obtain or noncompliances which, individually
or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. Without limiting the
generality of the foregoing definition of "Licenses",
such definition shall specifically include, with respect
to the United States, new drug applications, abbreviated
new drug applications, product license applications,
investigational new drug applications, premarket approval
applications, premarket notifications under Section
510(k) of the Federal Food, Drug, and Cosmetic Act,
investigational device exemptions, and product export
applications issued by FDA, as well as registrations
issued by the Drug Enforcement Administration of the
Department of Justice.
(c) Except as set forth in Schedule 3.18,
neither the Company nor any of its subsidiaries nor any
of their officers, employees or agents has made any
untrue statement of a material fact or fraudulent
statement to FDA, failed to disclose a fact required to
be disclosed to FDA, or committed any act, made any
statement, or failed to make any statement, that would
reasonably be expected to provide a basis for FDA to
invoke its policy respecting "Fraud, Untrue Statements of
Material Facts, Bribery, and Illegal Gratuities," set
forth in 56 Fed. Reg. 46191 (September 10, 1991).
(d) The Company has provided or made
available to Parent all documents in its possession
concerning communications to or from FDA, or prepared by
FDA, which bear in any material respect on compliance by
the Company and its subsidiaries with FDA regulatory
requirements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DCC
DCC represents and warrants to Parent and
Acquisition as follows:
Section 4.1 Organization. DCC is a corporation
duly organized, validly existing and in good standing
under the laws of the State of Delaware.
Section 4.2 Authority Relative to this
Agreement. DCC has all necessary corporate power and
authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have
been duly and validly authorized by the board of
directors of DCC, and no other corporate proceedings on
the part of DCC are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and
delivered by DCC and, assuming it constitutes a valid and
binding agreement of the other parties hereto,
constitutes a legal, valid and binding agreement of DCC,
enforceable against DCC in accordance with its terms.
Section 4.3 Non-Contravention; Required
Filings and Consents. (a) The execution, delivery and
performance by DCC of this Agreement and the consummation
of the transactions contemplated hereby (including the
Merger) do not and will not (i) contravene or conflict
with the Certificate of Incorporation or By-Laws of DCC;
(ii) assuming that all consents, authorizations and
approvals contemplated by subsection (b) below have been
obtained and all filings described therein have been
made, contravene or conflict with or constitute a
violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or
applicable to DCC or any of its properties; (iii)
conflict with, or result in the breach or termination of
any provision of or constitute a default (with or without
the giving of notice or the lapse of time or both) under,
or give rise to any right of termination, cancellation,
or loss of any benefit to which DCC is entitled under any
provision of any agreement, contract, license or other
instrument binding upon DCC or any of its properties, or
allow the acceleration of the performance of, any
obligation of DCC under any indenture, mortgage, deed of
trust, lease, license, contract, instrument or other
agreement to which DCC is a party or by which DCC or any
of its assets or properties is subject or bound; or (iv)
result in the creation or imposition of any Lien on any
asset of DCC, except in the case of clauses (ii), (iii)
and (iv) for any such contraventions, conflicts,
violations, breaches, terminations, defaults,
cancellations, losses, accelerations and Liens which,
individually or in the aggregate, would not reasonably be
expected to prevent DCC from performing its obligations
hereunder.
(b) The execution, delivery and
performance by DCC of this Agreement and the consummation
of the transactions contemplated hereby by DCC require no
action by or in respect of, or filing with, any
governmental body, agency, official or authority (either
domestic or foreign) other than (i) compliance with any
applicable requirements of the HSR Act, the EC Merger
Regulation and the Canadian Competition Act; (ii) the
filing of a notice pursuant to Exon-Florio; (iii)
compliance with any applicable requirements of the
Exchange Act and state securities, takeover and Blue Sky
laws; and (iv) such actions or filings which, if not
taken or made, would not, individually or in the
aggregate, reasonably be expected to prevent DCC from
performing its obligations hereunder.
Section 4.4 Absence of Litigation. Except as
previously disclosed by DCC to the Company, Parent and
Acquisition, as of the date hereof, there is no action,
suit, claim, investigation or proceeding pending against,
or to the knowledge of DCC, threatened against, DCC or
any of its properties before any court or arbitrator or
any administrative, regulatory or governmental body, or
any agency or official which challenges or seeks to
prevent, enjoin, alter or delay the Merger or any of the
other transactions contemplated by this Agreement or the
Stock Purchase Agreement. As of the date hereof, neither
DCC nor any of its properties is subject to any order,
writ, judgment, injunction, decree, determination or
award which would prevent or delay the consummation of
the transactions contemplated hereby.
Section 4.5 Certain Matters Concerning the
Company. (a) Except for this Agreement and certain
other agreements entered into in connection with this
Agreement and to which Parent is a party or of which
Parent is aware, Schedule 4.5 sets forth a complete and
correct list of all contracts, agreements and commitments
(oral or written) between the Company or any of its
subsidiaries, on the one hand, and DCC or any of its
affiliates (other than the Company and its subsidiaries),
on the other hand (the "Dow Agreements").
(b) To the knowledge of DCC, and without
having made any special inquiry or investigation, except
as disclosed in the SEC Reports filed prior to the date
of this Agreement or as set forth on Schedule 3.5(b), the
Company and its subsidiaries have no liabilities of any
nature (whether accrued, absolute, contingent or
otherwise), except for liabilities incurred in the
ordinary course of business since December 31, 1994 or
which would not, individually or in the aggregate, have a
Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Each of Parent and Acquisition represents and
warrants to the Company as follows:
Section 5.1 Organization. Each of Parent and
Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to
carry on its business as now being conducted. As of the
closing pursuant to the Stock Purchase Agreement and as
of the Closing hereunder, Acquisition will be a direct
wholly owned subsidiary of Parent.
Section 5.2 Authority Relative to this
Agreement. Each of Parent and Acquisition has all
necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized
by the board of directors of Acquisition and Parent and
by the sole stockholder of Acquisition, and no other
corporate proceedings on the part of Parent or
Acquisition are necessary to authorize this Agreement or
to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and
delivered by each of Parent and Acquisition and, assuming
it constitutes a valid and binding agreement of the other
parties hereto, constitutes a legal, valid and binding
agreement of each of Parent and Acquisition, enforceable
against each of Parent and Acquisition in accordance with
its terms.
Section 5.3 Non-Contravention; Required
Filings and Consents. (a) The execution, delivery and
performance by Parent and Acquisition of this Agreement
and the consummation of the transactions contemplated
hereby (including the Merger) do not and will not
(i) contravene or conflict with the Certificate of
Incorporation or By-Laws of Parent or Acquisition; (ii)
assuming that all consents, authorizations and approvals
contemplated by subsection (b) below have been obtained
and all filings described therein have been made,
contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to
Parent or Acquisition or any of their respective
properties; (iii) conflict with, or result in the breach
or termination of any provision of or constitute a
default (with or without the giving of notice or the
lapse of time or both) under, or give rise to any right
of termination, cancellation, or loss of any benefit to
which Parent or Acquisition is entitled under any
provision of any agreement, contract, license or other
instrument binding upon Parent, Acquisition or any of
their respective properties, or allow the acceleration of
the performance of, any obligation of Parent or
Acquisition under any indenture, mortgage, deed of trust,
lease, license, contract, instrument or other agreement
to which Parent or Acquisition is a party or by which
Parent or Acquisition or any of their respective assets
or properties is subject or bound; or (iv) result in the
creation or imposition of any Lien on any asset of Parent
or Acquisition, except in the case of clauses (ii), (iii)
and (iv) for any such contraventions, conflicts,
violations, breaches, terminations, defaults,
cancellations, losses, accelerations and Liens which,
individually or in the aggregate, would not reasonably be
expected to prevent the consummation of the Merger.
(b) The execution, delivery and
performance by Parent and Acquisition of this Agreement
and the consummation of the transactions contemplated
hereby (including the Merger) by Parent and Acquisition
require no action by or in respect of, or filing with,
any governmental body, agency, official or authority
(either domestic or foreign) other than (i) the filing of
a certificate of merger in accordance with Delaware Law;
(ii) compliance with any applicable requirements of the
HSR Act, the EC Merger Regulation and the Canadian
Competition Act; (iii) compliance with any applicable
requirements of the Exchange Act and state securities,
takeover and Blue Sky laws; (iv) the filing of a notice
pursuant to Exon-Florio; and (v) such actions or filings
which, if not taken or made, would not, individually or
in the aggregate, reasonably be expected to prevent the
consummation of the Merger.
Section 5.4 Absence of Litigation. Except as
previously disclosed by Parent and Acquisition to the
Company and DCC, as of the date hereof, there is no
action, suit, claim, investigation or proceeding pending
against, or to the knowledge of Parent and Acquisition,
threatened against, Parent or Acquisition or any of their
respective properties before any court or arbitrator or
any administrative, regulatory or governmental body, or
any agency or official which challenges or seeks to
prevent, enjoin, alter or delay the Merger or any of the
other transactions contemplated by this Agreement or the
Stock Purchase Agreement. As of the date hereof, neither
Parent nor Acquisition nor any of their respective
properties is subject to any order, writ, judgment,
injunction, decree, determination or award which would
prevent or delay the consummation of the transactions
contemplated hereby.
Section 5.5 Proxy Statement; Schedule 13E-3.
None of the information provided by Parent or Acquisition
specifically for use in the Proxy Statement shall, at the
time filed with the SEC, at the time mailed to the
Company's stockholders, at the time of the Stockholders'
Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
None of the information provided by Parent or Acquisition
specifically for use in the Schedule 13E-3(if required to
be filed) will at the time the Schedule 13E-3 or any
amendments thereto are filed with the SEC, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 5.6 No Prior Activities. Since the
date of its incorporation, Acquisition has not engaged in
any activities other than in connection with or as
contemplated by this Agreement or the Stock Purchase
Agreement or in connection with arranging any financing
required to consummate the transactions contemplated
hereby and thereby.
Section 5.7 Financing. Upon the terms and
subject to the conditions of this Agreement, Parent or
Acquisition will have available all funds necessary to
satisfy its obligation to pay the aggregate Merger
Consideration.
Section 5.8 Parent Not an Interested
Stockholder. As of the date hereof, (i) neither Parent
nor any of its affiliates is, with respect to the
Company, an "Interested Stockholder", as such term is
defined in Section 203 of Delaware Law and (ii) except to
the extent that Parent and its affiliates may be deemed
to hold Shares as a result of this Agreement or the Stock
Purchase Agreement, Parent and its affiliates
collectively do not hold directly or indirectly five
percent (5%) or more of the outstanding voting securities
of the Company.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business of the
Company. Except as otherwise expressly provided in this
Agreement, during the period from the date hereof to the
Effective Time, the Company and its subsidiaries will
each conduct its operations according to its ordinary
course of business consistent with past practice, and the
Company and its subsidiaries will each use its reasonable
best efforts to preserve intact its business
organization, to keep available the services of its
officers and employees and to maintain existing
relationships with licensors, licensees, suppliers,
contractors, distributors, customers and others having
business relationships with it. Without limiting the
generality of the foregoing, and except as disclosed in
the SEC Reports filed prior to the date of this
Agreement, as otherwise expressly provided in this
Agreement, as required by law or as set forth in Schedule
6.1, prior to the Effective Time, neither the Company nor
any of its subsidiaries will, without the prior written
consent of Acquisition (which consent will be deemed to
include the consent of any person designated from time to
time by Acquisition by written notice to the Company):
(a) amend its certificate or articles of
incorporation or by-laws or equivalent organizational
documents;
(b) authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase
or otherwise) any stock of any class or any other
securities or equity equivalents (including, without
limitation, stock appreciation rights), except as
required by option agreements as in effect as of the date
hereof or upon any conversion of Series A Preferred
Shares, or amend any of the terms of any such securities
or agreements outstanding as of the date hereof;
(c) split, combine or reclassify any
shares of its capital stock, declare, set aside or pay
any dividend or other distribution (whether in cash,
stock, or property or any combination thereof) in respect
of its capital stock (except that the Company may declare
and pay dividends on the Series A Preferred Shares in
accordance with their terms and may declare and pay its
regular quarterly cash dividends in respect of issued and
outstanding Shares in an amount not to exceed $0.25 per
Share per quarter; provided, that the record dates for
determining the holders of Shares entitled to receive
such regular quarterly cash dividends shall be the close
of business on the last business day of each calendar
quarter), or, except for the redemption of the Series A
Preferred Shares pursuant hereto and pursuant to the
Company's Restated Certificate of Incorporation, redeem,
repurchase or otherwise acquire any of its securities or
any securities of its subsidiaries;
(d) (i) incur any indebtedness for
borrowed money (except for short term indebtedness
incurred in the ordinary course of business consistent
with past practice pursuant to existing lines of credit)
or issue any debt securities or, except in the ordinary
course of business consistent with past practice, assume,
guarantee or endorse the obligations of any other person;
(ii) make any loans, advances or capital contributions
to, or investments in, any other person (other than to
wholly owned subsidiaries of the Company); (iii) pledge
or otherwise encumber shares of capital stock of the
Company or any of its subsidiaries; (iv) enter into or
invest in any Derivative Financial Instruments except in
the ordinary course of business consistent with the
Company's current investment and risk management
policies; or (v) except in the ordinary course of
business consistent with past practice, mortgage or
pledge any of its assets, tangible or intangible, or
create or suffer to exist any Lien thereupon;
(e) enter into, adopt or (except as may
be required by law or the terms of any such arrangement)
amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance
or other employee benefit agreement, trust, plan, fund or
other arrangement for the benefit or welfare of any
director, officer or employee, or (except, in the case of
employees who are not officers or directors, for normal
compensation increases in the ordinary course of business
consistent with past practice that, in the aggregate, do
not result in a material increase in benefits or
compensation expense to the Company) increase in any
manner the compensation or benefits of any director,
officer or employee or pay any benefit not required by
any plan or arrangement as in effect as of the date
hereof (including, without limitation, the granting of
stock options, restricted stock, stock appreciation
rights or performance units);
(f) acquire, sell, lease or dispose of
any assets outside the ordinary course of business or any
assets which in the aggregate are material to the Company
and its subsidiaries, taken as a whole, or enter into any
contract, agreement, commitment or transaction outside
the ordinary course of business consistent with past
practice;
(g) change any of the accounting
principles or practices used by it, except as may be
required as a result of a change in law, SEC guidelines
or generally accepted accounting principles;
(h) (i) acquire (by merger,
consolidation, or acquisition of stock or assets) any
corporation, partnership or other business organization
or division thereof; (ii) authorize any new capital
expenditure or expenditures which, individually, is in
excess of $1,000,000 or, in the aggregate, are in excess
of $5,000,000; (iii) settle any litigations for amounts
in excess of $200,000 individually or $1,000,000 in the
aggregate; or (iv) enter into or amend any contract,
agreement, commitment or arrangement with respect to any
of the foregoing;
(i) make any Tax election or settle or
compromise any Tax liability, other than in the ordinary
course of business;
(j) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course
of business consistent with past practice or in
accordance with their terms, of liabilities set forth in
Schedule 3.5(b) or reflected or reserved against in the
consolidated financial statements (or the notes thereto)
of the Company and its consolidated subsidiaries or
incurred in the ordinary course of business consistent
with past practice;
(k) terminate, modify, amend or waive
compliance with any provision of any of the Significant
Agreements, or fail to take any action necessary to
preserve the benefits of any Significant Agreement to the
Company or any of its subsidiaries; or
(l) take, or agree in writing or
otherwise to take, any of the actions described above in
Section 6.1.
Section 6.2 Boards of Directors and
Committees; Section 14(f).
(a) Promptly following the purchase by
Acquisition, Parent or their affiliates of the Dow Shares
and from time to time thereafter, Acquisition shall be
entitled to designate up to such number of directors,
rounded up to the next whole number, on the Board that
equals the product of (i) the total number of directors
on the Board (giving effect to the election of any
additional directors pursuant to this Section) and (ii)
the percentage that the number of Shares owned by
Acquisition and its affiliates (including any Shares
purchased pursuant to the Stock Purchase Agreement) bears
to the total number of outstanding Shares, and the
Company shall, upon request by Acquisition, promptly
either increase the size of the Board or use its
reasonable best efforts to secure the resignation of such
number of directors as is necessary to enable
Acquisition's designees to be elected to the Board and
shall cause Acquisition's designees to be so elected.
Promptly upon request by Acquisition, the Company will
use its reasonable best efforts to cause persons
designated by Acquisition to constitute the same
percentage as is on the Board of (i) each committee of
the Board, (ii) each board of directors of each
subsidiary of the Company designated by Acquisition and
(iii) each committee of each such board. Simultaneously
with the purchase by Acquisition, Parent or their
affiliates of the Dow Shares, DCC shall use its
reasonable best efforts to cause each employee of DCC who
is on the Board to resign from the Board and from the
board of directors of any subsidiary of the Company on
which such individual serves. Subject to the foregoing,
the Company shall use its reasonable best efforts to
ensure that all of the members of the Board as of the
date hereof who are not employees of DCC shall remain
members of the Board until the Effective Time.
(b) The Company's obligations to appoint
designees to the Board shall be subject to Section 14(f)
of the Exchange Act, and Rule 14f-1 promulgated
thereunder. As promptly as practicable following the
date of this Agreement, the Company shall take all
actions required pursuant to Section 14(f) and Rule 14f-1
in order to fulfill its obligations under this Section
6.2 and shall file with the SEC and distribute to its
stockholders such information as is required under
Section 14(f) and Rule 14f-1. Parent or Acquisition will
supply to the Company in writing and be solely
responsible for any information with respect to either of
them and their nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment
of Acquisition's designees pursuant to this Section 6.2
and prior to the Effective Time, any amendment of this
Agreement or the Restated Certificate of Incorporation or
By-Laws of the Company, any termination of this Agreement
by the Company, any extension by the Company of the time
for the performance of any of the obligations or other
acts of Parent or Acquisition or any waiver of any of the
Company's rights hereunder, will require the concurrence
of a majority of the directors of the Company then in
office who are not designees of Acquisition or employees
of DCC or the Company. From and after the purchase of
the Dow Shares by Acquisition, Parent or their affiliates
and prior to the Effective Time, Parent and Acquisition
will cooperate with the Company to ensure that the Board
at all times includes at least two directors who are not
designees of Acquisition or employees of DCC or the
Company.
Section 6.3 Proxy Statement; Schedule 13E-3.
(a) The Company shall, as promptly as
practicable following the date hereof, prepare and file
the Proxy Statement with the SEC under the Exchange Act.
As soon as practicable following completion of review of
the Proxy Statement by the SEC, the Company shall mail
the Proxy Statement to its stockholders who are entitled
to vote at the Stockholders' Meeting. Subject to the
fiduciary obligations of the Board under applicable law,
the Proxy Statement shall contain the recommendation of
the Board that the stockholders of the Company adopt this
Agreement and the Merger.
(b) In the event Parent and the Company
determine that the Schedule 13E-3 is required to be filed
with the SEC in connection with the Merger, then, as
promptly as practicable following notice of such
determination, the Company, Parent and Acquisition shall
prepare and file the Schedule 13E-3 with the SEC.
(c) The Company, Parent and Acquisition
shall cooperate with one another in the preparation and
filing of the Proxy Statement and the Schedule 13E-3 (if
required to be filed) and shall use their reasonable best
efforts to promptly obtain and furnish the information
required to be included in the Proxy Statement and the
Schedule 13E-3 and to respond promptly to any comments or
requests made by the SEC with respect to the Proxy
Statement or the Schedule 13E-3 (if required to be
filed). Each party hereto shall promptly notify the
other parties of the receipt of comments of, or any
requests by, the SEC with respect to the Proxy Statement
or the Schedule 13E-3 (if required to be filed), and
shall promptly supply the other parties with copies of
all correspondence between such party (or its
representatives) and the SEC (or its staff) relating
thereto. The Company, Parent and Acquisition each agrees
to correct any information provided by it for use in the
Proxy Statement or the Schedule 13E-3 (if required to be
filed) which shall have become, or is, false or
misleading.
Section 6.4 Access to Information. (a)
Subject to applicable law and the agreements set forth in
Section 6.4(b), between the date hereof and the Effective
Time, the Company will give each of Parent and
Acquisition and their counsel, financial advisors,
auditors, and other authorized representatives reasonable
access to all employees, plants, offices, warehouses and
other facilities and to all books and records of the
Company and its subsidiaries, will permit each of Parent
and Acquisition and their respective counsel, financial
advisors, auditors and other authorized representatives
to make such inspections as Parent or Acquisition may
reasonably require and will cause the Company's officers
and those of its subsidiaries to furnish Parent or
Acquisition or their representatives with such financial
and operating data and other information with respect to
the business and properties of the Company and any of its
subsidiaries as Parent or Acquisition may from time to
time reasonably request. No investigation pursuant to
this Section 6.4 shall affect any representations or
warranties of the parties herein or the conditions to the
obligations of the parties hereunder. The foregoing
shall not require the Company to permit any inspection,
or to disclose any information, which in the reasonable
judgment of the Company would result in the disclosure of
any trade secrets of third parties or violate any
obligation of the Company with respect to confidentiality
if the Company shall have used reasonable efforts to
obtain the consent of such third party to such inspection
or disclosure.
(b) Each of Parent and Acquisition agrees
to be bound by the confidentiality agreement, dated as of
August 18, 1994 (the "Confidentiality Agreement"), among
Hoechst AG ("HAG"), Hoechst Celanese Corporation ("HCC"),
Roussel Uclaf S.A. ("RU"), DCC and the Company as if the
references to HAG, HCC and RU therein were to Parent and
Acquisition, except that Parent and Acquisition may (i)
enter into this Agreement and the Stock Purchase
Agreement and (ii) acquire Shares pursuant to the Merger
and the Stock Purchase Agreement.
Section 6.5 Reasonable Best Efforts. Subject
to the terms and conditions herein provided, each of the
parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper
or advisable under applicable laws and regulations to
consummate and make effective the transactions
contemplated by this Agreement and the Stock Purchase
Agreement. Without limiting the generality of the
foregoing, Parent, Acquisition, DCC and the Company shall
cooperate with one another (i) in the preparation and
filing of any required filings under the HSR Act and the
other laws referred to in Sections 3.4(b), 4.3(b) and
5.3(b); (ii) in determining whether action by or in
respect of, or filing with, any governmental body,
agency, official or authority (either domestic or
foreign) is required, proper or advisable or any actions,
consents, waivers or approvals are required to be
obtained from parties to any contracts, in connection
with the transactions contemplated by this Agreement and
the Stock Purchase Agreement; and (iii) in seeking timely
to obtain any such actions, consents and waivers and to
make any such filings. In case at any time after the
Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party hereto
shall take all such necessary action.
Section 6.6 Public Announcements. Parent and
Acquisition, on the one hand, and DCC and the Company, on
the other hand, will consult with each other before
issuing any press release with respect to the
transactions contemplated by this Agreement and the Stock
Purchase Agreement, and shall not issue any such press
release prior to such consultation, except as may be
required by applicable law or by applicable rules of any
securities exchange.
Section 6.7 Indemnification; Insurance.
(a) From and after the purchase by
Acquisition, Parent or their affiliates of the Dow
Shares, Parent and Acquisition shall indemnify and hold
harmless each person who is, or has been at any time
prior to the date hereof or who becomes prior to the
Effective Time, an officer, director or employee of the
Company or any of its subsidiaries (collectively, the
"Indemnified Parties" and individually, the "Indemnified
Party") against all losses, liabilities, expenses, claims
or damages in connection with any claim, suit, action,
proceeding or investigation based in whole or in part on
the fact that such Indemnified Party is or was a
director, officer or employee of the Company or any of
its subsidiaries and arising out of acts or omissions
occurring prior to and including the Effective Time
(including but not limited to the transactions
contemplated by this Agreement) to the fullest extent
permitted by Delaware Law, for a period of not less than
six years following the Effective Time; provided that in
the event any claim or claims are asserted or made within
such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until
final disposition of any and all such claims.
(b) Parent shall cause the Certificate of
Incorporation and By-Laws of the Surviving Corporation
and its subsidiaries to include provisions for the
limitation of liability of directors and indemnification
of the Indemnified Parties to the fullest extent
permitted under applicable law and shall not permit the
amendment of such provisions in any manner adverse to the
Indemnified Parties, as the case may be, without the
prior written consent of such persons, for a period of
six years from and after the date hereof.
(c) Without limitation of the foregoing,
in the event any such Indemnified Party is or becomes
involved in any capacity in any action, proceeding or
investigation in connection with any matter, including,
without limitation, the transactions contemplated by this
Agreement, occurring prior to, and including, the
Effective Time, Parent will pay as incurred such
Indemnified Party's legal and other expenses (including
the cost of any investigation and preparation) incurred
in connection therewith. Parent shall pay all expenses,
including attorneys' fees, that may be incurred by any
Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 6.7 or any
action involving an Indemnified Party resulting from the
transactions contemplated by this Agreement.
(d) For six years after the Effective
Time, the Surviving Corporation shall cause to be
maintained the current policies of directors' and
officers' liability insurance maintained by the Company
(provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage
containing terms and conditions which are substantially
equivalent) with respect to matters occurring prior to
the Effective Time, to the extent such policies are
available; provided, that in no event shall the Surviving
Corporation be required to expend, in order to maintain
or procure insurance coverage pursuant to this Section
6.7(c), any amount per annum greater than 125% of the
current annual premiums paid by the Company for such
insurance (which the Company represents and warrants to
be not more than $620,000).
(e) Any determination to be made as to
whether any Indemnified Party has met any standard of
conduct imposed by law shall be made by legal counsel
reasonably acceptable to such Indemnified Party, Parent
and the Surviving Corporation, retained at Parent's and
the Surviving Corporation's expense.
(f) This Section 6.7 is intended to
benefit the Indemnified Parties and their respective
heirs, executors and personal representatives and shall
be binding on the successors and assigns of Parent,
Acquisition and the Surviving Corporation.
Section 6.8 Notification of Certain Matters.
The Company shall give prompt notice to Parent or
Acquisition, and Parent or Acquisition shall give prompt
notice to the Company, upon becoming aware of (i) the
occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence of which would cause any
representation or warranty contained in this Agreement to
be untrue or inaccurate and (ii) any failure of the
Company, Parent or Acquisition, as the case may be, to
comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it
hereunder; provided, that the delivery of any notice
pursuant to this Section 6.8 shall not limit or otherwise
affect the remedies available hereunder to the party
receiving such notice.
Section 6.9 Redemption of Series A Preferred
Stock; Termination of Stock Plans. (a) Effective
immediately prior to the Merger, the Company shall redeem
for cash all of the outstanding Series A Preferred Shares
at the applicable redemption price determined in
accordance with the Company's Restated Certificate of
Incorporation (which shall not exceed $37.41 per Series A
Preferred Share). Upon such redemption, the Company
shall retire the shares so redeemed and restore such
shares to the status of authorized but unissued shares of
Preferred Stock, par value $1.00 per share, undesignated
as to series. The foregoing provisions of this Section
6.9 shall be of no further force or effect if the Company
purchases all of the outstanding Series A Preferred
Shares prior to the Merger.
(b) Except as may be otherwise agreed to
by the Parent and the Company, the Company Plans shall
terminate as of the Effective Time. Prior to the
purchase by Parent, Acquisition and their affiliates of
the Dow Shares, the Board (or, if appropriate, any
committee thereof) shall adopt such resolutions or take
such other actions as are required to (i) effect the
transactions contemplated by Section 1.8 hereof and (ii)
with respect to any stock option, stock appreciation or
other stock benefit plan of the Company or any of its
subsidiaries not addressed by the preceding clause (i),
ensure that, following the Effective Time, no participant
therein shall have any right thereunder to acquire any
capital stock of the Surviving Corporation or any
subsidiary thereof.
(c) Between the date of this Agreement
and the Effective Time, the Company shall reasonably
cooperate with Parent and Acquisition in structuring
transactions (including those described in Sections
1.8(a), 1.8(b) and 6.9(b)) with respect to Employee
Options and Performance Shares so as to optimize the tax
treatment of the Company, Parent and Acquisition in
connection therewith.
Section 6.10 No Solicitation. (a) The Company
will immediately cease any existing discussions or
negotiations with any third parties conducted prior to
the date hereof with respect to any Acquisition Proposal
(as defined below). The Company shall not, directly or
indirectly, through any officer, director, employee,
representative or agent or any of its subsidiaries, (i)
solicit, initiate, or encourage any inquiries or
proposals that constitute, or would lead to, a proposal
or offer for a merger, consolidation, business
combination, sale of substantial assets, sale of a
substantial percentage of shares of capital stock
(including, without limitation, by way of a tender offer)
or similar transactions involving the Company or any of
its subsidiaries, other than the transactions
contemplated by this Agreement (any of the foregoing
inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) subject to
the fiduciary duties of the Board under applicable law,
engage in negotiations or discussions concerning, or
provide any non-public information to any person or
entity relating to, any Acquisition Proposal, or (iii)
agree to, approve or recommend any Acquisition Proposal;
provided, that nothing contained in this Section 6.10
shall prevent the Company from, and the Company may
without any liability for breach of this Agreement, (A)
furnish information to, or enter into discussions or
negotiations with, any person in connection with an
unsolicited bona fide written Acquisition Proposal by
such person or recommend an Acquisition Proposal to the
stockholders of the Company, if and only to the extent
that the Board determines in good faith after
consultation with outside legal counsel that such action
is necessary for the Board to comply with its fiduciary
duties to stockholders under applicable law and prior to
furnishing such information to, or entering into
discussions or negotiations with, such person, the Board
receives from such person an executed confidentiality
agreement with terms no less favorable to the Company
than those contained in the Confidentiality Agreement; or
(B) comply with Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to an Acquisition Proposal.
(b) The Company shall notify Parent
immediately (and no later than 24 hours) after receipt by
the Company of any Acquisition Proposal or any request
for non-public information in connection with an
Acquisition Proposal or for access to the properties,
books or records of the Company by any person or entity
that informs the Company that it is considering making,
or has made, an Acquisition Proposal. Such notice shall
be made orally and shall indicate the identity of the
offeror and the terms and conditions of such proposal,
inquiry or contract.
Section 6.11 Undisclosed Agreements. If,
after the date hereof, Parent becomes aware that there
are any contracts, agreements and commitments (oral or
written; provided, that oral agreements referred to in
this Section 6.11 shall not include oral agreements
entered into pursuant to any contracts, agreements or
commitments listed on Schedule 4.5) existing as of the
date of this Agreement between the Company or any of its
subsidiaries, on the one hand, and DCC or any of its
affiliates (other than the Company and its subsidiaries),
on the other hand, which are not set forth in Schedule
4.5, then, from and after the purchase by Acquisition,
Parent or their affiliates of the Dow Shares, the Company
and, following the Effective Time, the Surviving
Corporation shall have the right, exercisable within 60
days after Parent becomes aware of such contract,
agreement or commitment, to, at its sole discretion,
terminate (effective as of the date on which Acquisition,
Parent or their affiliates purchase the Dow Shares;
provided, that any payments (not in excess of the fair
market value of the goods or services to which such
payments relate) made to DCC or any of its affiliates
pursuant to such contract, agreement or commitment shall
not be required to be repaid pursuant to this clause) any
or all of such contracts, agreements or commitments, and
neither Parent nor the Company nor any of their
respective subsidiaries shall incur or be subject to any
penalty or liability whatsoever with respect to such
termination. DCC agrees to be, and agrees to cause its
applicable affiliates to be, bound by any such
termination. The termination provisions set forth in
this Section 6.11 shall be the sole remedy of Parent,
Acquisition and the Company, and their affiliates, for
any breach of the representations and warranties set
forth in Section 4.5.
Section 6.12 Employee Matters. (a) For a
period of at least two years after the Effective Time,
Parent shall cause the Surviving Corporation to provide
benefit plans (other than any stock-based plans, programs
or arrangements) that are in the aggregate substantially
as favorable as the Company's existing compensation,
welfare and pension benefit plans, programs and
arrangements for the benefit of current and former
employees and directors of the Company (subject to such
modification as may be required by applicable law).
(b) If any employee of the Company or any
of its subsidiaries becomes a participant in any employee
benefit or compensation plan, arrangement, practice or
policy of Parent or any affiliate of Parent, such
employee shall be given credit for eligibility and
vesting under such plan for all service prior to the
Effective Time with the Company, any of its subsidiaries,
affiliates or any predecessors for which the employee
would have been credited in the Company's plans
immediately prior to the Effective Time.
Section 6.13 Acquisition. (a) Prior to the
purchase by Acquisition, Parent or their affiliates of
the Dow Shares, each of Parent and Acquisition shall take
all steps necessary to cause Acquisition to become a
direct wholly owned subsidiary of Parent and remain so
until the Effective Time.
(b) Parent will take all action necessary
to cause Acquisition to perform its obligations hereunder
and to consummate the Merger on the terms and conditions
set forth herein.
Section 6.14 Certain Intercompany Accounts and
Matters. Effective as of the purchase by Parent,
Acquisition or their affiliates of the Dow Shares, DCC
and its subsidiaries, on the one hand, and the Company
and its subsidiaries, on the other hand, shall repay all
outstanding intercompany obligations between them for
borrowed money, in accordance with the terms of such
obligations; provided, that any such obligations between
Marion Merrell Dow KK and Dow Chemical Japan ("Japanese
Intercompany Accounts") may remain outstanding until
December 31, 1995; provided, further, that Parent shall
cause Marion Merrell Dow KK to perform its obligations
with respect to the Japanese Intercompany Accounts and
Parent guarantees the performance of the obligations of
Marion Merrell Dow KK with respect to the Japanese
Intercompany Accounts.
Section 6.15 Stock Purchase Agreement. Upon
the terms and subject to the conditions set forth in the
Stock Purchase Agreement, Parent shall cause Acquisition
to, and Acquisition shall, purchase the Dow Shares.
Section 6.16 Name Changes. (a) Within 90 days
following the purchase of the Dow Shares by Parent,
Acquisition or their affiliates, the Company shall cause
its subsidiaries to delete "DOW" from their respective
company names and within the same 90 days initiate all
the necessary legal filings with the appropriate local
governmental authority to effectuate a name change to a
new name that does not contain DOW or a name confusingly
similar to DOW. Within eighteen (18) months following
the purchase of the Dow Shares by Parent, Acquisition or
their affiliates, the Company and its subsidiaries will
also replace their current names, which include DOW, to
their new company names on all stationary, business
cards, real and personal property, directories, labels,
advertising and promotional material, drug registrations
and any and all applications, registrations or other
documents filed or to be filed with international,
national and local governmental offices, agencies or
authorities in any country.
(b) From and after the date Acquisition,
Parent or their affiliates purchase the Dow Shares, the
Company shall indemnify and hold DCC and its subsidiaries
harmless from and against the out-of-pocket costs and
expenses described in the next sentence of this Section
6.16(b) which DCC or its subsidiaries incur as a result
of defending any suits, claims, administrative or legal
proceedings brought against DCC or any of its
subsidiaries to the extent that the basis of any such
suit, claim or proceeding is premised on the use of the
name and trademark DOW by the Company or any of its
subsidiaries or on their products. The Company's
indemnification under this Section 6.16(b) shall be
limited solely to the out-of-pocket costs and expenses
(including reasonable fees and expenses of outside
counsel) incurred by DCC or its subsidiaries in
successfully obtaining dismissal or other favorable
disposition of any such suits, claims or proceedings but
shall not include the amounts of any settlement payments,
judgments or other payments of any type.
Section 6.17 1989 Stock Acquisition Agreement.
Notwithstanding Section 10.1 of the 1989 Stock
Acquisition Agreement, dated as of July 17, 1989 among
the Company, RH Acquisition Corp. and DCC (the "1989
Stock Acquisition Agreement"), Section 7.23 of the 1989
Stock Acquisition Agreement is hereby waived by the
Company and DCC and shall be of no further effect from
and after the purchase of the Dow Shares by Parent,
Acquisition or their affiliates; provided, however, that
nothing herein shall be deemed to amend, waive or
supersede any other provision of the 1989 Stock
Acquisition Agreement, including, without limitation,
Section 7.18 and Section 7.19 thereof.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to the Company's,
Parent's and Acquisition's Obligation to Effect the
Merger. The respective obligations of the Company,
Parent and Acquisition to effect the Merger are subject
to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) this Agreement shall have been
adopted by the affirmative vote of the stockholders of
the Company by the requisite vote in accordance with
Delaware Law;
(b) any waiting period applicable to the
Merger under the HSR Act, EC Merger Regulation and the
Canadian Competition Act shall have terminated or
expired;
(c) no statute, rule, regulation,
executive order, decree, ruling, injunction or other
order shall have been enacted, entered, promulgated or
enforced by any court or governmental or supranational
authority of competent jurisdiction within the United
States or the European Community which prohibits the
Merger or makes the Merger illegal; and
(d) Acquisition, Parent or their
affiliates shall have purchased the Dow Shares.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may
be terminated and the Merger may be abandoned at any time
prior to the Effective Time, notwithstanding approval
thereof by the stockholders of the Company:
(a) by mutual written consent of Parent,
Acquisition, DCC and the Company;
(b) by Parent, DCC or the Company if any
court or governmental or supranational authority of
competent jurisdiction within the United States or the
European Community shall have issued an order, decree or
ruling or taken any other action restraining, enjoining
or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final
and nonappealable;
(c) by Parent, DCC or the Company, at
any time after January 31, 1996, if the Merger shall not
have occurred by such date; provided, that the right to
terminate this Agreement under this subparagraph (c)
shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the
cause or resulted in the failure of the Merger to have
occurred by such date; provided, further, that no party
hereto shall have the right to terminate this Agreement
under this subparagraph (c) if Acquisition, Parent or
their affiliates shall have acquired the Dow Shares;
(d) by Parent, at any time prior to the
purchase by Acquisition, Parent or their affiliates of
the Dow Shares, if (i) there shall have been a breach of
any representation or warranty of the Company contained
herein or of Dow contained in the Stock Purchase
Agreement which would have a Material Adverse Effect or
prevent the consummation of the Merger or the
transactions contemplated by the Stock Purchase
Agreement, (ii) there shall have been a breach of any
covenant or agreement of the Company or DCC contained
herein or of Dow contained in the Stock Purchase
Agreement which would have a Material Adverse Effect or
prevent the consummation of the Merger or the
transactions contemplated by the Stock Purchase
Agreement, which shall not have been cured prior to two
business days following notice of such breach, or (iii)
the Board shall have withdrawn or modified in a manner
adverse to Parent its approval or recommendation of this
Agreement, the Merger or the transactions contemplated by
the Stock Purchase Agreement or shall have recommended,
or the Company shall have entered into an agreement
providing for, an Acquisition Proposal, or the Board
shall have resolved to do any of the foregoing;
(e) by DCC if Acquisition fails to
purchase the Dow Shares in violation of Acquisition's
obligations under the Stock Purchase Agreement; or
(f) at any time prior to the purchase by
Acquisition, Parent or their affiliates of the Dow
Shares, by the Company, DCC or Parent in the event the
Stock Purchase Agreement shall have been terminated by
the mutual written consent of the parties thereto.
Section 8.2 Effect of Termination. In the
event of the termination and abandonment of this
Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and have no effect, without any
liability on the part of any party hereto, other than the
provisions of this Section 8.2 and Section 8.3. The
termination of this Agreement shall not relieve any party
from liability for any breach of this Agreement.
Section 8.3 Fees and Expenses. Each party
shall bear its own expenses and costs in connection with
this Agreement and the transactions contemplated hereby.
Section 8.4 Amendment. Subject to Section
6.2(c), this Agreement may be amended by action taken by
the Company, DCC, Parent and Acquisition at any time
before or after adoption of the Merger by the
stockholders of the Company but, after any such approval,
no amendment shall be made which decreases the Merger
Consideration or changes the form thereof or which
adversely affects the rights of the Company's
stockholders hereunder without the approval of such
stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of
the parties hereto.
Section 8.5 Extension; Waiver. Subject to
Section 6.2(c), at any time prior to the Effective Time,
the Company and DCC, on the one hand, and Parent and
Acquisition, on the other hand, may (i) extend the time
for the performance of any of the obligations or other
acts of the other party, (ii) waive any inaccuracies in
the representations and warranties of the other party
contained herein or in any document, certificate or
writing delivered pursuant hereto, or (iii) waive
compliance by the other party with any of the agreements
or conditions contained herein. Any agreement on the
part of any party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of
any party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations and
Warranties. The representations and warranties made
herein shall not survive beyond the purchase by
Acquisition, Parent or their affiliates of the Dow
Shares. The covenants and agreements herein shall
survive in accordance with their respective terms.
Section 9.2 Entire Agreement; Assignment.
This Agreement (including the Schedules hereto), the
Stock Purchase Agreement and the Confidentiality
Agreement (i) constitute the entire agreement among the
parties hereto with respect to the subject matter hereof
and supersede all other prior agreements and
understandings, both written and oral, among the parties
with respect to the subject matter hereof and (ii) shall
not be assigned by operation of law or otherwise;
provided that Acquisition may assign its rights and
obligations in whole or in part to any direct subsidiary
of Parent (provided that such transferee agrees in
writing to be bound by this Agreement), but no such
assignment shall relieve Acquisition of its obligations
hereunder if such assignee does not perform such
obligations.
Section 9.3 Notices. All notices, requests,
claims, demands and other communications hereunder shall
be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person,
by facsimile or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as
follows:
if to Parent or Acquisition:
Hoechst Corporation
Route 202-206
P.O. Box 2500
Somerville, New Jersey 08876-1258
Fax: 908-231-4848
Attention: Harry R. Benz
with copies to:
Hoechst AG
65926 Frankfurt am Main
Germany
Fax: 011-49-69-319-113
Attention: Peter Schuster
and
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Fax: 212-735-2000
Attention: Roger S. Aaron
and
Franklin M. Gittes
if to the Company:
Marion Merrell Dow Inc.
9300 Ward Parkway
Kansas City, Missouri 64114
Fax: 816-966-3805
Attention: General Counsel
with copies to:
Shook, Hardy & Bacon PC
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2118
Fax: 816-421-5547
Attention: Jennings J. Newcom
and
Randall B. Sunberg
and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Fax: 212-558-3355
Attention: Francis J. Aquila
if to DCC, to:
The Dow Chemical Company
2030 Dow Center
Midland, Michigan 48674
Fax: 517-636-0861
Attention: Jane M. Gootee
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Fax: 312-701-7711
Attention: Scott J. Davis
or to such other address as the person to whom notice is
given may have previously furnished to the other in
writing in the manner set forth above.
Section 9.4 Governing Law. This Agreement
shall be governed by and construed in accordance with the
law of the State of Delaware, without regard to the
principles of conflicts of law thereof. Each of the
parties hereto hereby irrevocably and unconditionally
consents to submit to jurisdiction of the courts of the
State of Delaware and of the United States of America
located in the State of Delaware (the "Delaware Courts")
for any litigation arising out of or relating to this
Agreement and the transactions contemplated hereby (and
agrees not to commence any litigation relating thereto
except in such Delaware Courts), waives any objection to
the laying of venue of any such litigation in the
Delaware Courts and agrees not to plead or claim in any
Delaware Court that such litigation brought therein has
been brought in an inconvenient forum.
Section 9.5 Parties in Interest. This
Agreement shall be binding upon and inure solely to the
benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Section 6.7
nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 9.6 Remedies. The parties hereto
agree that irreparable damage would occur in the event
any provision of this Agreement was not performed in
accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or in
equity. Notwithstanding anything to the contrary
contained herein, the Company's exclusive remedy for
Parent's or Acquisition's breach of Section 6.15 shall be
an action for monetary damages.
Section 9.7 Severability. The provisions of
this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not
affect the validity and enforceability of the other
provisions hereof. If any provision of this Agreement,
or the application thereof to any person or entity or any
circumstance, is invalid or unenforceable, (a) a suitable
and equitable provision shall be substituted therefor in
order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid and
unenforceable provision and (b) the remainder of this
Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected
by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or
enforceability of such provision, or the application
thereof, in any other jurisdiction.
Section 9.8 Descriptive Headings. The
descriptive headings herein are inserted for convenience
of reference only and are not intended to be part of or
to affect the meaning or interpretation of this
Agreement.
Section 9.9 Certain Definitions. For purposes
of this Agreement, the term:
(a) "affiliate" of a person means a person
that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(b) "control" (including the terms "controlled
by" and "under common control with") means the
possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction
of the management policies of a person, whether through
the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise;
(c) "generally accepted accounting principles"
shall mean the generally accepted accounting principles
set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as
may be approved by a significant segment of the
accounting profession in the United States, in each case
applied on a basis consistent with the manner in which
the audited financial statements for the fiscal year of
the Company ended December 31, 1994 were prepared;
(d) "person" means an individual, corporation,
partnership, association, trust, unincorporated
organization, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of any
person means any corporation, partnership, joint venture
or other legal entity of which such person (either alone
or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other
equity interests the holder of which is generally
entitled to vote for the election of the board of
directors or other governing body of such corporation,
partnership, joint venture or other legal entity;
provided, that Carderm Capital L.P., a Delaware limited
partnership, shall be deemed a subsidiary of the Company
for all purposes under this Agreement.
Section 9.10 Counterparts. This Agreement may
be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has
caused this Agreement to be executed on its behalf by its
representatives thereunto duly authorized, all as of the
day and year first above written.
HOECHST CORPORATION
By: /s/ Harry R. Benz
Name: Harry R. Benz
Title: Secretary and Treasurer
H PHARMA ACQUISITION CORP.
By: /s/ Klaus Schmieder
Name: Klaus Schmieder
Title: Vice President and
Treasurer
MARION MERRELL DOW INC.
By: /s/ Fred W. Lyons, Jr.
Name: Fred W. Lyons, Jr.
Title: Chairman and Chief
Executive Officer
THE DOW CHEMICAL COMPANY
By: /s/ Enrique C. Falla
Name: Enrique C. Falla
Title: Executive Vice
President and Chief
Financial Officer
EXHIBIT 2
CONFORMED COPY
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of May
3, 1995, is among Hoechst Corporation, a Delaware
corporation ("Parent"), H Pharma Acquisition Corp., a
Delaware corporation ("Acquisition"), The Dow Chemical
Company, a Delaware corporation ("DCC"), RH Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary
of DCC ("RHAC"), and Dow Holdings Inc., a Delaware
corporation and a wholly owned subsidiary of DCC ("DHI").
DCC, RHAC and DHI are sometimes individually referred to
herein as a "Seller" and are sometimes collectively referred
to herein as the "Sellers".
WHEREAS, simultaneously with the execution and
delivery of this Agreement, Parent, Acquisition, DCC and
Marion Merrell Dow Inc., a Delaware corporation (the
"Company"), are entering into an Agreement and Plan of
Merger (the "Merger Agreement"), which provides, among other
things, upon the terms and subject to the conditions
thereof, that (i) Acquisition will be merged with and into
the Company in accordance with the General Corporation Law
of the State of Delaware ("Delaware Law") and (ii) each
share of common stock, par value $0.10 per share, of the
Company (the "Shares"), issued and outstanding immediately
prior to the Effective Time (as defined in the Merger
Agreement) will, except as otherwise expressly provided in
the Merger Agreement, be converted into the right to receive
the Merger Consideration (as defined in the Merger
Agreement);
WHEREAS, each Seller owns the number of Shares
(the "Seller's Shares") set forth on Schedule A hereto
opposite the name of such Seller; and
WHEREAS, in order to induce Parent and Acquisition
to enter into the Merger Agreement, each Seller has agreed
to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing
and the mutual covenants and agreements herein contained,
and intending to be legally bound hereby, Parent,
Acquisition and the Sellers hereby agree as follows.
Section 1. Capitalized Terms. Capitalized terms
used but not defined herein shall have the meanings assigned
to such terms in the Merger Agreement.
Section 2. Representations and Warranties of
Sellers. Each Seller represents and warrants to Parent and
Acquisition as follows:
(a) Such Seller is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Such Seller has all necessary corporate power
and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated hereby.
(c) The execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
the board of directors of such Seller and the sole
stockholder of RHAC and (indirectly) DHI and no other
corporate proceedings on the part of any Seller are
necessary to authorize this Agreement or to consummate the
transactions so contemplated.
(d) This Agreement has been duly and validly
executed and delivered by such Seller and constitutes a
legal, valid and binding agreement of such Seller
enforceable against such Seller in accordance with its
terms.
(e) The execution, delivery and performance by
such Seller of this Agreement and the consummation of the
transactions contemplated hereby do not and will not
(i) contravene or conflict with the Certificate of
Incorporation or By-Laws of such Seller; (ii) assuming that
all consents, authorizations and approvals contemplated by
subsection (f) below have been obtained and all filings
described therein have been made, contravene or conflict
with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding
upon or applicable to such Seller, any of its subsidiaries
or any of its properties; (iii) conflict with, or result in
the breach or termination of any provision of or constitute
a default (with or without the giving of notice or the lapse
of time or both) under, or give rise to any right of
termination, cancellation, or loss of any benefit to which
such Seller or any of its subsidiaries is entitled under any
provision of any agreement, contract, license or other
instrument binding upon such Seller, any of its subsidiaries
or any of their respective properties, or allow the
acceleration of the performance of, any obligation of such
Seller or any of its subsidiaries under any indenture,
mortgage, deed of trust, lease, license, contract,
instrument or other agreement to which such Seller or any of
its subsidiaries is a party or by which such Seller or any
of its subsidiaries or any of their respective assets or
properties is subject or bound; or (iv) result in the
creation or imposition of any Lien on any asset of such
Seller or any of its subsidiaries, except in the case of
clauses (ii), (iii) and (iv) for any such contraventions,
conflicts, violations, breaches, terminations, defaults,
cancellations, losses, accelerations and Liens which would
not individually or in the aggregate be reasonably expected
to prevent the consummation by such Seller of the
transactions contemplated by this Agreement.
(f) The execution, delivery and performance by
such Seller of this Agreement and the consummation of the
transactions contemplated hereby by such Seller require no
action by or in respect of, or filing with, any governmental
body, agency, official or authority (either domestic or
foreign) other than (i) compliance with any applicable
requirements of the HSR Act, the EC Merger Regulation and
the Canadian Competition Act; (ii) compliance with any
applicable requirements of the Exchange Act and state
securities, takeover and Blue Sky laws; (iii) the filing of
a notice pursuant to Exon-Florio; and (iv) such actions or
filings which, if not taken or made, would not individually
or in the aggregate be reasonably expected to prevent the
consummation by such Seller of the transactions contemplated
by this Agreement.
(g) Except as previously disclosed by the Sellers
to Parent and Acquisition, as of the date hereof, there is
no action, suit, claim, investigation or proceeding pending
against, or to the knowledge of the Sellers, threatened
against, any Seller or any of its subsidiaries or any of
their respective properties before any court or arbitrator
or any administrative, regulatory or governmental body, or
any agency or official which challenges or seeks to prevent,
enjoin, alter or delay the Merger or any of the other
transactions contemplated hereby or by the Merger Agreement.
As of the date hereof, none of the Sellers, none of their
respective subsidiaries and none of their respective
properties is subject to any order, writ, judgment,
injunction, decree, determination or award which would
prevent or delay the consummation of the transactions
contemplated hereby.
(h) Such Seller has, and at any Closing (as
defined below) hereunder such Seller will have, good and
valid title to such Seller's Shares, free and clear of any
Liens.
(i) There are no options or rights to acquire, or
any agreements to which such Seller is a party relating to,
such Seller's Shares, other than this Agreement.
(j) The transfer of such Seller's Shares
hereunder to Acquisition will transfer to Acquisition good
and valid title to such Seller's Shares, free and clear of
any Liens.
(k) The Seller's Shares described in Schedule A
represent all of the Shares beneficially owned (within the
meaning of Rule 13d-3 under the Exchange Act) by DCC.
(l) DCC owns, directly or indirectly, all of the
outstanding shares of capital stock of RHAC and DHI, free
and clear of any Liens.
Section 3. Representations and Warranties of
Parent and Acquisition. Each of Parent and Acquisition
represents and warrants to the Sellers as follows:
(a) Each of Parent and Acquisition is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation.
(b) Each of Parent and Acquisition has all
necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby.
(c) The execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
the board of directors of each of Parent and Acquisition and
no other corporate proceedings on the part of Parent or
Acquisition are necessary to authorize this Agreement or to
consummate the transactions so contemplated.
(d) This Agreement has been duly and validly
executed and delivered by each of Parent and Acquisition and
constitutes a legal, valid and binding agreement of each of
Parent and Acquisition enforceable against each of Parent
and Acquisition in accordance with its terms.
(e) The execution, delivery and performance by
Parent and Acquisition of this Agreement and the
consummation of the transactions contemplated hereby do not
and will not (i) contravene or conflict with the Certificate
of Incorporation or By-Laws of Parent or Acquisition; (ii)
assuming that all consents, authorizations and approvals
contemplated by subsection (f) below have been obtained and
all filings described therein have been made, contravene or
conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Parent, Acquisition, any of
their respective subsidiaries or any of their respective
properties; (iii) conflict with, or result in the breach or
termination of any provision of or constitute a default
(with or without the giving of notice or the lapse of time
or both) under, or give rise to any right of termination,
cancellation, or loss of any benefit to which Parent,
Acquisition or any of their respective subsidiaries is
entitled under any provision of any agreement, contract,
license or other instrument binding upon Parent,
Acquisition, any of their respective subsidiaries or any of
their respective properties, or allow the acceleration of
the performance of, any obligation of Parent, Acquisition or
any of their respective subsidiaries under any indenture,
mortgage, deed of trust, lease, license, contract,
instrument or other agreement to which Parent or Acquisition
is a party or by which Parent, Acquisition, any of their
respective subsidiaries or any of their respective assets or
properties is subject or bound; or (iv) result in the
creation or imposition of any Lien on any asset of Parent,
Acquisition, or any of their respective subsidiaries except
in the case of clauses (ii), (iii) and (iv) for any such
contraventions, conflicts, violations, breaches,
terminations, defaults, cancellations, losses, accelerations
and Liens which would not individually or in the aggregate
be reasonably expected to prevent the consummation by Parent
or Acquisition of the transactions contemplated by this
Agreement.
(f) The execution, delivery and performance by
Parent and Acquisition of this Agreement and the
consummation of the transactions contemplated hereby by
Parent and Acquisition require no action by or in respect
of, or filing with, any governmental body, agency, official
or authority (either domestic or foreign) other than (i)
compliance with any applicable requirements of the HSR Act,
the EC Merger Regulation and the Canadian Competition Act;
(ii) compliance with any applicable requirements of the
Exchange Act and state securities, takeover and Blue Sky
laws; (iii) the filing of a notice pursuant to Exon-Florio;
and (iv) such actions or filings which, if not taken or
made, would not individually or in the aggregate be
reasonably expected to prevent the consummation by Parent
and Acquisition of the transactions contemplated by this
Agreement.
(g) Except as previously disclosed by Parent and
Acquisition to Sellers, as of the date hereof, there is no
action, suit, claim, investigation or proceeding pending
against, or to the knowledge of Parent and Acquisition,
threatened against, Parent, Acquisition, any of their
respective subsidiaries or any of their respective
properties before any court or arbitrator or any
administrative, regulatory or governmental body, or any
agency or official which challenges or seeks to prevent,
enjoin, alter or delay the Merger or any of the other
transactions contemplated hereby or by the Merger Agreement.
As of the date hereof, none of Parent, Acquisition, any of
their respective subsidiaries or any of their respective
properties is subject to any order, writ, judgment,
injunction, decree, determination or award which would
prevent or delay the consummation of the transactions
contemplated hereby.
Section 4. Purchase of Seller's Shares by
Acquisition; Dividends. As soon as practicable following
the satisfaction or waiver of all of the conditions set
forth in Section 10 hereof, but, subject to the following
sentence, in no event more than three business days
following such satisfaction or waiver, Acquisition shall
purchase all of each Seller's Shares, at a purchase price of
$25.75 per Share in cash (the "Purchase Price"). The
closing of such purchase and sale (the "Closing") of the
Seller's Shares shall take place at such time and on such
business day as Acquisition may designate (the "Closing
Date") by notice to Sellers; provided, that the Closing
shall not take place during any period beginning the day
following the New York Stock Exchange "ex-dividend" date and
ending on the corresponding record date with respect to a
regular quarterly cash dividend on the Shares; provided,
further, that, if the Closing is delayed as set forth in the
immediately preceding proviso, then the Closing shall take
place on the first business day following such record date.
The Closing shall occur at the office of Skadden, Arps,
Slate, Meagher & Flom, 919 Third Avenue, New York, New York
10022, or such other place as the parties may mutually
agree. The parties further agree that if Acquisition
acquires the Seller's Shares on or before the New York Stock
Exchange "ex-dividend" date in respect of any regular
quarterly cash dividend paid in respect of the Shares, then,
whether or not such Seller's Shares are transferred of
record to Acquisition on or before the corresponding record
date, the dividend payable to holders of record on such
record date shall be for the account of Acquisition and not
the Sellers. The foregoing shall not limit the remedies of
Parent and Acquisition, on the one hand, or the Sellers, on
the other hand, in the event that the other parties hereto
fail to effect the Closing in violation of their obligations
hereunder.
Section 5. Transfer of Shares. At the Closing,
and subject to the satisfaction or waiver of the conditions
set forth in Section 10 of this Agreement, each of the
Sellers will sell, transfer and deliver such Seller's Shares
to Acquisition (in proper form for transfer) and Acquisition
will purchase such Shares and wire transfer to the Sellers
(to such accounts as the Sellers shall specify on at least
two days notice) immediately available funds representing
the aggregate Purchase Price for such Seller's Shares,
without deduction or setoff of any kind, including, without
limitation, any deduction for any stock transfer tax or
similar governmental transfer tax. Acquisition shall bear
responsibility for any stock transfer tax or similar
governmental transfer tax, arising out of the transfer of
each Seller's Shares, but shall not have any responsibility
whatsoever for any other taxes imposed by law on any of the
Sellers. At the Closing and thereafter, each Seller will,
upon request of Acquisition, execute and deliver all
additional documents reasonably deemed by Acquisition to be
necessary, appropriate or desirable to effect, complete and
evidence the sale, assignment and transfer of such Seller's
Shares pursuant to this Agreement.
Section 6. Anti-Dilution Adjustments. In the
event of any change in the number of Shares outstanding by
recapitalization, declaration of a stock split or
combination or payment of a stock dividend or the like, the
number of Shares to be transferred to Acquisition and the
per Share payments to be made to the Sellers shall be
adjusted appropriately.
Section 7. Covenants. Except as provided for
herein, each Seller agrees not to (either directly or
indirectly):
(a) sell, transfer, pledge, assign, hypothecate
or otherwise dispose of, or enter into any contract, option
or other arrangement or understanding with respect to the
sale, transfer, pledge, assignment, hypothecation or other
disposition of such Seller's Shares (including, without
limitation, through the disposition or transfer of control
of another person);
(b) grant any proxies with respect to such
Seller's Shares, deposit such Seller's Shares into a voting
trust or enter into a voting agreement with respect to any
of such Seller's Shares; or
(c) take any action which would make any
representation or warranty of such Seller herein untrue or
incorrect in any material respect.
Section 8. No Solicitation. (a) The Sellers will
immediately cease any existing discussions or negotiations
with any third parties conducted prior to the date hereof
with respect to any Acquisition Proposal (as defined below).
The Sellers shall not, directly or indirectly, through any
officer, director, employee, representative or agent or any
of their respective subsidiaries, (i) solicit, initiate, or
encourage any inquiries or proposals that constitute, or
would lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial
assets, sale of a substantial percentage of shares of
capital stock (including without limitation by way of a
tender offer) or similar transactions involving the Company
or any of its subsidiaries, other than the transactions
contemplated by this Agreement and the Merger Agreement (any
of the foregoing inquiries or proposals being referred to in
this Agreement as an "Acquisition Proposal"), (ii) engage in
negotiations or discussions concerning, or provide any non-
public information to any person or entity relating to, any
Acquisition Proposal, or (iii) agree to, approve or
recommend any Acquisition Proposal; provided, that the
Sellers shall not be deemed to have breached their
obligations contained in this Section 8(a) by reason of the
Company's taking any action permitted by the proviso to
Section 6.10(a) of the Merger Agreement.
(b) The Sellers shall notify Parent immediately
(and no later than 24 hours) after receipt by any Seller of
any Acquisition Proposal or any request for non-public
information in connection with an Acquisition Proposal or
for access to the properties, books or records of the
Company by any person or entity that informs such party that
it is considering making, or has made, an Acquisition
Proposal. Such notice shall be made orally and shall
indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or
contract.
Section 9. Voting Agreement; Proxy.
(a) For so long as this Agreement is in effect,
Sellers shall vote, or cause to be voted, all of their
respective Seller's Shares in favor of the approval and
adoption of the Merger Agreement and the transactions
contemplated thereby.
(b) For so long as this Agreement is in effect,
in any meeting of the stockholders of the Company, however
called, and in any action by consent of the stockholders of
the Company, Sellers shall vote or cause to be voted all of
their respective Seller's Shares: (i) against any action or
agreement that would result in a breach in any material
respect of any covenant, representation or warranty or any
other obligation of the Company or DCC under the Merger
Agreement or of Sellers under this Agreement; and (ii)
against any action or agreement that would impede, interfere
with or discourage the transactions contemplated by the
Merger Agreement, including, without limitation: (1) any
extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company or any
of its subsidiaries, (2) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries
or the issuance of securities by the Company or any of its
subsidiaries, (3) any change in the Board (other than as
contemplated by the Merger Agreement), (4) any change in the
present capitalization or dividend policy of the Company
(other than as contemplated by the Merger Agreement) or (5)
any other material change in the Company's corporate
structure or business.
(c) Upon receipt of the Purchase Price as
provided in Section 5 hereof, each Seller shall grant
Acquisition an irrevocable proxy and irrevocably appoint
Acquisition or its designees, with full power of
substitution, its attorney and proxy to vote all such
Seller's Shares at any meeting of the stockholders of the
Company however called, or in connection with any action by
written consent by the stockholders of the Company. Each
Seller acknowledges and agrees that such proxy, if and when
given, will be coupled with an interest, will be irrevocable
and shall not be terminated by operation of law or otherwise
upon the occurrence of any event and that no subsequent
proxies will be given (and if given will not be effective).
Section 10. Conditions. (a) The obligation of
Acquisition to purchase the Seller's Shares hereunder shall
be subject to the satisfaction or waiver at or prior to the
Closing of each of the following conditions:
(i) any waiting period applicable to the
purchase and sale of the Seller's Shares pursuant to this
Agreement under the HSR Act, the EC Merger Regulation and
the Canadian Competition Act shall have terminated or
expired;
(ii) either (A) the Committee on Foreign
Investment in the United States shall have determined not to
investigate the transactions contemplated by this Agreement
or the Merger Agreement under Exon-Florio (either by action
or inaction) or (B) if such Committee shall have determined
to make such an investigation, such investigation shall have
been completed or the President shall have determined (by
action or inaction) not to take any action under Exon-Florio
with respect to the transactions contemplated by this
Agreement or the Merger Agreement;
(iii) no statute, rule, regulation,
executive order, decree, ruling, injunction or other order
shall have been enacted, entered, promulgated or enforced by
any court or governmental or supranational authority of
competent jurisdiction within the United States or the
European Community (including in connection with obtaining
termination of applicable waiting periods under the HSR Act
and the EC Merger Regulation) which (x) prohibits or makes
illegal the sale of any Seller's Shares pursuant to this
Agreement or (y) with respect to antitrust or similar
competition law matters, would have a material adverse
effect on (A) the United States business and operations of
the Company and its subsidiaries and the United States
pharmaceutical business and operations of Parent and its
affiliates, taken as a whole or (B) the European business
and operations of the Company and its subsidiaries and the
European pharmaceutical business and operations of Parent
and its affiliates, taken as a whole (it being agreed that
the meaning of "material adverse effect" for purposes of
this clause (y) shall be consistent with discussions among
the parties hereto and their respective counsel);
(iv) there shall not have occurred any
governmental action (such as the declaration of a banking
moratorium or a prohibition on the export of funds) which
prevents Parent and Acquisition from obtaining the funds
necessary to pay the aggregate Purchase Price hereunder (it
being agreed that in such event Parent and Acquisition shall
use their reasonable best efforts to obtain alternative
sources of funds as soon as practicable, and that this
condition is not intended to include governmental actions
that merely make it more expensive for Parent and
Acquisition to obtain the funds necessary to pay the
aggregate Purchase Price hereunder);
(v) the Sellers shall have performed in all
material respects all of their covenants and agreements
under this Agreement required to be performed at or prior to
the Closing, and each of DCC and the Company shall have
performed in all material respects all of its covenants and
agreements under the Merger Agreement required to be
performed at or prior to the Closing hereunder; provided,
that with respect to such covenants and agreements of the
Company, the foregoing condition shall be deemed satisfied
so long as no failure to perform any such covenant or
agreement shall have had or would have a Material Adverse
Effect and that the existence of any remedy under Section
6.11 of the Merger Agreement shall not be a condition to
Acquisition's obligation to purchase the Sellers Shares
hereunder;
(vi) the representations and warranties of
the Sellers set forth in this Agreement and of DCC set forth
in the Merger Agreement and in all other agreements entered
into in connection with the transactions contemplated hereby
which are qualified as to materiality shall be true and
correct and the representations and warranties of the
Sellers set forth in this Agreement and of DCC set forth in
the Merger Agreement and such other agreements which are not
so qualified shall be true and correct in all material
respects, in each case as of the date when made and (except
in the case of any representation and warranty made as of a
specified date) as of the date of the Closing as if such
representations and warranties were made on such date;
provided, that the truth or correctness of the
representations set forth in Section 4.5 of the Merger
Agreement shall not be a condition to Acquisition's
obligation to purchase the Seller's Shares hereunder; and
(vii) the representations and warranties of
the Company set forth in the Merger Agreement shall be true
and correct as of the date when made and (except in the case
of any representation and warranty made as of a specified
date) as of the date of the Closing as if such
representations and warranties were made on such date;
provided, that the foregoing condition shall be deemed
satisfied so long as no failure to be so true and correct
shall have had or would have a Material Adverse Effect.
(b) The obligation of each Seller to sell such
Seller's Shares hereunder shall be subject to the
satisfaction or waiver at or prior to the Closing of each of
the following conditions:
(i) any waiting period applicable to the
purchase and sale of the Seller's Shares pursuant to this
Agreement under the HSR Act, the EC Merger Regulation and
the Canadian Competition Act shall have terminated or
expired;
(ii) either (A) the Committee on Foreign
Investment in the United States shall have determined not to
investigate the transactions contemplated by this Agreement
or the Merger Agreement under Exon-Florio (either by action
or inaction) or (B) if such Committee shall have determined
to make such an investigation, such investigation shall have
been completed or the President shall have determined (by
action or inaction) not to take any action under Exon-Florio
with respect to the transactions contemplated by this
Agreement or the Merger Agreement;
(iii) no statute, rule, regulation,
executive order, decree, ruling, injunction or other order
shall have been enacted, entered, promulgated or enforced by
any court or governmental or supranational authority of
competent jurisdiction within the United States or the
European Community which prohibits or makes illegal the sale
of any Seller's Shares pursuant to this Agreement;
(iv) Parent and Acquisition shall have
performed in all material respects all of their covenants
and agreements under this Agreement and under the Merger
Agreement required to be performed at or prior to the
Closing; provided, that the foregoing condition shall be
deemed satisfied so long as Acquisition is ready and able to
purchase each Seller's Shares pursuant to this Agreement;
(v) the representations and warranties of
Parent and Acquisition set forth in this Agreement and in
the Merger Agreement which are qualified as to materiality
shall be true and correct and which are not so qualified
shall be true and correct in all material respects, in each
case as of the date when made and (except in the case of any
representation and warranty made as of a specified date) as
of the date of the Closing as if such representations and
warranties were made on such date; provided, that the
foregoing condition shall be deemed satisfied so long as
Acquisition is ready and able to purchase each Seller's
Shares pursuant to this Agreement; and
(vi) the Company shall have performed its
obligations under Section 6.14 of the Merger Agreement
required to be performed effective as of the Closing;
provided, that if such obligations have not been so
performed, Parent agrees to cause such performance within
two business days following the Closing and the foregoing
condition shall be deemed satisfied.
Section 11. Public Announcements. Parent and
Acquisition, on the one hand, and DCC on behalf of the
Sellers, on the other hand, will consult with each other
before issuing any press release with respect to the
transactions contemplated by this Agreement and the Merger
Agreement, and shall not issue any such press release prior
to such consultation, except as may be required by
applicable law or by applicable rules of any securities
exchange.
Section 12. Specific Performance. The parties
hereto agree that irreparable damage would occur in the
event any provision of this Agreement was not performed in
accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
Section 13. Indemnification. The Sellers, on the
one hand, and Parent and Acquisition, on the other hand, in
connection with the transactions contemplated herein, shall
indemnify and hold the other harmless from and against any
and all losses, damages, claims, liabilities or obligations
with respect to (i) any breach of any representation,
warranty or agreement of the other party contained in this
Agreement and (ii) any brokerage fees, commissions or
finders' fees payable on the basis of any action taken by
the other party or any of its affiliates.
Section 14. Expenses. Each party shall bear its
own expenses and costs in connection with this Agreement and
the transactions contemplated hereby.
Section 15. Nonsurvival of Representations and
Warranties; Agreements Joint and Several. None of the
representations and warranties made by the Sellers, Parent
or Acquisition in this Agreement shall survive the Closing
hereunder; provided, that the representations and warranties
contained in Section 2(h) and Section 2(j) shall survive
indefinitely following the Closing. The covenants and
agreements made herein shall survive in accordance with
their respective terms. Notwithstanding anything contained
herein to the contrary, the representations, warranties and
agreements made in this Agreement by the Sellers, on the one
hand, and Parent and Acquisition, on the other hand, shall
be joint and several.
Section 16. Amendment; Assignment. This
Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto. No party
to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written
consent of the other parties except that the rights and
obligations of Acquisition may be assigned by Acquisition to
Parent or any of Parent's other wholly owned subsidiaries
(provided such transferee agrees in writing to be bound
under this Agreement), but no such transfer shall relieve
Acquisition of its obligations hereunder if such transferee
does not perform such obligations.
Section 17. Parties in Interest. This Agreement
shall be binding upon and inure solely to the benefit of
each party hereto and its successors and permitted assigns,
and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever.
Section 18. Notices. All notices, requests,
claims, demands and other communications hereunder shall be
in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as
follows:
(a) If to Parent or Acquisition, to:
Hoechst Corporation
Route 202-206
P.O. Box 2500
Somerville, New Jersey 08876-1258
Fax: 908-231-4848
Attention: Harry R. Benz
with copies to:
Hoechst AG
65926 Frankfurt am Main
Germany
Fax: 011-49-69-319-113
Attention: Peter Schuster
and
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Fax: 212-735-2000
Attention: Roger S. Aaron
and
Franklin M. Gittes
(b) If to the Sellers, to:
The Dow Chemical Company
2030 Dow Center
Midland, Michigan 48674
Fax: 517-636-0861
Attention: Jane M. Gootee
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Fax: 312-701-7711
Attention: Scott J. Davis
or to such other address as the person to whom notice is
given may have previously furnished to the other in writing
in the manner set forth above.
Section 19. Reasonable Best Efforts. Subject to
the terms and conditions herein provided, each of the
parties hereto agrees to use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause
to be done, all things reasonably necessary, proper or
advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated
by this Agreement. Without limiting the generality of the
foregoing, the parties hereto shall cooperate with one
another (i) in determining whether action by or in respect
of, or filing with, any governmental body, agency, official
or authority (either domestic or foreign) is required,
proper or advisable or any actions, consents, waivers or
approvals are required to be obtained from parties to any
contracts, in connection with the transactions contemplated
by this Agreement and (ii) in seeking timely to obtain any
such actions, consents, waivers or to make any such filings.
In addition, Parent and Acquisition shall use their
reasonable best efforts to take such action as may be
required by any governmental or supranational authority of
competent jurisdiction within the United States or the
European Community in order to resolve any objections such
authority may have to the transactions contemplated hereby
under applicable antitrust laws; provided, that the
foregoing shall not obligate Parent or Acquisition to take
any action which would have a material adverse effect on (A)
the United States business and operations of the Company and
its subsidiaries and the United States pharmaceutical
business and operations of Parent and its affiliates, taken
as a whole or (B) the European business and operations of
the Company and its subsidiaries and the European
pharmaceutical business and operations of Parent and its
affiliates, taken as a whole (it being agreed that the
meaning of "material adverse effect" for purposes of this
proviso shall be consistent with discussions among the
parties and their respective counsel). In case at any time
after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, the
proper officers and directors of each party hereto shall
take all such necessary action.
Section 20. Governing Law. This Agreement shall
be governed by and construed in accordance with the law of
the State of Delaware, without regard to the principles of
conflicts of law thereof.
Section 21. Termination. This Agreement may be
terminated at any time by mutual written consent of the
parties hereto. Upon the termination of the Merger
Agreement in accordance with its terms, this Agreement shall
forthwith terminate without any action by any of the parties
hereto. No such termination shall relieve any party from
liability for any breach of this Agreement.
Section 22. Severability. The provisions of this
Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the
validity and enforceability of the other provisions hereof.
If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and
purpose of such invalid and unenforceable provision and (b)
the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 23. Entire Agreement. This Agreement
constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter
hereof.
Section 24. Descriptive Headings. The
descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
Section 25. Consent to Jurisdiction. Each of the
parties hereto hereby irrevocably and unconditionally
consents to submit to jurisdiction of the courts of the
State of Delaware and of the United States of America
located in the State of Delaware (the "Delaware Courts") for
any litigation arising out of or relating to this Agreement
and the transactions contemplated hereby (and agrees not to
commence any litigation relating thereto except in such
Delaware Courts), waives any objection to the laying of
venue of any such litigation in the Delaware Courts and
agrees not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in an
inconvenient forum.
Section 26. Certain Definitions. For purposes of
this Agreement, the term:
(a) "affiliate" of a person means a person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "control" (including the terms "controlled
by" and "under common control with") means the possession,
directly or indirectly or as trustee or executor, of the
power to direct or cause the direction of the management
policies of a person, whether through the ownership of
stock, as trustee or executor, by contract or credit
arrangement or otherwise;
(c) "person" means an individual, corporation,
partnership, association, trust, unincorporated
organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(d) "subsidiary" or "subsidiaries" of any person
means any corporation, partnership, joint venture or other
legal entity of which such person (either alone or through
or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity
interests the holder of which is generally entitled to vote
for the election of the board of directors or other
governing body of such corporation, partnership, joint
venture or other legal entity; provided, that the Company
and its subsidiaries shall not be deemed subsidiaries of any
of the Sellers for purposes of this Agreement.
Section 27. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall constitute
one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed on its behalf by its
representatives thereunto duly authorized, all as of the day
and year first above written.
HOECHST CORPORATION
By: /s/ Harry R. Benz
Name: Harry R. Benz
Title: Secretary and Treasurer
H PHARMA ACQUISITION CORP.
By: /s/ Klaus Schmieder
Name: Klaus Schmieder
Title: Vice President and
Treasurer
THE DOW CHEMICAL COMPANY
By: /s/ Enrique C. Falla
Name: Enrique C. Falla
Title: Executive Vice
President and Chief
Financial Officer
RH ACQUISITION CORP.
By: /s/ John C. Lillich
Name: John C. Lillich
Title: President
DOW HOLDINGS INC.
By: /s/ Enrique C. Falla
Name: Enrique C. Falla
Title: President
SCHEDULE A
TO THE
STOCK PURCHASE AGREEMENT
Capitalized terms used in this Schedule A and not
otherwise defined in this Schedule A have the respective
meanings assigned to such terms in the attached Stock
Purchase Agreement.
Name of each Seller Number of Shares
The Dow Chemical Company 65,931,690 Shares
RH Acquisition Corp. 55,934,100 Shares
Dow Holdings Inc. 75,000,000 Shares
======================== ==================
Total 196,865,790 Shares
EXHIBIT 3
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of May 3, 1995,
is among Latin American Pharmaceutical Inc., a Delaware
corporation ("LAPI") and a wholly owned subsidiary of The
Dow Chemical Company, a Delaware corporation ("TDCC"), Dow
Quimica Argentina S.A., a corporation organized under the
laws of Argentina and an indirect wholly owned subsidiary of
TDCC ("Dow Argentina"), Dow Quimica Mexicana S.A., a
corporation organized under the laws of Mexico and an
indirect wholly owned subsidiary of TDCC ("Dow Mexico"), Dow
Productos Quimicos LTDA, a limited company organized under
the laws of Brazil and an indirect wholly owned subsidiary
of TDCC ("Dow Productos"), Mineracao e Quimica de Nordeste,
a corporation organized under the laws of Brazil and an
indirect wholly owned subsidiary of TDCC ("Dow Mineracao"),
Dow Quimica S.A., a corporation organized under the laws of
Brazil and an indirect wholly owned subsidiary of TDCC ("Dow
Brazil" and, collectively with LAPI, Dow Argentina, Dow
Productos and Dow Mineracao, "Sellers"), Merrell Lepetit
Farmaceutica Industrial LTDA, a limited company organized
under the laws of Brazil and an indirect wholly owned
subsidiary of TDCC ("Lepetit Brazil"), Laboratorios Lepetit
de Mexico S.A. de C.V., a corporation organized under the
laws of Mexico and an indirect wholly owned subsidiary of
TDCC ("Lepetit Mexico" and, collectively with Lepetit
Brazil, the "Transferred Subsidiaries"), and Roussel Uclaf
S.A., a French societe anonyme ("Purchaser").
WHEREAS, Sellers directly, or indirectly through
their affiliates, develop, register, formulate, manufacture,
distribute, market and sell prescription and nonprescription
drugs and certain over-the-counter products, including
personal care and personal hygiene products, in Argentina,
Brazil, Mexico and elsewhere in Latin America (the
"Business"); and
WHEREAS, upon the terms and subject to the
conditions contained in this Agreement, Sellers desire to
sell and to cause their affiliates to sell to Purchaser or
its designated affiliate or affiliates, and Purchaser
desires that it or its designated affiliate or affiliates
purchase, the Business.
NOW, THEREFORE, in consideration of and in
reliance upon the terms, covenants, and conditions contained
in this Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.
ARTICLE I
TRANSFER OF DESIGNATED ASSETS
Section 1.1 Transfer of Designated Assets. Upon
the terms and subject to the conditions contained in this
Agreement, at the Closing provided for in Section 3.1,
Sellers shall, or shall cause their affiliates to, sell,
transfer, convey, assign and deliver the Designated Assets
(as defined in Section 1.2) to Purchaser or one or more
affiliates of Purchaser designated by Purchaser (it being
understood and agreed that the Designated Assets of the
Transferred Subsidiaries will not be transferred directly
but indirectly through the transfer to Purchaser or one or
more affiliates of Purchaser designated by Purchaser of all
of the outstanding shares of capital stock of the
Transferred Subsidiaries).
Section 1.2 Designated Assets. As used in this
Agreement, the term "Designated Assets" means all of the
rights, properties, assets, claims, contracts, licenses,
permits, causes of action, operations and businesses of
every kind, character and description, whether tangible or
intangible, and wherever located, of Sellers or any of their
affiliates, which are used primarily in connection with, or
are held for use primarily in, are necessary for the conduct
of, or are otherwise primarily related to the Business,
including, but not limited to: (i) all machinery and
equipment, racks, movable walls, tools, dyes, furniture,
furnishings, plant and office equipment, leasehold
improvements and automobiles and other vehicles; (ii) all
inventories, including supplies, raw materials, work-in-
process, finished goods and goods-in-transit from suppliers
or manufacturers used or intended for use, or held for sale;
(iii) all accounts and notes receivable and cash and cash
equivalents; (iv) all prepaid rent, prepaid property taxes,
prepaid supplies, advances and other prepaid expenses and
deposits; (v) all rights in and under product registrations,
leases, licenses, contracts, purchase and sale orders,
commitments, arrangements, understandings, quotations and
other agreements; (vi) all operating data and records,
including books, sales and sales promotional data,
advertising materials, customer lists, financial records,
tax records, credit information, cost and pricing
information, supplier lists, registration files, business
plans, development and production data and information,
reference catalogs, computer programs and electronic data
processing software; (vii) all engineering and production
designs, drawings and other similar data; and (viii) all
Intellectual Property (as defined in Section 4.12); except
for the assets listed on Schedule 1.2 (the "Excluded
Assets"). It is understood and agreed that the inadvertent
failure to include a particular asset on Schedule 1.2 shall
not create a presumption that such asset is not an Excluded
Asset.
ARTICLE II
DESIGNATED LIABILITIES; EXCLUDED LIABILITIES
Section 2.1 Assumption of Designated Liabilities.
Upon the terms and subject to the conditions contained in
this Agreement, at the Closing provided for in Section 3.1,
Purchaser shall, or shall cause its affiliates purchasing
Designated Assets to, assume the Designated Liabilities (as
defined in Section 2.2)(it being understood and agreed that
the Designated Liabilities of the Transferred Subsidiaries
shall be retained by the Transferred Subsidiaries).
Section 2.2 Designated Liabilities. As used in
this Agreement, the term "Designated Liabilities" means:
all liabilities arising out of the conduct of the Business
or the ownership of the Designated Assets, including (a) all
liabilities reflected in the Financial Statements (as
defined in Section 4.7) to the extent not satisfied as of
the Closing and (b) all liabilities (including liabilities
under contracts) to the extent arising out of the conduct of
the Business after the Closing; except, in all cases, for
the Excluded Liabilities (as defined in Section 2.3).
Section 2.3 Excluded Liabilities. Neither
Purchaser nor any of its affiliates, nor any of the
Transferred Subsidiaries nor any of their respective
subsidiaries, if any, shall, or shall be required pursuant
to this Agreement to, assume or retain or have any liability
or obligation of any nature, direct or indirect, absolute,
accrued, contingent or otherwise, for the following excluded
liabilities (the "Excluded Liabilities"): (i) all
liabilities of TDCC or any of its affiliates related to or
associated with (A) the businesses of TDCC and its
affiliates (other than the Business and liabilities of the
Business, if any, relating to the products referred to in
Sections 6 and 8 of the Insurance Separation Agreement,
dated as of May 3, 1995, among TDCC, Hoechst Corporation
("Hoechst"), Marion Merrell Dow Inc. ("MMD"), Dorinco
Reinsurance Company, Dorintal Reinsurance Ltd. and Timber
Insurance Ltd. (the "Insurance Agreement)) (B) the Excluded
Assets and (C) employees who are not identified on Schedules
4.16 or 6.15; (ii) all liabilities arising in connection
with all actions, suits, claims, investigations and
proceedings pending, threatened or otherwise known on the
Closing Date; (iii) pre-Closing environmental liabilities
related to the Business; and (iv) all liabilities arising as
a result of the Restructuring (as defined in Section 3.2).
After the Closing, all Excluded Liabilities shall be
retained by and remain liabilities of TDCC and its
affiliates (other than the Transferred Subsidiaries) or,
with respect to the Excluded Liabilities of the Transferred
Subsidiaries, shall be assumed by TDCC or one or more of its
affiliates (other than the Transferred Subsidiaries).
ARTICLE III
CLOSING
Section 3.1 Closing. The closing of the
transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, New York 10022
at 10:00 a.m., local time, on the sixth business day
following the satisfaction or waiver of the conditions
contained in Articles VII and VIII of this Agreement (unless
waived by the appropriate party), or such other date as
shall be agreed upon by the parties, but in no event later
than January 31, 1996 (the "Closing Date"). To the extent
any party hereto may reasonably request, local closings in
the countries where the Designated Assets are located shall
be held simultaneously with and as part of the Closing. In
the event that the portion of the Purchase Price (as defined
in Section 3.4) payable at any such local closing is
required by applicable law to be paid in local currency, the
amount of local currency to be paid shall be determined by
reference to a mutually agreeable official exchange rate.
Section 3.2 Restructuring.
(a) On or prior to the Closing, Sellers
shall, and shall cause their affiliates to, effect the
following transactions (collectively, the "Restructuring"):
(i) Dow Brazil shall sell, transfer, convey, assign and
deliver all of the Shares of Lepetit Brazil owned by it to
Dow Productos; (ii) Dow Productos and Dow Mineracao will
create a new corporation or limited company ("Brazil Newco")
which will be owned by them in proportion to their
respective ownership of the Shares of Lepetit Brazil and
will cause Lepetit Brazil to transfer all of its rights,
properties, assets, claims, contracts, licenses, permits,
causes of action, operations and businesses of every kind,
character and description, whether tangible or intangible,
and wherever located which are not Designated Assets, and
specifically including its real properties, including land,
buildings, structures and fixtures, (together with all
easements, rights and privileges appertaining thereto) to
Brazil Newco; (iii) Dow Productos and Dow Mineracao shall
cause Brazil Newco to assume from Lepetit Brazil its
Excluded Liabilities; (iv) Lepetit Mexico will sell,
transfer, convey, assign and deliver its real properties,
including land, buildings, structures and fixtures,
(together with all easements, rights and privileges
appertaining thereto) to Dow Mexico and the proceeds of such
sale (net of any applicable Taxes) shall be transferred or
paid, by dividend or otherwise, by Lepetit Mexico to LAPI;
(v) LAPI shall assume from Lepetit Mexico its Excluded
Liabilities; and (vi) Lepetit International Inc. ("Dow
Panama") will sell, transfer, convey, assign and deliver
(for inclusion in the Designated Assets) all of its
trademarks associated with the Business to LAPI. As used
herein, "Shares" means all of the issued and outstanding
shares of capital stock of Lepetit Mexico and all of the
outstanding equity interests in Lepetit Brazil.
(b) Sellers shall retain appropriate local
counsel (who may be employees of Sellers) and other experts
(as necessary) to assist in the preparation of documentation
for, and the execution of, the Restructuring. Sellers shall
provide a detailed written plan specifically identifying all
transactions to be completed in connection with the
Restructuring (the "Restructuring Plan") and shall provide
Purchaser an opportunity to comment on and consult with
Sellers concerning the Restructuring Plan prior to any
implementation thereof. In addition, Sellers shall give due
consideration to any objections raised by Purchaser with
respect to the Restructuring Plan (and notice and
opportunity to confer on deviations therefrom) and use
reasonable efforts to make appropriate modifications to the
Restructuring Plan in response to any such objections. The
deeds, bills of sale, instruments of assignment and
assumption and other documents necessary to effect the
Restructuring (which shall be delivered to Purchaser in
sufficient time for review and comment in advance of their
execution) shall be reasonably satisfactory in form and
substance to Purchaser, and the Restructuring shall be
completed in accordance with the Restructuring Plan (as
modified in response to Purchaser's objections, if any) with
no material deviations therefrom that, individually or in
the aggregate, are or may be detrimental to the Business.
Section 3.3 Deliveries at the Closing.
(a) At the Closing, immediately following
the Restructuring contemplated by Section 3.2, Sellers
shall, or shall cause their affiliates to, deliver or cause
to be delivered to Purchaser the following: (i) a notarial
deed or deeds, in form and substance reasonably satisfactory
to Purchaser, as may be necessary to transfer the Shares to
Purchaser or affiliates of Purchaser designated by
Purchaser, duly executed by Dow Productos and Dow Mineracao
or LAPI, as appropriate; (ii) the share registers of the
Transferred Subsidiaries (which may be delivered locally);
(iii) the minute books and, if any, the corporate seals of
the Transferred Subsidiaries (which may be delivered
locally); (iv) such resignations of the officers and
directors of the Transferred Subsidiaries from such
positions as Purchaser shall request; (v) such other deeds,
bills of sale, instruments of assignment and other
documents, in form and substance reasonably satisfactory to
Purchaser, as may be necessary to transfer good and
marketable title to the Designated Assets (other than the
Designated Assets transferred indirectly to Purchaser
through the transfer of the Shares) to Purchaser or
affiliates of Purchaser designated by Purchaser; (vi) such
instruments of assumption and other documents, in form and
substance reasonably satisfactory to Purchaser, as may be
necessary to effect the assumption by Brazil Newco and LAPI
of all Excluded Liabilities of the Transferred Subsidiaries;
and (vii) the certificates referred to in Section 8.7.
(b) At the Closing, concurrently with the
deliveries contemplated by Section 3.3, Purchaser will
deliver or cause to be delivered to Sellers: (i) such
instruments of assumption and other documents, in form and
substance reasonably satisfactory to Sellers, as may be
necessary to effect the assumption by Purchaser or
affiliates of Purchaser designated by Purchaser of the
Designated Liabilities (other than the Designated
Liabilities of the Transferred Subsidiaries); (ii) the
Purchase Price (as defined in Section 3.4); and (iii) the
certificates referred to in Section 7.5.
Section 3.4 Purchase Price; Payment at Closing;
Purchase Price Adjustment.
(a) As consideration for the purchase of the
Business, at the Closing, Purchaser shall pay to Sellers the
aggregate amount of One Hundred Forty Million Dollars
($140,000,000), such amount to be adjusted pursuant to
Section 3.4(b)(iv) below (the amount so adjusted being, the
"Purchase Price"). It is understood and agreed that the
amount paid at Closing shall be allocated as follows: $50
Million in respect of Lepetit Brazil, $20 Million in respect
of the Designated Assets sold by Dow Argentina (the
"Argentine Assets"), $20 Million in respect of Lepetit
Mexico and $50 Million in respect of the other Designated
Assets to be sold by LAPI (the "Other LAPI Assets"), such
amounts so allocated to be adjusted pursuant to Section
3.4(b)(v) below. The Purchase Price shall be payable in
immediately available funds, which shall be delivered to
Sellers at the Closing in the form of a wire transfer to an
account or accounts designated by Sellers; provided, that
Purchaser shall have received from Sellers written notice of
the accounts so designated at least two business days prior
to the Closing. As used in this Agreement, "Dollars" or
numbers preceded by the symbol "$" means amounts in United
States Dollars.
(b) Sellers and Purchaser intend that the
book value of the Designated Assets at Closing (determined
on a consolidated basis) shall exceed the book value of the
Designated Liabilities at Closing (determined on a
consolidated basis) by $45 million (all as calculated in
accordance with U.S. GAAP (as defined in Section 4.7) the
"Closing Net Assets"). Without limiting the obligations of
Sellers or the Transferred Subsidiaries under any other
provision of this Agreement, Sellers shall endeavor to cause
such excess to be $45 million at Closing and shall consult
with Purchaser from time to time prior to the Closing
regarding the manner in which Sellers expect to cause such
excess to be $45 million; provided, that neither Sellers nor
any of their affiliates shall revalue (except as required by
Local GAAP (as defined in Section 4.7)) assets for purposes
of performing their obligations under this Section 3.4(b);
and provided, further, that subject to the accuracy of
Sellers' representations and warranties in Section 4.19
hereof, Purchaser's sole remedy in the event that such
excess is not equal to $45 million shall be the Purchase
Price Adjustment contemplated by Section 3.4(b)(iv).
(i) Within twenty-one days after the Closing,
Sellers shall close the accounts of the Business and prepare
financial statements of the Business as at the Closing Date,
including unaudited balance sheets and unaudited income
statements for each of the Business (which shall be
consolidated financial statements) and the Business as
conducted in each of Argentina, Mexico and Brazil, with such
statements being prepared in accordance with U.S. GAAP as
well as, with respect to statements pertaining to the
Business as conducted in each of Argentina, Mexico and
Brazil, each in accordance with Local GAAP, in all cases
prepared on a basis consistent with past practice (it being
understood that Purchaser will provide Sellers with access
to the appropriate books and records in order to perform
such function in accordance with paragraph (iii) below).
Purchaser shall retain at its own expense a "Big Six"
accounting firm ("CPA Firm") to audit the consolidated
balance sheet and the consolidated income statement of the
Business as at the Closing Date (the "Closing Balance
Sheet") and a statement (the "Closing Statement") which
shall set forth the book value of the Designated Assets and
the book value of the Designated Liabilities as of the
Closing Date based on the Closing Balance Sheet and the
amount by which the book value of the Designated Assets
exceeds the book value of the Designated Liabilities as of
the Closing Date (such amount, the "Book Value of the
Business"). The Closing Balance Sheet and Closing Statement
together with an audit report thereon (which shall detail
all audit adjustments, if any, thereto) shall be delivered
to Sellers within thirty (30) days of the receipt of the
unaudited balance sheets and income statements and shall be
prepared in accordance with U.S. GAAP.
(ii) Within ten (10) days of their receipt
of the Closing Balance Sheet and Closing Statement together
with such work papers and supporting information as are
reasonably requested by Sellers (the "Objection Period"),
Sellers shall provide Purchaser with a written statement of
any objections or disagreements, including the reasons
therefor, with respect to the Closing Balance Sheet and
Closing Statement ("Sellers' Objection Statement"). If
Sellers do not provide Purchaser with a Sellers' Objection
Statement within the Objection Period, Sellers shall be
deemed to have accepted and agreed to the Closing Balance
Sheet and Closing Statement. In the event Sellers provide
Purchaser with a Sellers' Objection Statement within the
Objection Period, Purchaser and Sellers shall have ten (10)
days (the "Resolution Period") following the receipt by
Purchaser of a Sellers' Objection Statement to resolve any
disagreements with respect to the Closing Balance Sheet and
Closing Statement. If Purchaser and Sellers are unable to
resolve their disagreements with respect to the
determination of the Closing Balance Sheet and Closing
Statement, they shall, promptly following the Resolution
Period, refer their differences to another internationally
recognized firm of independent public accountants (the
"Second CPA Firm") who shall be chosen by mutual agreement
of Sellers and Purchaser. The Second CPA Firm shall, acting
as experts and not as arbitrators, determine on the basis of
U.S. GAAP, the differences so submitted, including, if
applicable, the Book Value of the Business as of the Closing
Date. The Second CPA Firm shall deliver its written
determination to Purchaser and Sellers no later than the
tenth day after such differences are referred to the Second
CPA Firm (unless Purchaser and Sellers agree, upon request
of the Second CPA Firm, to provide the Second CPA Firm with
additional time to make its determination). The Second CPA
Firm's determination shall be conclusive and binding upon
Purchaser and Sellers. The fees and disbursements of the
Second CPA Firm shall be shared equally by Purchaser, on the
one hand, and Sellers, on the other hand. The "Final
Closing Balance Sheet" and "Final Closing Statement" shall
mean (i) the Closing Balance Sheet and Closing Statement, in
the event that Sellers and Purchaser resolve all disputes
during the Resolution Period or Purchaser does not receive
the Sellers' Objection Statement within the Objection
Period, or (ii) the Closing Balance Sheet and Closing
Statement, as adjusted by the Second CPA Firm.
(iii) Purchaser and Sellers each shall
provide each other, the CPA Firm and the Second CPA Firm
full access to the books and records, any other information,
including work papers of its accountants, and to any
employees to the extent necessary for the preparation of the
Closing Balance sheet and Closing Statement and the Final
Closing Balance Sheet and Final Closing Statement.
(iv) If the Book Value of the Business, as
reflected on the Final Closing Statement, is (i) less than
$45 million (such shortfall amount being defined as the
"Sellers' Adjustment Amount"), Sellers shall make an
adjustment payment to Purchaser in an amount equal to the
Sellers' Adjustment Amount within five business days
following the issuance of the Final Closing Statement by
wire transfer of immediately available United States funds
to a bank account designated by Purchaser or (ii) greater
than $45 million (such excess being defined as the
"Purchaser's Adjustment Amount"), Purchaser shall make an
adjustment payment to Sellers in an amount equal to the
Purchaser's Adjustment Amount within five business days
following the Issuance of the Final Closing Statement by
wire transfer of immediately available United States funds
to a bank account designated by Sellers; provided, however,
that in no event shall the Purchaser's Adjustment Amount
payable pursuant to this section exceed $10 million. If
payments due under this subsection are not made within the
prescribed time periods, such unpaid amounts will bear
interest at 10% per annum until the date of payment. Soft
loans arrangements up to the total amount of the trade
accounts receivable of the Business ("Trade A/R") may be
used to reduce the Closing Net Assets to $45 million. Any
such soft loans shall be repaid as the Trade A/R are
collected and Purchaser shall have no liability for the
repayment thereof in respect of Trade A/R backing up such
soft loans that are not collected. Purchaser shall assist
Sellers in their efforts to collect such Trade A/R.
(v) The allocation of the Purchase Price set
forth in Section 3.4(a) will be adjusted to reflect the
Seller's Adjustment Amount or the Purchaser's Adjustment
Amount, as the case may be, (A) to the extent such
adjustment can be attributed to specific Designated Assets,
by increasing or decreasing, as the case may be, the amount
of Purchase Price allocated to such Designated Assets or (B)
to the extent such adjustment cannot be so attributed, by
increasing or decreasing, as the case may be, the amount of
Purchase Price allocated to each of Lepetit Brazil, the
Argentine Assets, Lepetit Mexico and the Other LAPI Assets
by 25% of the total amount of such adjustment.
Section 3.5 Further Assurances.
(a) From time to time after the Closing,
Sellers shall, or shall cause their affiliates to, at the
request of Purchaser and without further cost or expense to
Purchaser, execute and deliver such additional instruments
and documents of conveyance, transfer, assignment and
assumption and take such other actions as Purchaser may
reasonably request, in order to convey, transfer and assign
the Designated Assets and the Shares to Purchaser or
affiliates of Purchaser designated by Purchaser and to
assume the Excluded Liabilities, all as contemplated by this
Agreement.
(b) From time to time after the Closing,
Purchaser shall or shall cause its affiliates to, at the
request of Sellers and without further cost or expense to
Sellers, execute and deliver such additional instruments and
documents of conveyance, transfer, assignment and assumption
and take such other actions as Sellers may reasonably
request, in order to convey, transfer and assign the
Excluded Assets to Sellers or affiliates of Sellers
designated by Sellers and to assume the Designated
Liabilities, all as contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SELLERS
Sellers represent and warrant to Purchaser (i)
severally as to matters which can be attributed to a
particular Seller based on the geographic area in which it
operates, (ii) jointly and severally as to matters which
cannot be attributed to a particular Seller based on the
geographic area in which it operates and (iii) jointly and
severally as to matters relating to the Business as a whole,
as follows:
Section 4.1 Corporate Organization, Etc.
(a) Each Seller and each Transferred
Subsidiary is a corporation or a limited company duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or
organization and has all requisite power and authority to
own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have
such power and authority would not, individually or in the
aggregate, have a material adverse effect on the business,
results of operations (on an annualized basis) or financial
condition of the Business (a "Material Adverse Effect").
Without limiting the generality of the foregoing definition
of "Material Adverse Effect", such definition shall
specifically include adverse financial consequences to the
Business in excess of $5 million and shall exclude (i) the
effects of currency fluctuations and currency devaluations
and (ii) the termination of business arrangements with Astra
or Connaught as a result of the transactions contemplated
hereby.
(b) Sellers have heretofore furnished or
made available to Purchaser complete and correct copies of
each Seller's and each Transferred Subsidiary's Certificate
of Incorporation and By-Laws and/or equivalent
organizational documents, each as amended to the date
hereof. Such Certificate of Incorporation, By-Laws and
equivalent organizational documents are in full force and
effect and no other organizational documents are applicable
to or binding upon Sellers or the Transferred Subsidiaries.
No Seller or Transferred Subsidiary is in violation of any
of the provisions of its Certificate of Incorporation or By-
Laws or equivalent organizational documents.
Section 4.2 Capitalization of Transferred
Subsidiaries; Asset Ownership. There is no authorized,
issued or outstanding capital stock of Lepetit Brazil.
The authorized capital stock of Lepetit Mexico consists of
7,850 Series A Shares, par value 10 New Pesos per share,
105,096 Series B shares, par value 10 New Pesos per share,
and 238,600 Series C shares, par value 10 New Pesos per
share, all of which shares are issued and outstanding.
Except as set forth above, there are outstanding (i) no
shares of capital stock or other voting securities of any
Transferred Subsidiary, (ii) no securities of Sellers or any
of their affiliates (including, without limitation, the
Transferred Subsidiaries) convertible into or exchangeable
for shares of capital stock or voting securities of any
Transferred Subsidiary, (iii) no options, subscriptions,
warrants, convertible securities, calls or other rights to
acquire from Sellers or any of their affiliates (including,
without limitation, the Transferred Subsidiaries), and no
obligation of Sellers or any of their affiliates (including,
without limitation, the Transferred Subsidiaries) to issue,
deliver or sell any capital stock, voting securities or
securities convertible into or exchangeable for capital
stock or voting securities of any Transferred Subsidiary and
(iv) no equity equivalents, interests in the ownership or
earnings of any Transferred Subsidiary or other similar
rights. Except for Dow Argentina, Lepetit Brazil, Lepetit
Mexico, LAPI, Dow Brazil (Dow Productos after the
Restructuring), Dow Panama (LAPI after the Restructuring)
and Dow Mineracao, no person or entity owns any portion of
the Designated Assets.
Section 4.3 Authorization; Enforceability. Each
Seller and Transferred Subsidiary has all necessary
corporate power and authority to execute and deliver this
Agreement, and will, prior to the Closing Date, have all
necessary corporate power and authority to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement have been, and the performance of this Agreement
and the consummation of the transactions contemplated hereby
will, prior to the Closing Date, have been, duly and validly
authorized by the board of directors of each Seller and
Transferred Subsidiary and no other corporate proceedings on
the part of any Seller or Transferred Subsidiary are or will
be necessary to authorize this Agreement or to consummate
the transactions so contemplated. This Agreement has been
duly and validly executed and delivered by each Seller and
Transferred Subsidiary and constitutes a legal, valid and
binding agreement of each Seller and Transferred Subsidiary
enforceable against each Seller and Transferred Subsidiary
in accordance with its terms.
Section 4.4 Equity Holdings of Transferred
Subsidiaries. None of the Transferred Subsidiaries owns,
directly or indirectly, any capital stock of or other equity
interests in any other person.
Section 4.5 Title to Shares. Schedule 4.5
accurately describes the Shares owned by Dow Brazil (which
will be owned by Dow Productos after the Restructuring), Dow
Mineracao and LAPI. Each such Seller has good, valid and
marketable title to the Shares owned by it, free and clear
of all security interests, liens, claims, pledges, charges,
voting trusts or agreements or other encumbrances of any
nature whatsoever (collectively, "Liens") and free and clear
of any preemptive or similar rights.
Section 4.6 Non-Contravention; Required Filings
and Consents. (a) The execution, delivery and performance
by Sellers and the Transferred Subsidiaries of this
Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or
conflict with the Certificate of Incorporation or By-Laws or
the equivalent organizational documents of any Seller or
Transferred Subsidiary; (ii) assuming that all consents,
authorizations and approvals contemplated by subsection (b)
below have been obtained and all filings described therein
have been made, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to
any Seller or Transferred Subsidiary or any of their
respective properties or assets (including, without
limitation, the Designated Assets) or the Business; (iii)
except as set forth in Schedule 4.6, conflict with, or
result in the breach or termination of any provision of or
constitute a default (with or without the giving of notice
or the lapse of time or both) under, or require any consent
under or give rise to any right of termination,
cancellation, or loss of any benefit to which any Seller or
Transferred Subsidiary is entitled under any provision of
any agreement, contract, license or other instrument binding
upon any Seller or Transferred Subsidiary or any of their
respective properties or assets (including, without
limitation, the Designated Assets), or allow the
acceleration of the performance of, any obligation of any
Seller or Transferred Subsidiary under any indenture,
mortgage, deed of trust, lease, license, contract,
instrument or other agreement to which any Seller or
Transferred Subsidiary is a party or by which any Seller or
Transferred Subsidiary or any of their respective assets or
properties (including, without limitation, the Designated
Assets) is subject or bound; or (iv) result in the creation
or imposition of any Lien on any asset of any Seller or
Transferred Subsidiary; except in the case of clauses (ii),
(iii) and (iv) for any such contraventions, conflicts,
violations, breaches, terminations, defaults, cancellations,
losses, accelerations and Liens which would not individually
or in the aggregate have a Material Adverse Effect or
materially interfere with the consummation of the
transactions contemplated by this Agreement.
(b) The execution, delivery and performance
by Sellers and the Transferred Subsidiaries and the
consummation of the transactions contemplated hereby by
Sellers and the Transferred Subsidiaries require no action
by or in respect of, or filing with, any governmental body,
agency, official or authority (either domestic or foreign)
other than (i) filings with the appropriate antitrust
authorities in Brazil and Mexico and the expiration of
applicable waiting periods in connection therewith; (ii)
filings with the Federal Investment Bureau in Mexico; (iii)
filings and approvals with respect to the transfer of
certain product registrations in Argentina; (iv) such other
filings with and approvals of governmental authorities in
Brazil, Mexico and Argentina as may be agreed to by Sellers
and Purchaser between the date hereof and the Closing Date;
and (v) such actions or filings which, if not taken or made,
would not individually or in the aggregate have a Material
Adverse Effect or materially interfere with the consummation
of the transactions contemplated by this Agreement.
Section 4.7 Financial Statements.
(a) Consolidated financial statements of the
Business, which include a balance sheet as at and income
statement for the fiscal year ended December 31, 1994 and a
detailed description of intercompany eliminations (together
with the notes thereto, the "Financial Statements"), will be
provided to Purchaser as Schedule 4.7(a) to this Agreement
no later than May 10, 1995. The Financial Statements fairly
present, in conformity with (except as may be indicated in
the notes thereto), the consolidated financial position of
the Business as of the dates thereof and the consolidated
results of operations of the Business for the periods then
ended. For purposes of this Agreement, U.S. GAAP means
United States generally accepted accounting principles as
set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board,
in each case applied on a consistent basis.
(b) (i) Audited financial statements for
Lepetit Mexico consisting of balance sheets as at and income
statements for the fiscal years ended December 31, 1994,
December 31, 1993 and December 31, 1992 prepared in
accordance with Mexican generally accepted accounting
principles applied on a consistent basis together with the
notes thereto and related statements representing the
translation thereof into U.S. GAAP and (ii) unaudited
financial statements of the Business as conducted in each of
Argentina and Brazil, consisting of balance sheets as at and
income statements for the fiscal year ended December 31,
1994 prepared in accordance with the generally accepted
accounting principles of Argentina and Brazil, respectively,
applied on a consistent basis, together with the notes
thereto and related statements representing the translation
thereof into U.S GAAP (such Mexican, Argentine and Brazilian
financial statements being collectively, the "Regional
Financial Statements"), will be provided to Purchaser as
Schedule 4.7(b) to this Agreement no later than May 10,
1995. The Regional Financial Statements fairly present, in
conformity with the relevant generally accepted accounting
principles referred to above ("Local GAAP") or generally
accepted accounting principles, as the case may be, applied
on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of the
Business as of the dates thereof in each of Argentina,
Brazil and Mexico, as the case may be, and the consolidated
results of operations of the Business for the periods then
ended in each of Argentina, Brazil and Mexico, as the case
may be.
(c) A list of the reserves included in the
Financial Statements and Regional Financial Statements (in
U.S. GAAP and Local GAAP) together with a detailed
description of the matters covered by each such reserve will
be provided to Purchaser as Schedule 4.7(c) to this
Agreement no later than May 10, 1995.
Section 4.8 No Undisclosed Liabilities. Except
as reflected or reserved against in the Financial Statements
or Regional Financial Statements and for matters covered by
the Insurance Agreement, neither Sellers nor any of their
affiliates have any liabilities of any nature (whether
accrued, absolute, contingent or otherwise) relating to the
Business, except for liabilities incurred in the ordinary
course of business since December 31, 1994 which would not,
individually or in the aggregate, have a Material Adverse
Effect.
Section 4.9 Accounts Receivable. All accounts
receivable included in the Designated Assets represent sales
actually made in the ordinary course of business and
represent the legal, valid and binding obligations of the
obligors thereon. The Financial Statements and Closing
Balance Sheet contain, as of their respective dates,
adequate and sufficient reserves for bad debts in respect of
accounts receivable of the Business.
Section 4.10 Inventory. All of the inventories
included in the Designated Assets consist of a quality and
quantity useable and saleable in the ordinary course of
business (it being understood that a product shall be
considered unsaleable if its remaining shelf life is less
than six months). Inventories of the Business are valued in
the Financial Statements and Closing Balance Sheet at the
lower of cost or market, with obsolete or below-standard
quality materials having been written off.
Section 4.11 Absence of Certain Changes. Since
December 31, 1994, except as disclosed in Schedule 4.11 and
except for the Restructuring and the transactions
contemplated hereby, neither Sellers nor any of their
affiliates has (i) taken any of the actions set forth in
Section 6.1 except as permitted thereunder, or (ii) in
connection with the Business, entered into any transaction,
or conducted its business or operations, other than in the
ordinary course of business consistent with past practice.
Since December 31, 1994, there has not been any material
adverse change in the business, results of operations (on an
annualized basis) or financial condition of the Business.
Section 4.12 Intellectual Property.
(a) Except as set forth on Schedule 4.12(a)
or to the extent that the inaccuracy of any of the following
(or the circumstances giving rise to such inaccuracy)
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect: (1) Subject to
the provisions of Section 6.16, Dow Argentina, Lepetit
Brazil, Lepetit Mexico and LAPI own, or are licensed to use
(in each case, free and clear of any Liens), all
Intellectual Property (as defined below) used in or
necessary for the conduct of Business; (2) to the knowledge
of Sellers, the use of Intellectual Property in the conduct
of the Business does not infringe on or otherwise violate
the rights of any person; (3) to the knowledge of Sellers,
no product (or component thereof or process) used, sold or
manufactured by and/or for, or supplied to, the Business
infringes or otherwise violates the Intellectual Property of
any other person; (4) to the knowledge of Sellers, no person
is challenging (by way of opposition, interference,
cancellation, arbitration, interference, nullity, or other
similar proceedings), infringing on or otherwise violating
any right with respect to any Intellectual Property used in
or necessary for the conduct of the Business; and (5) all
trademarks, service marks, certification marks and similar
marks used in or necessary for the conduct of the Business
are properly registered in each jurisdiction where such
trademarks are used by the Business. For purposes of this
Agreement "Intellectual Property" shall mean, without
limitation, trademarks, service marks, brand names,
certification marks, trade dress, assumed names, trade names
and other indications of origin, the goodwill associated
with the foregoing and registrations in any jurisdiction of,
and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal
of any such registration or application; inventions,
discoveries and ideas, whether patentable or not in any
jurisdiction; patents, applications for patents (including,
without limitation, division, continuations, continuations,
reexaminations in part and renewal applications), and any
renewals, extensions, reexaminations or reissues thereof, in
any jurisdiction; nonpublic information, invention
disclosure, trade secrets and confidential information and
rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether
copyrightable or not in any jurisdiction; registrations or
applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; any
similar intellectual property or proprietary rights such as
mask works or seed rights; and any claims or causes of
action arising out of or related to any infringement or
misappropriation of any of the foregoing.
(b) Set forth on Schedule 4.12(b) are all
the patents, applications for patents (including, without
limitation, division, continuations, continuations in part
and renewal applications), or any renewals, extensions,
reexaminations or reissues thereof, in any jurisdiction,
which are used in or necessary for the conduct of the
Business.
(c) Schedule 4.12(c) sets forth a true and
complete list of all trademarks, service marks, brand names,
certification marks, trade dress, assumed names, trade names
and other indications of origin, and registrations in any
jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension,
modification or renewal of any such registration or
application which are used in or necessary for the conduct
of the Business.
Section 4.13 Tax Matters.
(a) As used in this Agreement, the following
terms shall have the following meanings:
(i) "Tax" means any (including, but not
limited to, Argentine, Brazilian, Mexican, or U.S.) ad
valorem, alternative or add-on minimum, capital stock,
custom duty, disability, employment, environmental,
estimated, excise, franchise, governmental fee or other like
assessment or charge of any kind whatsoever, gross receipts,
income, license, occupation, payroll, premium, profits,
property (including real, personal, and intangible),
registration, sales, severance, social security (or
similar), stamp, transfer, unemployment, use, value-added,
windfall profits, withholding, or other tax of any kind
whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
(ii) "Tax Return" means any return,
declaration, report, claim for refund, or information return
or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
(b) There are no Liens on any of the
Designated Assets that arose in connection with any failure
(or alleged failure) to pay any Tax due prior to the Closing
Date. To Sellers or any of their affiliates knowledge,
there are no facts or circumstances that could give rise to
such a Lien or support the imposition by any Tax authority
of transferee Tax liability with respect to the Business or
the Designated Assets. The purchasers of the Designated
Assets will not be liable for any Tax Liability related to
the business or operations of Sellers or any of their
affiliates relating to a taxable period ending on or before
the Closing Date, other than those Tax Liabilities of the
Transferred Subsidiaries for which Purchaser and its
affiliates are indemnified as provided in Section 9.3
hereof.
(c) Except as set forth in Schedule 4.13(c),
the Transferred Subsidiaries each have filed, been included
in or sent, all material Tax Returns required to be filed or
sent by or relating to any of them relating to any Taxes
with respect to any material income, properties or
operations of the Transferred Subsidiaries. As of the time
of filing, such Tax Returns correctly reflected in all
material respects the facts regarding the income, business,
assets, operations, activities and status of the Transferred
Subsidiaries and any other material information required to
be shown therein. The Transferred Subsidiaries have timely
paid or made provision for all material Taxes that have been
shown as due and payable on the Tax Returns that have been
filed. The Transferred Subsidiaries have made or will make
provision for all material Taxes payable for any periods
that end before the Closing Date for which no Tax Returns
have yet been filed and for any periods that begin before
the Closing Date and end after the Closing Date to the
extent such Taxes are attributable to the portion of any
such period ending at the Closing Date. The charges,
accruals and reserves for Taxes reflected on the books of
the Transferred Subsidiaries are adequate under U.S. GAAP or
Local GAAP, as the case may be, to cover the Tax liabilities
accruing or payable by the Transferred Subsidiaries in
respect of periods prior to the date hereof. None of the
Transferred Subsidiaries are delinquent in the payment of
any material Taxes or has requested any extension of time
within which to file or send any material Tax Return (other
than extensions granted to the Transferred Subsidiaries for
the filing of their Tax Returns as set forth in Schedule
4.13(c)), which Tax Return has not since been filed or sent.
No material deficiency for any Taxes has been proposed,
asserted or assessed in writing against the Transferred
Subsidiaries (or any member of any affiliated or combined
group of which the Transferred Subsidiaries are or has been
a member for which any of the Transferred Subsidiaries could
be liable) other than those Taxes being contested in good
faith by appropriate proceedings and set forth in Schedule
4.13(c) (which shall set forth the nature of the proceeding,
the type of return, the deficiencies proposed, asserted or
assessed and the amount thereof, and the taxable year in
question). None of the Transferred Subsidiaries have
granted any extension of the limitation period applicable to
any material Tax claims other than those Taxes being
contested in good faith by appropriate proceedings. None of
the Transferred Subsidiaries are subject to liability for
Taxes of any person (other than the Transferred
Subsidiaries), including, without limitation, liability
arising from the application of any provision analogous to
U.S. Treasury Regulation Section 1.1502-6. None of the
Transferred Subsidiaries are or has been a party to any
material Tax sharing agreement with any corporation. To the
knowledge of Sellers or any of their affiliates, no claim
has been made by an authority in a jurisdiction where any of
the Transferred Subsidiaries do not file Tax Returns that
such entities are or may be subject to taxation by that
jurisdiction. Schedule 4.13(c) (i) lists all federal,
state, local, and foreign income Tax Returns filed by the
Transferred Subsidiaries for taxable periods ended on or
after December 31, 1988, (ii) indicates those Tax Returns
that have been audited, and (iii) indicates those Tax
Returns that currently are the subject of audit. Sellers
have delivered to Purchaser correct and complete copies of
all income Tax Returns, examination reports in the records
of Sellers or any of their affiliates as of the date of this
Agreement or the Closing Date, and statements of
deficiencies assessed against or agreed to by the
Transferred Subsidiaries, if any, since December 31, 1984.
Section 4.14 Contracts and Commitments.
(a) Schedule 4.14(a) lists each of the
following contracts and agreements of Sellers or any of
their affiliates relating to the Business (such contracts
and agreements being "Material Contracts"):
(i) any collective bargaining
agreement;
(ii) any employee agreement with
any employee;
(iii) any contract entered into in
the ordinary course of business which involves the
payment or receipt of an amount in excess of
$250,000 or any contract entered into outside of
the ordinary course of business which involves the
payment or receipt of an amount in excess of
$50,000;
(iv) any credit agreement, loan
agreement, indenture, note, mortgage, security
agreement, loan commitment, evidence of
indebtedness, or other contract relating to the
borrowing of a material amount of funds;
(v) any lease of real property
that is material to the Business;
(vi) any contract outside the
ordinary course of business granting to any Person
a right of first refusal or option to purchase or
acquire any material assets; and
(vii) any agreement, contract or
commitment exclusively between or among TDCC
and/or one or more affiliates of TDCC.
(b) Sellers have heretofore furnished or
made available to Purchaser complete and correct copies of
the Material Contracts, each as amended or modified to the
date hereof (including any waivers with respect thereto).
Since December 31, 1994, there have been no transactions
between Sellers and their affiliates, on the one hand, and
the other parties to the Material Contracts or any of their
respective affiliates, on the other hand, other than
transactions in the ordinary course of business consistent
with past practice pursuant to and in accordance with the
terms of the Material Contracts. Each of the Material
Contracts is in full force and effect and enforceable in
accordance with its terms. Except for the possible
termination of the business arrangements with Astra as a
result of the transactions contemplated hereby, neither
Sellers nor any of their affiliates has received any notice
(written or oral) of cancellation or termination of, or any
expression or indication of an intention or desire to cancel
or terminate, any of the Material Contracts. No Material
Contract is the subject of, or has been threatened to be
made the subject of, any arbitration, suit or other legal
proceeding. With respect to any Material Contract which by
its terms will terminate as of a certain date unless renewed
or unless an option to extend such Material Contract is
exercised, neither Sellers nor any of their affiliates has
received any notice (written or oral), or otherwise has any
knowledge, that any such Material Contract will not be, or
is not likely to be, so renewed or that any such extension
option will not be exercised. There exists no event of
default or occurrence, condition or act on the part of
Sellers or any of their affiliates or, to the knowledge of
Sellers, on the part of the other parties to the Material
Contracts which constitutes or would constitute (with notice
or lapse of time or both) a breach of or default under any
of the Material Contracts. Except as set forth in Schedule
4.14(b), the execution, delivery and performance by Sellers
and the Transferred Subsidiaries of this Agreement and the
consummation of the transactions contemplated hereby
(including the Restructuring) do not and will not conflict
with, or result in the breach or termination of any
provision of or constitute a default (with or without the
giving of notice or the lapse of time or both) under, or
require any consent under, or give rise to any right of
termination, cancellation, or loss of any benefit to which
the Business is entitled under any provision of any Material
Contract.
Section 4.15 Labor Relations. No collective
bargaining agreement is being negotiated by TDCC or any of
its affiliates with respect to any of the employees of the
Business. Except as previously disclosed to Purchaser, to
the knowledge of Sellers, there are no activities or
proceedings of any labor union to organize any of the
employees of the Business. There is no labor dispute,
strike or work stoppage against the Business pending or, to
the knowledge of Sellers, threatened which may interfere
with the Business, except where such dispute, strike or work
stoppage would not reasonably be expected to have a Material
Adverse Effect on the Business.
Section 4.16 Employee Benefit Plans. Schedule
4.16 identifies each "Employee Benefit Arrangement",
including any employee benefit plan, practice, policy or
arrangement of any kind, oral or written, covering Employees
(as defined below), which Sellers or any of their affiliates
maintains, or to which Sellers or any of their affiliates
contributes. Such schedule is complete and accurate in all
material respects. All Employee Benefit Arrangements comply
in all material respects with applicable law. Neither
Sellers nor any of their affiliates have any obligations
with respect to the Employees for retiree health and life
benefits under any Employee Benefit Arrangement. There are
no Employee Benefit Arrangements providing pension,
retirement or other similar benefits other than those
Employee Benefit Arrangements in connection with which
Sellers or their affiliates make contributions as required
by applicable law. With respect to each Employee Benefit
Arrangement: (i) Sellers and their affiliates are in
compliance in all material respects with the terms of such
Employee Benefit Arrangement and with the requirements
prescribed by applicable law; (ii) except as disclosed on
Schedule 4.16, there are no material actions or proceedings
(other than routine claims for benefits) pending or, to the
knowledge of Sellers, threatened, with respect to any
Employee Benefit Arrangement; and (iii) all contributions to
each Employee Benefit Arrangement that may have been
required to be made in accordance with the terms of the
Employee Benefit Arrangement and applicable law, have been
timely made. None of the Employee Benefit Arrangements is
subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended. The aggregate amount of
outstanding loans made by Sellers or any of their affiliates
to officers, directors or other managerial employees of the
Business is less than $100,000. Schedule 4.16 sets forth a
true and complete list of all agreements (other than
agreements with respect to the loans referred to in the
preceding sentence) between Sellers or any of their
affiliates, on the one hand, and any officer, director or
other managerial employee of the Business, on the other
hand. As used in this Agreement, "Employees" means all
employees of the Business employed immediately prior to the
Closing and identified on Schedule 4.16 (which Schedule
accurately sets forth the wage, salary or other compensation
currently paid to each such Employee).
Section 4.17 Absence of Litigation. Except as
set forth on Schedule 4.17, there is no action, suit, claim,
investigation or proceeding pending against, or to the
knowledge of Sellers, threatened against or affecting, TDCC
or any of its affiliates, the Business or the Designated
Assets before any court or arbitrator or any administrative,
regulatory or governmental body, or any agency or official
which (i) individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect; (ii) in any
manner challenges or seeks to prevent, enjoin, alter or
delay the transactions contemplated hereby; or (iii) alleges
criminal action or inaction relating to the Business or the
Designated Assets. As of the date hereof, neither any
aspect of the Business nor any of the Designated Assets is
subject to any order, writ, judgment, injunction, decree,
determination or award having, or which would reasonably be
expected to have, a Material Adverse Effect or which would
prevent or delay the consummation of the transactions
contemplated hereby.
Section 4.18 Compliance. Neither Sellers nor any
of their affiliates is in violation of, or has violated, in
any such case in connection with the conduct of the
Business, any applicable provisions of (i) any laws, rules,
statutes, orders, ordinances or regulations (including,
without limitation, those relating to the protection of the
environment or the discharge of hazardous materials) or (ii)
any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise, or other instrument or
obligations to which LAPI, Dow Argentina or any Transferred
Subsidiary is a party or by which LAPI, Dow Argentina, any
Transferred Subsidiary or any of the Designated Assets are
bound or affected, which, individually or in the aggregate,
would result or reasonably be expected to result in a
Material Adverse Effect.
Section 4.19 Designated Assets; Good Title
Conveyed, Etc. All properties and assets (tangible and
intangible), rights and other items utilized or necessary in
the conduct of the Business are included in the Designated
Assets, and such tangible assets are, in the aggregate, in
good condition and, if applicable, in good working order,
ordinary wear and tear excepted. Sellers and their
affiliates have complete and unrestricted power and the
unqualified right to sell, assign, transfer and deliver to
Purchaser, and upon consummation of the transactions
contemplated by this Agreement, Purchaser will acquire,
good, valid and marketable title to, the Designated Assets,
free and clear of all Liens, except for Liens which in the
aggregate would not have a Material Adverse Effect (it being
understood and agreed that title to the Designated Assets of
the Transferred Subsidiaries will not be transferred
directly but indirectly through the transfer to Purchaser of
the Shares). Sellers and their affiliates have complete and
unrestricted power and the unqualified right to sell,
assign, transfer and deliver to Purchaser, and upon
consummation of the transactions contemplated by this
Agreement, Purchaser will acquire, good, valid and
marketable title to, the Shares, free and clear of all
Liens. The bills of sale, deeds, endorsements, assignments
and other instruments to be executed and delivered to
Purchaser by Sellers at the Closing will be valid and
binding obligations of Sellers enforceable in accordance
with their terms.
Section 4.20 Brokers and Finders. No broker or
finder has acted directly or indirectly for Sellers or any
of their affiliates in connection with this Agreement or the
transactions contemplated hereby, except for Morgan Stanley
& Co. Incorporated ("Morgan Stanley"), whose fees and
expenses will be paid by TDCC.
Section 4.21 Insurance. Schedule 4.21 sets forth
a complete and correct list of all insurance policies
(including a brief summary of the nature and terms thereof
and any amounts paid or payable to the Business) providing
coverage in respect of the Business and the Designated
Assets. Each such policy is in full force and effect, no
notice of termination, cancellation or reservation of rights
has been received with respect to any such policy, there is
no default with respect to any provision contained in any
such policy, and there has not been any failure to give any
notice or present any claim under any such policy in a
timely fashion or in the manner or detail required by any
such policy, except for any such failures to be in full
force and effect, any such terminations, cancellations,
reservations or defaults, or any such failures to give
notice or present claims which, individually or in the
aggregate, would not reasonably be expected to have a
Material Adverse Effect. The coverage provided by such
policies is adequate and sufficient, in nature, scope and
amount, in accordance with applicable good risk management
practice.
Section 4.22 Product Matters.
(a) Schedule 4.22 sets forth a complete and
correct list of all products that are, directly or
indirectly, being researched in human subjects or
distributed for commercial sale by Sellers or any of their
affiliates in connection with the Business (the
"Products")(including, on such Schedule 4.22, a list of all
Licenses (as defined below) for each Product that have been
obtained by Sellers or any of their affiliates, or form the
basis for manufacturing, distribution, sale or human
research of a Product by Sellers or any of their
affiliates).
(b) (i) With respect to each Product: (A)
Sellers and their affiliates have obtained all applicable
approvals, clearances, authorizations, licenses and
registrations required by applicable governments or
government agencies, to permit the manufacture,
distribution, sale, marketing or human research of such
Product (collectively, "Licenses"); (B) Sellers and their
affiliates are in full compliance with all terms and
conditions of each License in each country in which such
Product is marketed, and with all requirements pertaining to
the manufacture, distribution, sale or human research of
such Product which is not required to be the subject of a
License; and (C) Sellers and their affiliates are in full
compliance with all applicable requirements (as set forth in
relevant statutes and regulations) regarding registration,
licensure or notification for each site (in any country) at
which such Product is manufactured, processed, packed, held
for distribution or from which it is distributed; (ii) all
manufacturing operations performed in connection with the
Business have been and are being conducted in full
compliance with applicable good manufacturing practice;
(iii) all nonclinical laboratory studies sponsored by
Sellers or any of their affiliates in connection with the
Business have been and are being conducted in full
compliance with applicable good laboratory practice
regulations; and (iv) TDCC and its affiliates are in full
compliance with all reporting requirements for all Licenses
or plant registrations described in the preceding clauses
(b)(i)(A) and (b)(i)(C); except, in the case of the
preceding clauses (b)(i)(A) through (b)(i)(C), inclusive,
(b)(ii), (b)(iii) and (b)(iv), for any such failures to
obtain or noncompliances which, individually or in the
aggregate, would not reasonably be expected to have a
Material Adverse Effect.
Section 4.23 Product Liability.
(a) Except as set forth on Schedule 4.23(a),
there are not presently pending, or to the knowledge of
Sellers, threatened civil, criminal or administrative
actions, suits, demands, claims, hearings, notices of
violation, investigations, proceedings or demand letters
relating to any alleged hazard or alleged defect in design,
manufacture, materials or workmanship, including, without
limitation, any alleged failure to warn or alleged breach of
express or implied warranties or representations, relating
to any product manufactured, distributed, or sold by or on
behalf of the Business.
(b) To the knowledge of Sellers, except as
set forth on Schedule 4.23(b), since January 1, 1991, there
have not been any civil, criminal or administrative actions,
suits, demands, claims, hearings, notices of violation,
investigations, proceedings or demand letters pending, or to
the knowledge of Sellers, threatened, against TDCC or any of
its affiliates relating to any alleged hazard or alleged
defect in design, manufacture, materials or workmanship,
including, without limitation, any alleged failure to warn
or alleged breach of express or implied warranties or
representations, relating to any product manufactured,
distributed, or sold by or on behalf of the Business.
(c) Except as set forth on Schedule 4.23(c),
since January 1, 1991, there have not been any product
recalls, reworks or post-sale warnings ("Recalls") by TDCC
or any of its affiliates relating to any product
manufactured, distributed, or sold by or on behalf of the
Business, or any investigation or consideration of or
decision made by Sellers or any of their affiliates, or to
the knowledge of Sellers, by any other person, concerning
whether to undertake or not to undertake any Recall.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser represents and warrants to Sellers as
follows:
Section 5.1 Corporate Organization, Etc.
Purchaser is a societe anonyme duly organized, validly
existing and in good standing under the laws of France.
Purchaser has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to
have such power and authority would not in the aggregate
materially interfere with the consummation by Purchaser of
the transactions contemplated by this Agreement.
Section 5.2 Authorization; Enforceability.
Purchaser has all necessary corporate power and authority to
execute and deliver this Agreement, and perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement have been, and the performance of this Agreement
and the consummation of the transactions contemplated hereby
have been, duly and validly authorized by the Supervisory
Board of Purchaser and no other corporate proceedings on the
part of Purchaser are or will be necessary to authorize this
Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and
delivered by Purchaser and constitutes a legal, valid and
binding agreement of Purchaser enforceable against Purchaser
in accordance with its terms.
Section 5.3 Non-Contravention; Required Filings
and Consents. (a) The execution, delivery and performance
by Purchaser of this Agreement and the consummation of the
transactions contemplated hereby do not and will not
(i) contravene or conflict with the Certificate of
Incorporation or By-Laws or the equivalent organizational
documents of Purchaser; (ii) assuming that all consents,
authorizations and approvals contemplated by subsection (b)
below have been obtained and all filings described therein
have been made, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to
Purchaser or any of its properties or assets; (iii) result
in the creation or imposition of any Lien on any asset of
Purchaser; or (iv) result in the breach of any material
contract binding upon Purchaser; except in the case of
clauses (ii), (iii) or (iv) above for any such
contraventions, conflicts, violations, Liens or breaches
which would not individually or in the aggregate materially
interfere with the consummation of the transactions
contemplated by this Agreement.
(b) The execution, delivery and performance
by Purchaser and the consummation of the transactions
contemplated hereby by Purchaser require no action by or in
respect of, or filing with, any governmental body, agency,
official or authority (either domestic or foreign) other
than (i) filings with the appropriate antitrust authorities
in Brazil and Mexico in connection therewith; (ii) filings
with and the approval of the Federal Investment Bureau in
Mexico; (iii) filings and approvals with respect to the
transfer of certain product registrations in Argentina; (iv)
such other filings with and approvals of governmental
authorities in Brazil Mexico and Argentina as may be agreed
to by Sellers and Purchaser between the date hereof and the
Closing Date; and (v) such actions or filings which, if not
taken or made, would not individually or in the aggregate
materially interfere with the consummation of the
transactions contemplated by this Agreement.
Section 5.4 Availability of Purchase Price at
Closing. At Closing, Purchaser shall have sufficient funds
available for the payment of the Purchase Price.
Section 5.5 Brokers and Finders. No broker or
finder has acted directly or indirectly for Purchaser or any
of its affiliates in connection with this Agreement or the
transactions contemplated hereby, except for J.P. Morgan &
Co., whose fees and expenses will be paid by Purchaser.
ARTICLE VI
COVENANTS OF THE PARTIES
Purchaser, on one hand, and Sellers and the
Transferred Subsidiaries, on the other hand, hereby covenant
and agree as follows:
Section 6.1 Conduct of the Business. Except as
otherwise expressly provided in this Agreement or as may be
required to effect the Restructuring, during the period from
the date hereof until the completion of the Closing, Sellers
shall, and shall cause their affiliates to, conduct the
Business according to its ordinary course of business
consistent with past practice, and Sellers shall, and shall
cause their affiliates to, use their respective best efforts
to preserve intact the business organization of the
Business, to keep available the services of the officers
(except for those from whom Purchaser has requested a
resignation) and employees of the Business and to maintain
existing relationships of the Business with licensors,
licensees, suppliers, contractors, distributors, customers
and others having business relationships with the Business.
Without limiting the generality of the foregoing, and except
as otherwise expressly provided in this Agreement or as may
be required to effect the Restructuring, prior to the
completion of the Closing, in connection with the Business,
Sellers shall not, and shall cause their affiliates not to,
without the prior written consent of Purchaser:
(a) amend or propose to amend the
certificate or articles of incorporation or by-laws or
equivalent organizational documents of any of the
Transferred Subsidiaries;
(b) authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities or
equity equivalents (including, without limitation, stock
appreciation rights) of any of the Transferred Subsidiaries
or amend any of the terms of any such securities or
agreements outstanding as of the date hereof;
(c) split, combine or reclassify any shares
of the capital stock of any of the Transferred Subsidiaries,
declare, set aside or pay any dividend or other distribution
(whether in cash, stock, or property or any combination
thereof) in respect of such capital stock, or redeem,
repurchase or otherwise acquire any of the securities of any
of the Transferred Subsidiaries;
(d) (i) except for drawing on existing
working capital facilities in the ordinary course of
business, incur any indebtedness for borrowed money or issue
any debt securities or, except in the ordinary course of
business consistent with past practice, assume, guarantee or
endorse the obligations of any other person; (ii) make any
loans, advances or capital contributions to, or investments
in, any other person other than short-term investments of
cash on hand in the ordinary course of business; (iii)
pledge or otherwise encumber shares of capital stock of any
of the Transferred Subsidiaries; or (iv) except in the
ordinary course of business consistent with past practice,
mortgage or pledge any of any assets, tangible or
intangible, or create or suffer to exist any Lien thereupon;
(e) except for actions taken by TDCC or its
affiliates (other than Sellers and subsidiaries thereof),
enter into, adopt or (except as may be required by law)
amend or terminate any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, stock equivalent,
stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee
benefit agreement, trust, plan, fund or other arrangement
for the benefit or welfare of any director, officer or
employee, or (except, in the case of employees who are not
officers or directors, for normal compensation increases in
the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material
increase in benefits or compensation expense) increase in
any manner the compensation or benefits of any director,
officer or employee or pay any benefit not required by any
plan or arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock
options, restricted stock, stock appreciation rights or
performance units);
(f) acquire, sell, lease or dispose of any
assets outside the ordinary course of business or any assets
which in the aggregate are material to the Business or enter
into any contract, agreement, commitment or transaction
outside the ordinary course of business consistent with past
practice;
(g) change any of the accounting principles
or practices used in connection with the Business except as
required to be changed at such time pursuant to Local GAAP;
(h) (i) acquire (by merger, consolidation,
or acquisition of stock or assets) any corporation,
partnership or other business organization or division
thereof; (ii) authorize any new capital expenditure or
expenditures which, individually, is in excess of $100,000
or, in the aggregate, are in excess of $500,000; (iii)
settle any litigations for amounts in excess of the greater
of $20,000 or the amount reserved therefor individually or
$100,000 in the aggregate; or (iv) enter into or amend any
contract, agreement, commitment or arrangement with respect
to any of the foregoing;
(i) make any tax election or settle or
compromise any tax liability;
(j) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of
business consistent with past practice or in accordance with
their terms, of liabilities reflected or reserved against in
the Balance Sheet (or the notes thereto) or incurred in the
ordinary course of business consistent with past practice;
(k) terminate, modify, amend or waive
compliance with any provision of, any of the Material
Contracts, or fail to take any action necessary (or, with
respect to the business arrangements with Astra or
Connaught, fail to use its reasonable efforts) to preserve
the benefits of any Material Contract to the Business;
(l) revalue any assets (except in connection
with the revaluation of assets due to currency fluctuations
or devaluations in accordance with Local GAAP but including,
without limitation, any revaluation of assets in connection
with the Restructuring); or
(m) take, or agree in writing or otherwise
to take, any of the actions described above in Section 6.1
or any action which would make any of the representations or
warranties of Sellers contained in this Agreement untrue or
incorrect in a material respect or would result in any of
the conditions set forth in Articles VII and VIII not being
satisfied.
Section 6.2 Access to Information. Subject to
applicable law and the confidentiality agreement between
TDCC and Purchaser dated March 12, 1995 (the
"Confidentiality Agreement"), between the date hereof and
the Closing, Sellers shall, and shall cause their affiliates
to, give Purchaser and its counsel, financial advisors,
auditors, and other authorized representatives reasonable
access to all employees, plants, offices, warehouses and
other facilities and to all books and records of the
Business, shall and shall cause their affiliates to permit
Purchaser and its counsel, financial advisors, auditors and
other authorized representatives to make such inspections as
Purchaser may reasonably require with respect to the
Business and shall cause its and its affiliates' officers to
furnish Purchaser or its representatives with such financial
and operating data and other information with respect to the
Business as Purchaser may from time to time request,
provided, however, that nothing set forth in this provision
shall require the provision of, or access to, internal TDCC
cost or pricing information. No investigation pursuant to
this Section 6.2 shall affect any representations or
warranties of the parties herein or the conditions to the
obligations of the parties hereunder.
Section 6.3 Books and Records; Furnishing of
Information.
(a) After the Closing Date, Sellers shall
and shall cause their affiliates to make available to
Purchaser for inspection and copying at Purchaser's expense,
at reasonable times after request therefor, any records,
financial data and documents and information (relating to
the Designated Assets and the Business) which may have been
retained by TDCC or any of its affiliates (including,
without limitation, any Tax Return information). In
addition, Sellers shall and shall cause their affiliates to
make available former employees of the Business employed by
TDCC or its affiliates, as Purchaser shall from time to time
reasonably request, to permit Purchaser to prepare any Tax
Returns and in connection with any governmental examination
of Tax Returns relating to the Designated Assets or the
Business for periods from and after the Closing Date. After
the Closing Date, Sellers shall not and shall cause their
affiliates not to destroy or otherwise render unavailable
any of the aforesaid records, documents, data and
information without first offering them to Purchaser except
that Sellers shall not be obligated to retain documents
beyond their normal document retention period subject to
Sellers' obligation to deliver books and records included in
the Designated Assets.
(b) Upon the request of Purchaser (who shall
be responsible for the reasonable costs and expenses related
thereto), Sellers shall and shall cause their affiliates to
make available, from time to time as reasonably required,
employees, consultants, accountants and attorneys of the
Business employed or retained by TDCC and its affiliates,
(i) for the purposes of giving testimony or such other
assistance as Purchaser may reasonably need for the
preparation and defense or prosecution of any judicial or
administrative actions or proceedings regarding the Business
or the Designated Assets with respect to which Purchaser is
responsible hereunder, or (ii) for any other reasonable
purpose related to the transactions contemplated hereby.
(c) From time to time prior to the Closing
and subject to the terms of the Confidentiality Agreement,
Sellers shall promptly provide to Purchaser such monthly and
quarterly financial statements of the Business and of the
Business as conducted in Brazil, Argentina and Mexico as are
prepared by Sellers and their affiliates in the ordinary
course of business.
(d) Purchaser agrees that to the extent
books and records of Sellers or their affiliates are
delivered to it erroneously, it will return such books and
records to TDCC within a reasonable time after discovery
thereof and in the interim Purchaser will maintain the
confidentiality of such books and records.
Section 6.4 Delivery of Disclosure Schedules.
Sellers shall deliver to Purchaser all Schedules to this
Agreement no later than May 15, 1995.
Section 6.5 Supplements to Disclosure Schedule.
From time to time prior to the Closing, Sellers will
promptly supplement or amend the Schedules with respect to
any matter hereafter arising which, if existing or occurring
at the date of this Agreement, would have been required to
be set forth or described in the attached Schedules. No
supplement or amendment of the attached Schedules made
pursuant to this Section 6.5 shall be deemed to cure any
breach of any representation or warranty made in this
Agreement.
Section 6.6 Sellers' Agreement Regarding
Confidentiality. (a) Sellers covenant that, after the
Closing, they will not, and will not permit any of their
affiliates to, without the prior written consent of
Purchaser, disclose to any person confidential information
relating to or concerning the Designated Assets or the
Business (the "Confidential Information"), except to its or
their officers, directors, employees and representatives who
need to know such information for purposes of taxes,
accounting, pending litigation and other matters necessary
in respect of Sellers' ownership, prior to the Closing Date,
of the Designated Assets or the Business, unless in the
opinion of Seller's outside counsel, disclosure is required
to be made under applicable law. In the event that any of
TDCC or any of its affiliates is requested or required by
documents subpoena, civil investigative demand,
interrogatories, requests for information, or other similar
process to disclose any Confidential Information, Sellers
will provide Purchaser with prompt notice of such request or
demand or other similar process so that Purchaser may seek
an appropriate protective order or, if such request, demand
or other similar process is not mandatory, waive Sellers' or
their affiliates' compliance with the provisions of this
Section 6.6, as appropriate.
(b) The term "Confidential Information" does
not include information which (i) becomes generally
available to the public other than as a result of disclosure
by Sellers or any of their affiliates, or (ii) becomes
available to Sellers or their affiliates on a non-
confidential basis from a source other than the Business,
provided that such source is not bound by a confidentiality
agreement with or other obligation of confidentiality to
Purchaser, the Business or their respective representatives.
(c) For purposes of this Section 6.6,
Sellers and their affiliates shall include any of their
respective directors, officers, employees and
representatives.
Section 6.7 Reasonable Best Efforts; Local
Agreements. (a) Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, the parties hereto
shall cooperate with one another: (i) in the preparation and
filing of any required filings under the laws referred to in
Sections 4.6(b) and 5.3(b); (ii) in determining whether
action by or in respect of, or filing with, any governmental
body, agency, official or authority (either domestic or
foreign) is required, proper or advisable or any actions,
consents, waivers or approvals are required to be obtained
from parties to any contracts, in connection with the
transactions contemplated by this Agreement; (iii) in
seeking timely to obtain any such actions, consents and
waivers and to make any such filings (including with respect
to the transfer of product import registrations in
Argentina); and (iv) in negotiating alternative arrangements
in the event a governmental consent, permit, authorization
or registration required pursuant to the transactions
contemplated hereby is not obtained on a timely basis, with
the understanding that such arrangements will be designed so
as to put the parties in a position as close as practicable
to that which they would have been in had such consent,
permit, authorization or registration been obtained. In
case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party
hereto shall promptly take all such necessary action.
(b) To the extent that any party hereto
shall reasonably request, the parties shall prepare and
execute, with the assistance and advice of local counsel,
additional agreements reflecting the fundamental terms of
this Agreement in accordance with the requirements
(including language) Argentine, Brazilian, Mexican and, if
applicable, other local laws and customs. Notwithstanding
the foregoing, the parties agree that this Agreement sets
forth the complete agreement and understanding of the
parties with respect to the matters set forth herein and, to
the fullest extent permitted by law, shall be controlling in
the event of any conflict or inconsistency between the
provisions hereof and the provisions of any of such local
agreements.
Section 6.8 Covenant Not to Compete; No
Solicitation.
(a) For a period of five years after the
Closing Date, Sellers shall not, and shall cause their
affiliates not to, engage, in Mexico, Central America or
South America (the "Territory"), in the development (as used
herein, development shall mean those activities intended to
bring a product to market and does not include inventions,
discoveries or the like), registration, formulation, sale or
distribution of pharmaceutical products in final form
suitable for human consumption ("Final-Form Pharmaceutical
Products"), provided, however that nothing set forth herein
shall prohibit Sellers or any of their affiliates from: (i)
the development, registration, manufacture, sale or
distribution of fine chemicals for pharmaceutical use in the
Territory; (ii) the manufacturing or toll-manufacturing
outside of the Territory of third party Final-Form
Pharmaceutical Products (other than Final-Form
Pharmaceutical Products under development, or being
manufactured, sold or distributed, by the Business on the
Closing Date) for resale or distribution in the Territory by
such third party; or (iii) the development, registration,
formulation or manufacture outside of the Territory, of
intermediates, components or bulk versions of Final-Form
Pharmaceutical Products (other than Final-Form
Pharmaceutical Products under development, or being
manufactured, sold or distributed, by the Business on the
Closing Date) that may be sold or distributed by third
parties in the Territory.
(b) For a period of five years after the
Closing Date, Sellers shall not, and shall cause their
affiliates not to, solicit to employ any of the current
management employees of the Business so long as they are
employed by the Business.
Section 6.9 Public Announcements. A designated
representative of Purchaser and a designated representative
of Sellers will consult with each other before issuing any
press release or otherwise making any public statements
(other than internal communications with employees) with
respect to the transactions contemplated by this Agreement,
and shall not issue any such press release or make any such
public statement prior to such consultation, except as may
be required by applicable law or by applicable rules of any
securities exchange.
Section 6.10 Transition Services; Real Property
Leases. Prior to the Closing, Purchaser and one of the
Sellers or an affiliate designated by Sellers (for the
purposes of this Section 6.10, each a "Service Provider" or
a "Lessor," as the case may be) shall negotiate the
definitive terms of a transition services agreement (the
"Transition Services Agreement") and certain real property
leases (the "Real Property Leases"). On the Closing Date,
the relevant Service Provider or Lessor, shall enter into
the Transition Services Agreement and the Real Property
Leases.
(a) Transition Services Agreement.
(i) Prior to the Closing,
Purchaser and the relevant Service Provider shall
determine (A) each type of transition service to
be provided by the relevant Service Provider to
Purchaser and its affiliates after the Closing and
(B) the period of time following the Closing that
each type of transition service is to be provided.
From and after the Closing Date, Purchaser shall
update the relevant Service Provider ten business
days before the beginning of each calendar quarter
with respect to its projected future needs for
each type of transition service for the next year.
(ii) In consideration for such
transition services, Purchaser, or the applicable
affiliate of Purchaser, will pay the relevant
Service Provider an amount equal to such Service
Provider's costs and expenses, including wages,
benefits and other actual costs, incurred by such
entity in connection with the performance of such
transition services and determined on a basis
consistent with past practice plus (A) a mark-up
of 20% during the first year that such services
are provided after Closing and (B) a mark-up of
40% thereafter.
(iii) Insofar as the relevant
Service Provider requires data, documents,
information or materials of any nature to be
furnished by Purchaser and its affiliates or
requires the cooperation of Purchaser and its
affiliates or their personnel, Purchaser agrees to
furnish such items, to provide such cooperation
and to direct its personnel in such manner as may
be reasonably necessary in order to assist the
relevant Service Provider in performing such
transition services in a prompt manner.
(iv) The provision of each type of
transition service pursuant to the Transition
Services Agreement shall be terminable at
Purchaser's option at any time upon four months'
written notice to the relevant Service Provider.
(b) Mexico Lease. Purchaser intends to
lease the Cuernavaca site on the following terms:
(i) The term of the lease shall be
a maximum of five years subject to Purchaser's
right to terminate the lease at any time upon one
year's notice to the Lessor thereof.
(ii) Annual rent under the lease
shall be the Mexican Peso equivalent of $600,000,
determined as of the second business day prior to
the Closing Date by reference to a mutually
agreeable official exchange rate, to be paid on a
quarterly basis (the "Initial Mexico Rent"). The
Initial Mexico Rent shall be adjusted semi-
annually for changes in the Banxico Index or other
index as mutually agreed between lessee and Lessor
(the "Adjusted Mexico Rent"); provided, however,
that should the Banxico Index (or such other
mutually agreeable index) change by more than 25%
during the six month period between (x) the date
upon which the Initial Mexico Rent or Adjusted
Mexico Rent, as the case may be, is determined and
(y) the first date or next date, as the case may
be, upon which the Adjusted Mexico Rent is
determined, the rent under the lease for such
period shall be retroactively adjusted as if it
had been adjusted quarterly rather than semi-
annually, and subsequent adjustments shall be made
on a quarterly basis until such time as the change
in the index during a subsequent six month period
does not exceed 25% (at which time such
adjustments shall again be made semi-annually).
(c) Brazil Lease. Purchaser intends to
lease the Santo Amaro site on the following terms:
(i) The term of the lease shall be
a maximum of four years and nine months subject to
Purchaser's right to terminate the lease at any
time upon one year's notice to the Lessor thereof.
(ii) Annual rent under the lease
shall be the Brazilian Real equivalent of
$3,500,000, determined as of the second business
day prior to the Closing Date by reference to a
mutually agreeable official exchange rate, to be
paid on a quarterly basis (the "Initial Brazil
Rent"). The Initial Brazil Rent shall be adjusted
semi-annually for changes in the ICPR Index or
other index as mutually agreed between Lessor and
lessee (the "Adjusted Brazil Rent"); provided,
however, that should the ICPR Index (or such other
mutually agreeable index) change by more than 25%
during the six month period between (x) the date
upon which the Initial Brazil Rent or Adjusted
Brazil Rent, as the case may be, is determined and
(y) the first date or next date, as the case may
be, upon which the Adjusted Brazil Rent is
determined, the rent under the lease for such
period shall be retroactively adjusted as if it
had been adjusted quarterly rather than semi-
annually, and subsequent adjustments shall be made
on a quarterly basis until such time as the change
in the index during a subsequent six month period
does not exceed 25% (at which time such
adjustments shall again be made semi-annually).
Section 6.11 Post Closing Services to Sellers.
If Sellers or any of their affiliates require assistance in
connection with any of the Excluded Liabilities after the
Closing Date, then upon request Purchaser will allow
reasonable access to employees and records of the Business
related to such Excluded Liabilities. Sellers or their
affiliates will pay Purchaser's costs in providing such
assistance.
Section 6.12 Intercompany Agreements and
Arrangements. Sellers shall, and shall cause their
affiliates to, cancel, effective as of the Closing Date, all
intercompany agreements or arrangements (including, without
limitation, intercompany assets and liabilities relating to
financing activities which shall be paid or repaid, as the
case may be, prior to Closing) relating to, binding upon or
affecting the Transferred Subsidiaries or the Designated
Assets other than those intercompany agreements or
arrangements that Sellers and Purchaser agree shall remain
in effect after the Closing.
Section 6.13 Notification of Certain Matters.
Sellers shall give prompt notice to Purchaser, and Purchaser
shall give prompt notice to Sellers, of (i) the occurrence,
or non-occurrence, of any event known to them the
occurrence, or non-occurrence, of which would be likely to
cause any representation or warranty contained in this
Agreement to be untrue or inaccurate and (ii) any failure of
any party hereto to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by
it hereunder; provided, that the delivery of any notice
pursuant to this Section 6.13 shall not limit or otherwise
affect the remedies available hereunder to the party
receiving such notice.
Section 6.14 Transfer Taxes. Sellers and
Purchaser shall share equally all Taxes imposed upon the
transfer of the Designated Assets to Purchaser (other than
any such Taxes arising out of or relating to the
Restructuring). If a Seller pays a value added tax in any
jurisdiction in connection with the transactions
contemplated hereby, and such Seller transfers the benefit
of such value added tax to Purchaser, upon realization of
such benefit, Purchaser shall pay to such Seller an amount
equal to such benefit.
Section 6.15 Employee Matters. Purchaser shall
cause the Transferred Subsidiaries to offer to continue the
employment, in comparable positions, of (i) all active
Employees on the Closing Date or upon the return to active
employment, in accordance with the provisions of the
Business' employment policies (as in effect on the date
hereof), of any Employee who is, on the Closing Date, on
disability or medical leave or on nonmedical leave, and (ii)
the employees identified on Schedule 6.15; provided,
however, that the foregoing shall not obligate Purchaser or
any Transferred Subsidiary to continue the employment of any
such Employee or employee for any minimum period of time.
Section 6.16 Name Change. (a) Within 90 days
after the Closing, Purchaser shall cause the Transferred
Subsidiaries to delete "DOW" from their respective company
names (to the extent such names include "DOW") and within
the same 90 days initiate any necessary legal filings with
the appropriate local governmental authority to effectuate a
name change to, and to thereafter use only, a new name that
does not contain DOW or a name confusingly similar to DOW in
English or any other language. Within 12 months of the
Closing or as soon as practicable thereafter with respect to
matters requiring the action of third parties, Purchaser
will also cause the Transferred Subsidiaries to replace
their current names (to the extent such current names
include DOW) to their new company name on all stationery,
business cards, real and personal property, directories,
labels, advertising and promotional material, drug
registrations and any and all applications, registrations or
other documents filed or to be filed with international,
national and local governmental offices, agencies or
authorities in any country.
(b) Within 90 days after the Closing, Sellers
shall cause their affiliates to delete "Lepetit" and
"Merrell" from their respective company names (to the extent
used therein) and within the same 90 days initiate any
necessary legal filings with the appropriate local
governmental authority to effectuate a name change to, and
to thereafter use only, a new name that does not contain
Lepetit or Merrell or a name confusingly similar thereto in
English or any other language. Within 12 months of the
Closing or as soon as practicable thereafter with respect to
matters requiring the action of third parties, Sellers will
also cause their affiliates to replace their current names
(to the extent such current names include Lepetit or
Merrell) to their new Company name on all stationery,
business cards, real and personal property, directories,
labels, advertising and promotional material, drug
registrations and any and all applications, registrations or
other documents filed or to be filed with international,
national and local governmental offices, agencies or
authorities in any country.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
The obligation of Sellers to effect the Closing
shall be subject to the satisfaction at or before the
Closing of each of the following conditions, unless waived
in writing by Sellers:
Section 7.1 Representations and Warranties True.
Each of the representations and warranties of Purchaser set
forth in this Agreement that are qualified as to materiality
shall be true and correct and each of the representations
and warranties of Purchaser set forth in this Agreement that
are not so qualified shall be true and correct in all
material respects, in each case as of the date hereof and as
of the Closing Date as if such representations and
warranties were made at and as of the Closing Date (or, in
the case of any representation and warranty made as of a
specified date, as of such date).
Section 7.2 Performance. Purchaser shall have
performed and complied with all of the covenants and
agreements required by this Agreement to be performed or
complied with by it at or prior to the Closing.
Section 7.3 No Injunction. On the Closing Date,
there shall not be in effect any order, decree or ruling or
other action restraining, enjoining or otherwise prohibiting
the transactions contemplated hereby, which order, decree,
ruling or action shall have been issued or taken by any
court of competent jurisdiction or other governmental body
located or having jurisdiction within the United States or
any country or economic region in which TDCC or any of its
affiliates, directly or indirectly, has material assets or
operations.
Section 7.4 Waiting Periods. Any applicable
waiting periods contemplated by Sections 4.6(b)(i)-(iv) and
5.3(b)(i)-(iv) shall have expired or been terminated.
Section 7.5 Certificates. Purchaser shall have
furnished Sellers with such certificates of its officers and
others to evidence compliance with the conditions set forth
in this Article VII as may be reasonably requested by
Sellers.
Section 7.6 MMD Acquisition. Hoechst AG shall
have acquired, directly or indirectly, shares of common
stock of MMD representing not less than a majority of MMD's
outstanding voting power (on a fully diluted basis).
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to effect the Closing
shall be subject to the satisfaction at or before the
Closing of each of the following conditions, unless waived
in writing by Purchaser:
Section 8.1 Representations and Warranties True.
Each of the representations and warranties of Sellers set
forth in this Agreement that are qualified as to materiality
shall be true and correct and each of the representations
and warranties of Sellers set forth in this Agreement that
are not so qualified shall be true and correct in all
material respects, in each case as of the date hereof and as
of the Closing Date as if such representations and
warranties were made at and as of the Closing Date (or, in
the case of any representation and warranty made as of a
specified date, as of such date)
Section 8.2 Performance. Sellers and the
Transferred Subsidiaries shall have performed and complied
with all of the covenants and agreements required by this
Agreement to be performed or complied with by them at or
prior to the Closing.
Section 8.3 No Injunction. On the Closing Date,
there shall not be in effect any order, decree or ruling or
other action restraining, enjoining or otherwise prohibiting
the transactions contemplated hereby, which order, decree,
ruling or action shall have been issued or taken by any
court of competent jurisdiction or other governmental body
located or having jurisdiction within France or any country
or economic region in which Purchaser or any of its
affiliates, directly or indirectly, has material assets or
operations.
Section 8.4 Waiting Periods. Any applicable
waiting periods contemplated under Sections 4.6(b)(i)-(iv)
and 5.3(b)(i)-(iv) shall have expired or been terminated.
Section 8.5 No Material Adverse Change. There
shall not have occurred, and Purchaser shall not have become
aware of any fact that would reasonably be expected to
result in, a material adverse change in the business,
results of operations (on an annualized basis) or financial
condition of the Business, other than (i) the effects of
currency fluctuations and currency devaluations and (ii) the
termination of business arrangements with Astra or Connaught
as a result of the transactions contemplated hereby.
Section 8.6 MMD Acquisition. Hoechst AG shall
have acquired, directly or indirectly, shares of common
stock of MMD representing not less than a majority of MMD's
outstanding voting power (on a fully diluted basis).
Section 8.7 Certificates. Sellers and the
Transferred Subsidiaries shall have furnished Purchaser with
such certificates of their officers and others to evidence
compliance with the conditions set forth in this Article
VIII as may be reasonably requested by Purchaser.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival of Representations and
Warranties. All representations and warranties made by
Sellers in this Agreement shall survive the Closing Date and
continue for a period of three years from the Closing Date,
or until the termination and abandonment of this Agreement
as provided herein; provided, that the representations and
warranties contained in Section 4.13 shall survive the
Closing Date and continue until the termination of any
applicable statute of limitation, the representations and
warranties contained in Section 4.19 shall survive the
Closing Date and continue in perpetuity, and the
representations and warranties contained in Sections 4.22
and 4.23 shall survive the Closing Date for a period of 10
years from the Closing Date. All representations and
warranties made by Purchaser in this Agreement shall survive
the Closing Date and continue for a period of one year
thereafter. Any right of indemnification pursuant to this
Article IX with respect to a claimed breach of a
representation or warranty shall expire at the date of
termination of the representation or warranty claimed to be
breached (the "Termination Date"), unless on or prior to the
Termination Date a Claim (as defined herein) has been made
to the party from whom indemnification is sought. Provided
that a Claim is timely made, it may continue to be asserted
beyond the Termination Date of the representation and
warranty to which such Claim relates. As used in this
Agreement, a "Claim" means a written notice asserting a
breach of a representation, warranty, covenant, agreement or
obligation specified in this Agreement, which shall
reasonably set forth, in light of the information then known
to the party giving such notice, a description of and
estimate (if then reasonable to make) of the amount involved
in such breach. The covenants and agreements contained in
this Agreement shall survive in accordance with their
respective terms.
Section 9.2 General Indemnification.
(a) After the Closing Date, Dow Mexico, Dow
Argentina and Dow Brazil for themselves and their successors
(collectively, the "Indemnitors") hereby agree, jointly and
severally, to defend and, promptly upon the determination of
the Damages (as defined below) arising from or relating to
any Claim, to indemnify and hold harmless Purchaser and each
parent, affiliate, subsidiary (including, after the Closing
and without limitation, each Transferred Subsidiary),
director, officer, employee, agent and representative of
Purchaser (collectively, the "Purchaser Group"), as the case
may be, from and against all demands, claims, actions or
causes of action, assessments, losses, damages (including,
without limitation, consequential and punitive damages),
liabilities, costs and expenses, including, without
limitation, interest, penalties and reasonable attorneys'
fees, disbursements and expenses (collectively, the
"Damages") asserted against, resulting to, or imposed upon
or incurred by any member of the Purchaser Group, directly
or indirectly, by reason of, or resulting from, or which
constitutes or arises out of: (i) any breach of any
representation or warranty of Sellers contained in or made
pursuant to this Agreement (it being understood and agreed
that for purposes of determining whether a breach has
occurred for purposes of this Section 9.2(a)(i) and for
purposes of clause (x) of the proviso in this sentence, all
materiality exceptions and qualifications to such
representations and warranties shall be disregarded); (ii)
any breach of any covenant or agreement of Sellers contained
in or made pursuant to this Agreement; (iii) all Excluded
Liabilities set forth in clause (i) of Section 2.3; (iv) all
Excluded Liabilities set forth in clause (ii) of Section
2.3; (v) all Excluded Liabilities set forth in clauses (iii)
and (iv) of Section 2.3; and (vi) all Damages arising out of
or relating to the conduct of the Business or the ownership
of the Designated Assets prior to the Closing (other than
Damages incurred as a result of the matters set forth in
clause 9.2(a)(iv)); provided, however, that there shall be
no amount payable by Indemnitors pursuant to their
indemnification obligations under (x) Sections 9.2(a)(i) and
9.2(a)(vi) in respect of the first $2 million of Damages
determined to have been incurred as a result of the matters
set forth in Sections 9.2(a)(i) and 9.2(a)(vi) by the
Purchaser Group, after which the members of the Purchaser
Group shall be entitled to all such Damages so incurred (net
of insurance proceeds actually received by members of the
Purchaser Group), but in no event more than an aggregate
amount equal to $100 million; and (y) Section 9.2(a)(iv) in
respect of Damages determined to have been incurred as a
result of the matters set forth in Section 9.2(a)(iv) by the
Purchaser Group to the extent and in the amount that such
Damages were reserved for in Schedule 4.7(c) (less any
amount by which such reserves have been reduced between the
date of this Agreement and the Closing) or to the extent
that insurance proceeds are actually received by members of
the Purchaser Group in respect of such Damages. If the
aggregate amount of Damages incurred by the Purchaser Group
as a result of the matters set forth in Section 9.2(a)(iv)
prior to the tenth anniversary of the Closing Date is less
than the amount of reserves shown on Schedule 4.7(c) for
Damages of the type contemplated by Section 9.2(a)(iv),
Purchaser shall pay to Sellers, within 30 days following the
tenth anniversary of the Closing Date, an amount equal to
the excess of such reserves over such Damages (less any
amount by which such reserves have been reduced between the
date of this Agreement and the Closing). It is understood
and agreed that following the Closing, Sellers shall control
the defense of those matters referred to in Section
9.2(a)(iv) above; provided, however, that Sellers shall not,
without Purchaser's prior written consent, settle or
compromise any claim or consent to entry of any judgment
relating to any such Third Party Claim, which settlement,
compromise or judgment (A) does not include as an
unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party, or its subsidiaries,
affiliates, directors, officers, employees, agents or
representatives against whom a Third Party Claim is
asserted, a release from all liabilities in respect of such
Third Party Claim or (B) provides for any nonmonetary
damages which adversely affects the Business.
Notwithstanding anything to the contrary set forth herein,
the Indemnitors are not indemnifying Purchaser with respect
to liabilities of the Business, if any, relating to the
products referred to in Sections 6 and 8 of the Insurance
Agreement.
(b) After the Closing Date, Purchaser hereby
agrees to defend and, promptly upon the determination of the
Damages arising from or relating to any Claim, to indemnify
and hold harmless Sellers and each parent, affiliate,
subsidiary, director, officer, employee, agent and
representative of Sellers (collectively, the "Seller
Group"), as the case may be, from and against all Damages
asserted against, resulting to, or imposed upon or incurred
by any member of the Seller Group, directly or indirectly,
by reason of, or resulting from, or which constitutes or
arises out of (i) any breach of any representation or
warranty of Purchaser contained in or made pursuant to this
Agreement (it being understood and agreed that for purposes
of determining whether a breach has occurred for purposes of
this Section 9.2(b)(i) and the proviso below, all
materiality exceptions and qualifications to such
representations and warranties shall be disregarded); (ii)
any breach of any covenant or agreement of Purchaser
contained in or made pursuant to this Agreement; or (iii)
all Designated Liabilities; provided, however, that there
shall be no amount payable by Purchaser pursuant to its
indemnification obligations under Section 9.2(b)(i) in
respect of the first $2 million of Damages determined to
have been incurred as a result of the matters set forth in
Section 9.2(b)(i) by the Seller Group, after which the
members of the Seller Group shall be entitled to all such
Damages so incurred, but in no event more than an aggregate
amount equal to $100 Million.
(c) Nothing in this Section 9.2 shall be
construed to affect the rights to reimbursement or
indemnification under other provisions of this Agreement,
notwithstanding that the matter for which reimbursement or
indemnity is sought also constitutes a matter for which an
indemnity could be sought under this Section 9.2; provided,
however, that there shall not be any duplication of
reimbursement or indemnification with respect to any such
matter. Any indemnification obligation under this Article
IX shall be increased such that the indemnification payment
less any Taxes payable by the indemnified party with respect
to such indemnification payment equals the Damages giving
rise to such indemnification payment.
(d) Notwithstanding anything to the
contrary contained in this Agreement, Indemnitors
acknowledge and agree that in the event Purchaser assigns,
sells, transfers or otherwise disposes all or any part of
the Shares, the Designated Assets or the Business subsequent
to the Closing, Indemnitors' agreements and obligations to
reimburse and/or indemnify any member of the Purchaser Group
pursuant to any provisions of this Agreement, including, but
not limited to, Section 9.2(a) and Section 9.3 shall
continue and remain in full force and effect.
Section 9.3 Indemnification for Taxes.
(a) Certain Defined Terms. For purposes of
this Section 9.3, the following terms shall have the
following meanings (a term not specifically defined herein
shall have the same meaning as set forth in other sections
of this Agreement; provided, however, that for purposes of
this Section 9.3 the term "Taxes" shall have the same
meaning as defined in Section 4.13 excluding any Taxes
required to be paid by Purchaser pursuant to Section 6.14):
(i) "Adjusted Reserve Amount"
means the aggregate reserves for claims for unpaid
Taxes relating to periods ending on or before
December 31, 1994 and for the Pre-Closing Short
Period as shown on the Closing Balance Sheet as
such reserves for Taxes are adjusted from time to
time as described below.
(ii) "Audit" includes any audit,
assessment of Taxes, other examination by any Tax
Authority (as defined herein), proceeding, or
appeal of such proceeding relating to Taxes,
whether administrative or judicial.
(iii) "Pre-Closing Short Period"
means the taxable period ending on the Closing
Date.
(iv) "Redetermination" shall mean
any redetermination of any item of income, gain,
loss, deduction, or credit or any other item
affecting the Tax Liability of a Transferred
Subsidiary for (A) a taxable period ending on or
before the Closing Date or (B) the portion of the
taxable year or period through and including the
Closing Date in the case of any taxable year or
period which commences before but ends after the
Closing Date as a result of a final assessment,
settlement, or compromise with any Tax Authority
or a judicial decision that has become final.
(v) "Redetermination Date" means
the date of a Redetermination.
(vi) "Redetermination Tax Loss"
means any Tax Loss arising from or attributable to
a Redetermination.
(vii) "Restructuring Tax Loss"
means any Tax Loss arising from or attributable to
a Restructuring.
(viii) "Tax Authority" includes
any federal, state, local, or foreign or other
governmental authority responsible for the
administration of any Taxes (domestic, foreign, or
possessions).
(ix) "Tax Liability" shall mean
the amount of Taxes due to a Tax Authority for a
taxable period.
(x) "Tax Loss" means any loss,
cost or expense (including reasonable attorneys
fees and costs), and any and all liabilities
imposed on or incurred by the Purchaser Group in
respect of any liability for Taxes, excluding
consequential damages and salaries of employees of
the Purchaser Group.
(b) Preparation and Filing of Tax Returns.
Sellers shall prepare or cause to be prepared and file all
Tax Returns for each Transferred Subsidiary with respect to
all taxable periods ending on or before the Closing Date;
provided, however, that to the extent the parties agree,
Sellers shall prepare or cause to be prepared any Tax
Return, for those jurisdictions that permit a short-period
Tax Return for the Pre-Closing Short Period. Purchaser
shall prepare or cause to be prepared and file all Tax
Returns for each Transferred Subsidiary with respect to
taxable periods ending after the Closing Date. If a taxable
period commences before but ends after the Closing Date,
Purchaser shall prepare or cause to be prepared a pro forma
Tax Return for the taxable period up to and including the
Closing Date. Except as may be specifically agreed between
Sellers and Purchaser, such pro forma Tax Return will be
prepared in a manner consistent with prior elections,
accounting practices, accounting methods and conventions.
Purchaser shall provide such pro forma Tax Return to Sellers
for their review and consent (which consent shall not be
unreasonably withheld). Except as otherwise required by
law, Purchaser will incorporate the amounts shown on the pro
forma Tax Return into each Transferred Subsidiary's
corresponding Tax Return for the period that commences
before but ends after the Closing Date.
(c) Indemnification
(i) Redetermination Tax Loss. The
Indemnitors shall be responsible for, and shall
indemnify and hold the Purchaser Group harmless
from any Redetermination Tax Loss. No later than
10 business days after any Redetermination Date,
Sellers shall determine the difference between the
Adjusted Reserve Amount and the Redetermination
Tax Loss. If the Redetermination Tax Loss exceeds
the Adjusted Reserve Amount, the amount of such
excess shall equal the "Redetermination Amount"
and the Adjusted Reserve Amount shall then equal
zero. If the Adjusted Reserve Amount as of the
Redetermination Date is greater than the
Redetermination Tax Loss, the Adjusted Reserve
Amount shall be reduced (but not below zero) by an
amount equal to the Redetermination Tax Loss and
no payment shall be made by the Indemnitors to
Purchaser with respect to such Redetermination Tax
Loss.
(ii) Restructuring Tax Loss. The
Indemnitors shall be responsible for, and shall
indemnify and hold the Purchaser Group harmless
from any Restructuring Tax Loss; provided,
however, that such indemnification shall be
without duplication of indemnification (including
any offset to the Adjusted Reserve Amount) of any
Redetermination Tax Loss arising from or
attributable to any Restructuring pursuant to
Section 9.3(c)(i), above.
(iii) Designated Assets and
Excluded Assets Tax Loss. The Indemnitors shall
indemnify and hold the Purchaser Group harmless
from any Tax Loss arising from or attributable to
any Tax Liability imposed with respect to the
Designated Assets (without duplication of the
Transferred Subsidiaries which are intended to be
addressed in Section 9.3(c)(i) above) by a Tax
Authority that is related to the business or
operations of Sellers for any period ending on or
before the Closing Date or the portion of the
taxable year or period through and including the
Closing Date in the case of any taxable year or
period which commences before but ends after the
Closing Date (such amount shall be referred to as
the "Designated Asset Amount"). The Indemnitors
shall indemnify and hold the Purchaser Group
harmless from any Tax Loss arising from or
attributable to any Tax Liability imposed with
respect to the Excluded Assets by a Tax Authority
(such amount shall be referred to as the "Excluded
Asset Amount"); provided, however, that such
indemnification shall be without duplication of
indemnification (including any offset to the
Adjusted Reserve Amount) of any Redetermination
Tax Loss or Restructuring Tax Loss with respect to
the Excluded Assets pursuant to Sections 9.3(c)(i)
and 9.3(c)(ii), above.
(iv) Tax Benefits. To the extent
that Sellers receive a refund from Purchaser
(pursuant to Section 9.3(g) below) or a Tax
Authority for any taxable period ending on or
before the Closing Date or the portion of the
taxable year or period through and including the
Closing Date in the case of any taxable year or
period which commences before but ends after the
Closing Date, which results in an increased Tax
Liability to the Purchaser Group, the Indemnitors
shall promptly pay the amount of such increased
Tax Liability to Purchaser, but not before such
increased Tax Liability is incurred. If a
Redetermination shall both (A) increase a Tax
Liability for which Sellers are responsible under
this Section 9.3 and (B) decrease a Tax Liability
of the Purchaser Group for any period ending after
the Closing Date and if such decrease is not taken
into account in computing the amount of any
indemnity payment under this Section 9.3, then,
when and to the extent that the Purchaser Group
derives a direct benefit from such decrease
(through a reduction of Taxes, refund of Taxes
paid or credit against Taxes due), Purchaser shall
promptly pay to Sellers an amount equal to the
amount of such reduction, refund or credit, but
not before (I) the benefit of such reduction is
realized, (II) the refund is received, or (III)
the credit is actually utilized; provided,
however, that such amount shall not exceed the
amount of the indemnity or refund amount.
(d) Control and Management of Claims.
Sellers shall control all Audit, administrative, or judicial
proceedings relating to any Tax Liability of a Transferred
Subsidiary for all periods ending on or before the Closing
Date and shall bear all expenses for such defense.
Purchaser shall control all Audit, administrative, or
judicial proceedings relating to any Tax Liability of a
Transferred Subsidiary for all periods ending after the
Closing Date and shall bear all expenses for such defense.
Purchaser shall have the sole authority to defend and
contest a claim made by a Tax Authority on Audit or by
appropriate claim for refund or credit with respect to
periods commencing before but ending after the Closing Date;
provided, however, that Purchaser shall (i) act in good
faith with respect to Sellers in defending and settling any
such claim, (ii) not act in a manner that at the same time
would benefit the Purchaser Group and adversely affect
Sellers, and (iii) not settle any such claim for which
Sellers may have liability under this Agreement (a "Sellers
Matter") without the prior written consent of Sellers which
consent shall not be unreasonably withheld. In the event
Sellers want to contest a Sellers Matter, Sellers may
request Purchaser's written consent, which consent shall not
be unreasonably withheld, that Sellers be entitled to
contest, resolve and defend against any Sellers Matter, at
Sellers' expense; provided, however, that Purchaser shall
not be obligated to provide such requested consent, if
Purchaser determines that (i) Sellers may assert a position
with respect to such Sellers Matter that is contrary to or
undermines a position that has been or may be asserted by
the Purchaser Group with respect to a similar Tax matter or
(ii) provision of such consent would unreasonably delay or
hinder the Purchaser Group's resolution of any Audit or
other Tax matter. Purchaser shall have the exclusive right
to file any amended Tax Return or sign any closing agreement
with respect to periods commencing before but ending after
the Closing Date; provided, however, that Purchaser shall
not file any such amended Tax Return or sign a closing
agreement that contains a Sellers Matter without the prior
written consent of Sellers, which consent shall not be
unreasonably withheld.
(e) Notification. Purchaser shall forward
to Sellers any notice of any pending or threatened Audit or
other proceeding within 40 days of the Purchaser Group's
receipt of such notice that may result in any Tax Loss for
which indemnification may be sought under this Agreement.
To the extent that the failure of Purchaser to provide
notice to Sellers as required by the preceding sentence
results in an increase of an indemnifiable Tax Loss, the
amount of Sellers' indemnification obligation under this
Agreement shall be appropriately reduced to reflect such
increase. Sellers shall forward to Purchaser any notice of
any pending or threatened Audit or other proceeding that
relates to any Tax period ending after the Closing Date
within 40 days of the Seller Group's receipt of such notice.
(f) Mutual Cooperation. Sellers and
Purchaser shall, and shall cause their respective affiliates
to, reasonably cooperate with each other in the filing of
any Tax Return, amendment thereto, or consent contemplated
by this Agreement and to take such action as such other
party may reasonably request, including (but not limited
to):
(i) providing data for the
preparation of any original or amended Tax Return;
(ii) cooperating fully with each
other in connection with (A) the preparation and
filing of any Tax Returns and (B) the exchange of
information relating to the operations and
business of Sellers or Purchaser (or any of their
respective affiliates) which is relevant to
Sellers or Purchaser in preparing any Tax Returns
required to be filed by Sellers or Purchaser (or
any of their respective affiliates), including but
not limited to, information relating to the
computation of foreign tax credits of Sellers (or
any of their affiliates). Such cooperation shall
include without limitation, the furnishing or
making available of records, books of account or
other materials and access to personnel of Sellers
or Purchaser (and their respective affiliates)
necessary or helpful for the preparation of Tax
Returns or the defense against assertions of any
Tax Authority as to any Tax Returns, so long as
such access does not unreasonably interfere with
the business activities of such personnel. The
requesting party shall pay any out-of-pocket
expenses incurred by the other party;
(iii) cooperating in any Audit of
Sellers or Purchaser (or any of their respective
affiliates);
(iv) filing protests or otherwise
contesting any Audit of Sellers or Purchaser (or
any of their respective affiliates), including the
filing of petitions for redetermination or
prosecuting actions for refund in any court and
pursuing the appeal of any such actions; and
(v) Retaining and providing books,
records, documentation or other information
relating to any Tax Return until the expiration of
the applicable statute of limitation (giving
effect to any extension, waiver, or mitigation
thereof), providing additional information and
explanation of material provided hereunder, and
the use of the parties' commercially reasonable
efforts to obtain any documentation from a
governmental authority or third party that may be
necessary or helpful in connection with the
foregoing.
(g) Refunds. Purchaser shall pay to
Sellers, within 10 business days of receipt, any (i) refunds
received by the Purchaser Group from a Tax Authority with
respect to a Transferred Subsidiary for all taxable periods
ending on or before the Closing Date and (ii) the
appropriate portion of any refunds received by the Purchaser
Group from a Tax Authority with respect to a Transferred
Subsidiary attributable to the portion of the taxable year
or period through and including the Closing Date in the case
of any taxable period commencing before the Closing Date and
ending after the Closing Date; provided, however, that
Purchaser shall not be obligated to pay to Sellers any
refunds to the extent that the cumulative amount (which
cumulative amount shall be reduced, but not below zero, to
reflect such refund) of such refunds are reflected as an
asset on the Closing Balance Sheet; provided, further
however, that any payment of such a refund shall not reduce
or offset any obligation that Sellers or the Indemnitors may
have under this Agreement. For purposes of this Section
9.3(g), if a Redetermination with respect to the portion of
the taxable year or period through and including the Closing
Date in the case of any taxable year or period commencing
before the Closing Date and ending after the Closing Date
reduces the Tax Liability of a Transferred Subsidiary, such
reduction shall be treated as a refund to the extent that it
offsets the Tax Liability of a Transferred Subsidiary for
the period commencing before but ending after the Closing
Date. Sellers shall pay to Purchaser, within 10 business
days of receipt, any refunds received by the Seller Group
from a Tax Authority with respect to a Transferred
Subsidiary attributable to taxable periods other than (x)
taxable periods ending on or before the Closing Date and (y)
the portion of the taxable year or period through and
including the Closing Date in the case of any taxable year
or period commencing before the Closing Date that ends after
the Closing Date.
(h) Gross-up. Whenever, in accordance with
the provisions of this Section 9.3, the Indemnitors shall be
required to pay Purchaser an amount in respect of a Tax
Loss, the amount to be paid shall be an amount that, after
subtraction of all Taxes payable by the Purchaser Group as a
result of the receipt or accrual of such amount, shall be
equal to the amount by which the Taxes payable by the
Purchaser Group, taking such Tax Loss into account, exceed
in the aggregate the Taxes that would have been required to
be paid by the Purchaser Group had such Tax Loss never
occurred; the indemnity amount shall be determined assuming
that the Purchaser Group (x) is taxable at the maximum
marginal Tax rates applicable to the Purchaser Group and (y)
will have sufficient taxable income to fully utilize all
deductions and credits that would have been available absent
the Tax Loss.
(i) Adjusted Tax Reserve Payment. If, on
the tenth anniversary of the Closing Date, the aggregate
amount of claims, proposed adjustments or assessments which
may result in a Tax Loss for which indemnification may be
sought under this Agreement is less than the Adjusted
Reserve Amount, Purchaser shall pay to Sellers the amount by
which the Adjusted Reserve Amount exceeds such claims,
adjustments or assessments within 10 business days of such
anniversary; provided, however, that Purchaser shall pay to
Sellers the amount of any remaining Adjusted Reserve Amount
within 10 business days of the fifteenth anniversary of the
Closing Date.
(j) Indemnity Payments. Whenever a Tax
Loss occurs, the Indemnitors shall pay to Purchaser an
amount equal to the (i) Redetermination Amount, (ii)
Restructuring Tax Loss, (iii) Designated Asset Amount, plus
(iv) Excluded Asset Amount hereunder (plus the amount of any
gross-up with respect to such amount under Section 9.3(h)).
(k) Wire Transfers. Unless otherwise
provided for in this Section 9.3, all payments under Section
9.3 shall be made by wire transfer of immediately available
funds (in the currency in which the Tax to which such
payment relates is imposed) no later than 10 business days
after receipt of a written request therefore.
Section 9.4 Third Party Claims. The obligations
and liabilities of any of the parties to this Agreement
under Sections 9.2 and 9.3 hereof with respect to all items
indemnified against in Sections 9.2 and 9.3 and which are
initiated by third parties (the "Third Party Claims") will
be subject to the following terms and conditions:
(a) Upon receipt of written notice of any
Third Party Claim asserted against, resulting to, imposed
upon or incurred by any member of the Purchaser Group or the
Seller Group, as the case may be (the "Indemnified Party"),
the party receiving such written notice (the "Indemnifying
Party"), will undertake the defense thereof by counsel of
its own choosing, which counsel shall be reasonably
satisfactory to the Indemnified Party, provided that if in
the Indemnified Party's reasonable judgment a conflict of
interest may exist between such Indemnified Party and the
Indemnifying Party with respect to such Third Party Claim,
such Indemnified Party shall be entitled to select counsel
of its own choosing, in which event the Indemnified Party
shall be obligated to pay the fees and expenses of such
counsel.
(b) If within a reasonable time after
written notice of any Third Party Claim, the Indemnifying
Party fails to commence the defense of the Indemnified Party
against whom such Third Party Claim has been asserted, the
Indemnified Party will have the right to undertake the
defense, compromise or settlement of such Third Party Claim
on behalf of and for the account and at the risk of the
Indemnifying Party.
(c) Anything in this Section 9.4 to the
contrary notwithstanding, (i) if there is a reasonable
probability in the Indemnified Party's judgment that a claim
may materially and adversely affect the Indemnified Party or
any of its subsidiaries, affiliates, directors, officers,
employees, agents or representatives against whom a Third
Party Claim is asserted other than as a result of money
damages, the Indemnified Party or any of its subsidiaries,
affiliates, directors, officers, employees, agents or
representatives against whom a Third Party Claim is asserted
will have the right to defend or co-defend and compromise or
settle (with the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld) such Third Party
Claim and (ii) the Indemnifying Party will not, without the
prior written consent of the Indemnified Party or any of its
subsidiaries, affiliates, directors, officers, employees,
agents or representatives against whom a Third Party Claim
is asserted, settle or compromise any claim or consent to
entry of any judgment relating to any such Third Party
Claim, which settlement, compromise or judgment (A) does not
include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party, or its
subsidiaries, affiliates, directors, officers, employees,
agents or representatives against whom a Third Party Claim
is asserted, a release from all liabilities in respect of
such Third Party Claim or (B) provides for any nonmonetary
damages which adversely affect the Business.
(d) The Indemnifying Party will provide the
Indemnified Party or any of its subsidiaries, affiliates,
directors, officers, employees, agents or representatives
against whom a Third Party Claim is asserted with access to
all records and documents of the Indemnified Party relating
to any Third Party Claim. The Indemnified Party will
provide the Indemnifying Party with access to all records
and documents of the Indemnified Party relating to any Third
Party Claim.
ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.1 Methods of Termination. The
transactions contemplated herein may be terminated and/or
abandoned at any time but not later than the Closing:
(a) By mutual written consent of Sellers and
Purchaser; or
(b) By and at the option of Sellers if,
without fault on the part of Sellers or the Transferred
Subsidiaries, the Closing shall not have occurred on or
before January 31, 1996; or
(c) By and at the option of Purchaser if,
without fault on the part of Purchaser, the Closing shall
not have occurred on or before January 31, 1996; or
(d) By and at the option of Sellers or
Purchaser if there shall be in effect any order, decree or
ruling or other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated hereby,
which order, decree, ruling or action shall have (i) been
issued or taken by any court of competent jurisdiction or
other governmental body located or having jurisdiction
within the United States, France or any country or economic
region in which TDCC, Purchaser or any of their respective
affiliates, directly or indirectly, has material assets or
operations and (ii) become final and nonappealable; or
(e) By and at the option of Sellers or
Purchaser if the Agreement and Plan of Merger, dated as of
May 3, 1995, by and among TDCC, MMD, Hoechst and H Pharma
Acquisition Corporation shall have been terminated in
accordance with its terms; or
(f) Within seven days from the date upon
which the final Schedule is delivered pursuant to Section
6.4, by and at the option of Purchaser if such Schedules are
not satisfactory to Purchaser in its sole discretion.
Section 10.2 Effect of Termination. In the event
of the termination and abandonment of this Agreement
pursuant to Section 10.1, this Agreement shall forthwith
become void and have no effect, without any liability on the
part of any party hereto, other than the provisions of this
Section 10.2 and Section 10.3. Nothing contained in this
Section 10.2 shall relieve any party from liability for any
breach of this Agreement.
Section 10.3 Expenses. Except as otherwise
provided in this Agreement, whether or not the transactions
contemplated hereby are consummated, all fees and expenses
in connection with such transactions will be paid by the
party incurring said fees and expenses.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 Entire Agreement; Assignment. This
Agreement (together with the Schedules hereto), the
Insurance Agreement and the Confidentiality Agreement (which
the parties agree shall terminate and be of no further force
and effect upon the Closing) (i) constitute the entire
agreement among the parties hereto with respect to the
subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and
(ii) shall not be assigned by operation of law or otherwise;
provided that Purchaser may assign its rights and
obligations in whole or in part to any affiliate of
Purchaser (it being understood and agreed that such
assignment shall not relieve Purchaser from its obligations
hereunder to the extent such transferee does not perform
such obligations); provided, further, in the event Purchaser
assigns, sells, transfers or otherwise disposes all or any
part of the Shares, the Designated Assets or the Business
subsequent to the Closing to any person or persons not
affiliated with Purchaser, Purchaser may, with the prior
written consent of Sellers (which shall not be unreasonably
withheld), assign its rights hereunder in whole or in part
to such person or persons.
Section 11.2 Notices. All notices, requests,
claims, demands and other communications hereunder shall be
in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by
facsimile or "overnight" courier service, to the other party
as follows:
If to Purchaser:
Roussel Uclaf S.A.
102, Route de Noisy
93235 Romainville Cedex
France
Fax: 011-331-4991-3916
Attention: General Counsel
with copies to:
Hoechst AG
65926 Frankfurt am Main
Federal Republic of Germany
Fax: 011-49-69-319-113
Attention: Peter Schuster
and
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Fax: 212-735-2000
Attention: Eileen Nugent Simon
If to Sellers:
Dow Latin America
Chacara Santo Antonio
Rua Alexandre Dumas, 1671
01065 Sao Paulo, Brazil
Fax: 55-11-546-9650
Attention: General Counsel
with copies to:
The Dow Chemical Company
2030 Dow Center
Midland, Michigan 48674
Fax: (517) 638-9397
Attention: General Counsel
and
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Fax: 312-701-7711
Attention: Edward S. Best
or to such other address as any party shall have designated
by notice in writing to the other parties.
Section 11.3 Governing Law. This Agreement shall
be governed by and construed in accordance with the law of
the State of Delaware, without regard to the principles of
conflicts of law thereof.
Section 11.4 Parties in Interest. This Agreement
shall be binding upon and inure solely to the benefit of
each party hereto and its successors and permitted assigns,
and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under
or by reason of this Agreement, except for the right to any
indemnification to which members of the Purchaser Group and
Seller Group may be entitled under Article IX hereof.
Section 11.5 Specific Performance. The parties
hereto agree that irreparable damage would occur in the
event that any provision of this Agreement relating to the
transfer of the Designated Assets or contained in Article VI
(other than Sections 6.1, 6.2, 6.4, 6.5, 6.9 or 6.10
thereof) was not performed in accordance with the terms
thereof and that the parties shall be entitled to specific
performance of the terms thereof, in addition to any other
remedy at law or in equity.
Section 11.6 Severability. The provisions of
this Agreement shall be deemed severable and the invalidity
or unenforceability of any provision shall not affect the
validity and enforceability of the other provisions hereof.
If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and
purpose of such invalid and unenforceable provision and (b)
the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 11.7 Extension; Waiver. Sellers, on the
one hand, and Purchaser, on the other hand, may (i) extend
the time for the performance of any of the obligations or
other acts of the other party, (ii) waive any inaccuracies
in the representations and warranties of the other party
contained herein or in any document, certificate or writing
delivered pursuant hereto, or (iii) waive compliance by the
other party with any of the agreements or conditions
contained herein. Any agreement on the part of any party
hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of
such party. The failure of any party hereto to assert any
of its rights hereunder shall not constitute a waiver of
such rights.
Section 11.8 Amendment. This Agreement may not be
amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 11.9 Descriptive Headings. The
descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
Section 11.10 Certain Definitions. For purposes
of this Agreement, the term:
(a) "affiliate" of a person means a person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "control" (including the terms "controlled
by" and "under common control with") means the possession,
directly or indirectly or as trustee or executor, of the
power to direct or cause the direction of the management
policies of a person, whether through the ownership of
stock, as trustee or executor, by contract or credit
arrangement or otherwise;
(c) "knowledge" with respect to Sellers means the
knowledge of Sellers and the Transferred Subsidiaries;
(d) "person" means an individual, corporation,
partnership, association, trust, unincorporated
organization, other entity or group (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934); and
(e) "subsidiary" or "subsidiaries" of any person
means any corporation, partnership, joint venture or other
legal entity of which such person (either alone or through
or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity
interests the holder of which is generally entitled to vote
for the election of the board of directors or other
governing body of such corporation, partnership, joint
venture or other legal entity.
Section 11.11 Counterparts. This Agreement may
be executed in two or more counterparts, each of which shall
be deemed to be an original, but all of which shall
constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its
representatives thereunto duly authorized, all as of the day
and year first above written.
LATIN AMERICAN PHARMACEUTICAL INC.
By: /s/ Oscar Novo
Name: Oscar Novo
Title: President
DOW QUIMICA ARGENTINA S.A.
By: /s/ Juan Pedro Ziemke
Name: Juan Pedro Ziemke
Title: President
DOW QUIMICA MEXICANA S.A.
By: /s/ Victor Bermudez
Name: Victor Bermudez
Title: Attorney-in-fact
DOW PRODUCTOS QUIMICOS LTDA
By: /s/ John Lillich
Name: John Lillich
Title: Attorney-in-fact
DOW PRODUCTOS QUIMICOS LTDA
By: /s/ Charles J. Kalil
Name: Charles J. Kalil
Title: Attorney-in-fact
MINERACAO E QUIMICA DE NORDESTE
By: /s/ John Lillich
Name: John Lillich
Title: Attorney-in-fact
MINERACAO E QUIMICA DE NORDESTE
By: /s/ Charles J. Kalil
Name: Charles J. Kalil
Title: Attorney-in-fact
DOW QUIMICA S.A.
By: /s/ Oscar Novo
Name: Oscar Novo
Title: President
DOW QUIMICA S.A.
By: /s/ Charles J. Kalil
Name: Charles J. Kalil
Title: Director
MERRELL LEPETIT FARMACEUTICA
INDUSTRIAL LTDA
By: /s/ Nelson N. Libbos
Name: Nelson N. Libbos
Title: Director
MERRELL LEPETIT FARMACEUTICA
INDUSTRIAL LTDA
By: /s/ Sergio Rosengarten
Name: Sergio Rosengarten
Title: Director
LABORATORIOS LEPETIT DE MEXICO S.A.
DE C.V.
By: /s/ Victor Bermudez
Name: Victor Bermudez
Title: Attorney-in-fact
ROUSSEL UCLAF S.A.
By: /s/ Jean-Pierre Godard
Name: Jean-Pierre Godard
Title: President du Directoire
EXHIBIT 4
Hoechst Information
for the press
May 4, 1995
Hoechst signs agreements on acquisition of Marion Merrell
Dow Jurgen Dormann: Pharmaceuticals is our largest and most
important field of activity Worldwide expansion of pharmaceuticals
FRANKFURT; KANSAS CITY, MISSOURI; MIDLAND, MICHIGAN
On Thursday, May 4, 1995, the Hoechst Group, Marion
Merrell Dow Inc. (MMD) and The Dow Chemical Company
signed the agreements under which Hoechst will acquire
the whole of MMD. Hoechst will pay around US $7.1
billion for this purchase. Completion of the acquisition
now depends on the approval of the responsible anti-trust
authorities in the US and Europe.
The Hoechst Group's pharmaceutical sales in 1994 amounted
to DM 10.3 billion. It employed around 33,500 people in
this sector. Hoechst spent more than DM 1.7 billion on
research and development in the field of new drugs.
GLOBAL EXPANSION OF THE ACTIVITY WITH THE GREATEST
STRATEGIC IMPORTANCE
Hoechst intends to concentrate on its core activities and
further strengthen its business in the pharmaceutical,
agricultural and industrial chemical sectors. The most
important role in this regard will be played by the
pharmaceutical business area, which Hoechst intends to
expand worldwide: from diagnostics and plasma products to
innovative single-source drugs through to generics.
With the planned acquisition of Marion Merrell Dow,
Hoechst wants to further strengthen its position,
especially in the US, the largest pharmaceutical market
in the world in terms of volume.
Hoechst has not up to now succeeded in establishing a
strong position in North America by its own efforts. As
Jurgen Dormann, Chairman of the Board of Management of
Hoechst AG, put it: "We therefore need a partner with an
efficient sales and distribution network, good contacts
with the FDA, one who can provide us with access to the
innovative field of biotechnological research in the US,
a company with strong clinical development in the
country, who meaningfully complements our own product
range and is a reputable partner of the large local
managed care organizations. Among the new companies that
could even be considered for an acquisition, Marion is
the candidate which is best suited."
MARION - ONE OF THE MOST REPUTABLE SUPPLIERS OF THE
MANAGED CARE ORGANIZATIONS IN THE US
Marion is one of the 15 largest pharmaceutical companies
in the US and one of the most reputable suppliers of the
large managed care organizations in the country. With
9,000 employees, some 1,000 of whom are members of the US
field force, Marion last year achieved sales of US $ 3.1
billion and a net profit of US $438 million. North
America accounts for 66 percent of sales and Europe and
the Pacific Region for 17 percent respectively.
Marion's activities are focused on the key indication
fields of cardiovascular diseases,
immunology/rheumatology, diseases of the stomach,
allergies and diseases of the central nervous system.
Expenditure on research and development in 1994 amounted
to US $462 million. Marion's indication fields fit well
into the activities of Hoechst and Roussel.
"Strategically, bringing these companies together will
enable us to better serve health care customers and
millions of patients worldwide," said Fred W. Lyons, Jr.,
chairman and chief executive officer of Marion Merrell
Dow. With a strong commitment to research and
development, plus organization that is addressing the
changing needs of health care, we will have the critical
mass, geographic reach and depth of product line to be
formidable competitor in the global marketplace."
COMPANIES COMPLEMENT EACH OTHER IN PRODUCT PORTFOLIO AND
REGIONAL STRUCTURE
As Dr. Karl-Gerhard Seifert, Hoechst AG board member
responsible for pharmaceuticals, emphasized: "We are
convinced that the product portfolio and regional
structure of the companies complement each other well.
The considerable synergies will result in a successful
partnership between Hoechst Roussel and Marion."
ROUSSEL UCLAF ACQUIRES DOW PHARMACEUTICAL ACTIVITIES IN
LATIN AMERICA
Dow has operated its pharmaceutical activities in Latin
America independently, and has not integrated them into
Marion. Dow's pharmaceutical sales in Latin America in
1994 amounted to around US $ 175 million. On Thursday it
was also agreed that Roussel Uclaf will acquire this
business for a price of US $ 140 million.
GLOBAL PHARMACEUTICAL BUSINESS WILL BE KNOWN AS HOECHST
MARION ROUSSEL
Hoechst's pharmaceutical activities will in future be
known as Hoechst Marion Roussel. The entire Hoechst
Group pharmaceutical business will be headed by Jean-
Pierre Godard, his deputy will be Richard J. Markham, at
present the President and Chief Operating Officer of
MARion Merrell Dow.
Hoechst Marion Roussel will be sub-divided into four
geographical regions: North America, Europe/Africa, Asia
and Latin America. The North American pharmaceutical
business will be based in Kansas City.
EXHIBIT 5
MARION MERRELL DOW INC. LETTERHEAD
N E W S
FOR IMMEDIATE RELEASE
CONTACT: David M. Thompson
or Richard M. Johnson
(816) 966-4000
COMPANIES ANNOUNCE DEFINITIVE AGREEMENTS
FOR HOECHST TO ACQUIRE MARION MERRELL DOW
FRANKFURT, GERMANY; KANSAS CITY, MO.; and MIDLAND, MI.,
May 4, 1995 -- Hoechst AG, Marion Merrell Dow Inc. and
The Dow Chemical Company today announced the signing of
definitive agreements for Hoechst to acquire all of the
outstanding shares of Marion Merrell Dow, pending
regulatory approvals, for a basic price of U.S. $25.75
per share in cash. Upon completion, the acquisition will
expand Hoechst's global pharmaceutical business to annual
sales of approximately U.S. $10 billion, ranking among
the world's largest.
The acquisition is planned in two stages:
* Hoechst Corporation, a U.S. subsidiary of
Hoechst AG, and Dow Chemical signed an agreement for
Hoechst to purchase from Dow approximately 197 million
shares of Marion Merrell Dow at a price of U.S. $25.75
per share, or about U.S. $5.1 billion. Dow's interest
amounts to 71 percent of the 277 million shares
outstanding.
* Marion Merrell Dow shareholders will vote on a
proposal to merge the company with Hoechst Corporation,
which will result in Marion Merrell Dow becoming a wholly
owned subsidiary of Hoechst. As a result of the merger,
minority shareholders (who currently own approximately 80
million shares or 29 percent of the stock) will receive
merger consideration of U.S. $25.75 per share in cash,
plus an additional pro rata dividend that depends on the
timing of the closing of the merger.
GLOBAL PHARMA BUSINESS TO BE KNOWN AS HOECHST MARION
ROUSSEL
Following completion of the acquisition, Hoechst will
conduct its global pharmaceutical business under the name
Hoechst Marion Roussel.
The senior leadership of the new company will include
Jean-Pierre Godard, currently head of Hoechst's
pharmaceutical division, who will serve as the head of
pharmaceuticals for Hoechst Marion Roussel, and Richard
J. Markham, currently president and chief operating
officer of Marion Merrell Dow, who will assume the
position of deputy head of pharmaceuticals.
Hoechst Marion Roussel will be organized into four
geographic regions to meet customer needs in North
America, Europe/Africa, Asia and Latin America. The
North American business unit will be headquartered in
Kansas City, Mo.
NO CAPITAL INCREASE AT HOECHST AG FOR THE LARGEST
ACQUISITION
Hoechst's acquisition of Marion will cost a total of
approximately U.S. $7.1 billion, the largest U.S.
acquisition to date by a German company.
The purchase is being financed partly by means of a U.S.
$2.5 billion capital increase at Hoechst Corporation. No
capital increase at Hoechst AG is required for this
purpose. This amount is covered by liquid assets
available within Hoechst. The remaining sum,
approximately U.S. $4.6 billion, will be financed by
Hoechst Corporation through external loans.
The Hoechst companies are an international network of
innovative and customer-oriented companies. Global sales
totaled DM 49.6 billion (U.S. $30.6 billion) in 1994, and
Hoechst companies ranked among the leading suppliers in
the pharmaceutical, agricultural and industrial chemical
sectors of Europe, the Americas and Asia.
The current pharmaceutical division, Hoechst Roussel
Pharma, comprises the pharmaceutical businesses of
Hoechst AG and Roussel Uclaf S.A., in which Hoechst owns
a 56 percent share. Hoechst's pharmaceutical sales last
year amounted to DM 10.3 billion (U.S. $6.3 billion),
with about 60 percent of those sales in Europe, employing
about 33,500 associates worldwide.
The largest-selling products of Hoechst Roussel Pharma
are in therapeutic fields such as infections, vascular
and cardiovascular diseases, and diabetes. Hoechst
invested more than DM 1.7 billion (U.S. $1.1 billion)
last year on research and development of new drugs.
GLOBAL EXPANSION OF PHARMACEUTICALS HAS GREATEST
STRATEGIC IMPORTANCE
Hoechst has embarked on a structural and strategic
reorientation to concentrate on core activities and
further strengthen its businesses in the pharmaceutical,
agricultural and industrial chemical sectors. The most
important role will be played by the pharmaceutical
division, which Hoechst intends to expand worldwide --
including innovative single-source drugs, diagnostics,
plasma products and generics.
With the planned acquisition of Marion Merrell Dow,
Hoechst particularly seeks to strengthen its position in
North America. The United States is not only the largest
area for pharmaceutical sales -- the U.S. also is where
the world's standards are set for drug approval and for
pharmaceutical manufacturing.
Juergen Dormann, CEO and Chairman of the Board of
Management of Hoechst AG, said: "We need a partner with
a strong North American sales network, contracts with the
regulatory authorities, access to the innovative field of
biotechnology research in the United States, a
complementary product line and a strong clinical research
effort. As the health care market grows tougher and more
competitive, we also want to join with a company that is
a respected ally of U.S. managed health care
organizations. Marion is the best candidate to help us
achieve these strategic goals."
MARION: ONE OF THE MOST RESPECTED SUPPLIERS OF HEALTH
CARE ORGANIZATIONS
Marion is one of the 15 largest pharmaceutical companies
in the United States and one of the most respected
suppliers of the large health care organizations in the
country. With approximately 9,000 associates, including
over 1,000 in its U.S. field sales force, Marion last
year achieved sales of U.S. $3.1 billion and a net profit
of U.S. $438 million. North American sales were 66
percent of Marion's 1994 sales, Europe was 17 percent and
the Pacific Region was 17 percent.
Marion's activities are focused on the therapeutic fields
of cardiovascular diseases, allergies and respiratory
disease, gastrointestinal, and diseases of the central
nervous system. Expenditure on research and development
in 1994 amounted to U.S. $462 million. Marion's
activities complement those of Hoechst and Roussel well.
"Strategically, bringing these companies together will
enable us to better serve health care customers and
millions of patients worldwide," said Fred W. Lyons, Jr.,
chairman and chief executive officer of Marion Merrell
Dow. "With a strong commitment to research and
development, plus an organization that is addressing the
changing needs of health care, we will have the critical
mass, geographic reach and depth of product line to be a
formidable competitor in the global marketplace."
COMPANIES HAVE COMPLEMENTARY PRODUCT PORTFOLIOS, REGIONAL
STRUCTURE
As Dr. Karl-Gerhard Seifert, the member of the Hoechst AG
board who is responsible for pharmaceuticals, emphasized:
"We are convinced that the product portfolios and
regional structures of the companies complement each
other well. The considerable synergies will result in a
successful partnership between Hoechst-Roussel and Marion."
Dow Chemical has maintained its pharmaceutical activities
in Latin America independent of Marion. Hoechst and Dow
Chemical also agreed today that Roussel Uclaf will
acquire the Latin American pharmaceutical business, with
sales of U.S. $175 million, from Dow.
TRANSITION PROCESS TO BEGIN IMMEDIATELY
The integration of Marion confronts Hoechst and Roussel,
and the management of the pharmaceutical division, with a
demanding task. The aim of this integration is to
establish a joint business with a uniform, globally
responsible management structure that preserves the
historic strengths of the various companies involved.
This integration will be accomplished through a series of
task forces, with representation from Hoechst's
pharmaceutical subsidiaries and Marion Merrell Dow.
The recommendations of the task forces will be reviewed
by a steering committee chaired by Mr. Dormann. Mr.
Lyons will be vice chairman of the committee.
Announcements on additional management appointments at
Hoechst Marion Roussel, and the recommendations of the
various merger transition task forces, will be made as
appropriate following their review by the steering
committee.
EXHIBIT 6
INSURANCE SEPARATION AGREEMENT
This AGREEMENT, dated as of the 3rd day of May,
1995, is made by and among The Dow Chemical Company
("Dow"), Hoechst Corporation ("Hoechst"), Marion Merrell
Dow Inc. ("MMD") and Dow's three wholly-owned insurance
subsidiaries -- Dorinco Reinsurance Company ("Dorinco"),
Dorintal Reinsurance Ltd. and Timber Insurance Ltd.
(collectively, the "Dow Insurance Subsidiaries") --
hereinafter referred to collectively as "the Parties,"
and shall be binding upon the successors and assigns of
each.
WHEREAS, Dow has, for many years, used the
combined purchasing power of itself and its subsidiaries
to purchase insurance to protect Dow and its subsidiaries
against the risk of certain losses by reason of legal
liability in the U.S. and elsewhere, thus enabling Dow
and its subsidiaries to obtain for themselves enhanced
levels of coverage in return for their premium dollars;
WHEREAS, the aforementioned policies of
insurance purchased by Dow provide coverage to, inter
alia, the Named Insured, which is defined to include not
only Dow but also any domestic or foreign corporation
(not specifically excluded) in which Dow owns, or may
acquire, directly or indirectly, more than 50% of the
combined voting power (later revised to 60% or more of
the combined voting power);
WHEREAS, Dow's subsidiaries have shared in the
purchase costs of the aforementioned policies by paying
to Dow an allocated share of the total premium based in
part on the subsidiaries' respective levels of loss
activity;
WHEREAS, Dow acquired a majority voting
interest in the shares of Merrell Dow Pharmaceuticals,
Inc. ("MDPI") on or about March 10, 1981, and MDPI
thereby became a Named Insured under all Dow liability
insurance policies effective on or after that date;
WHEREAS, Dow and its wholly-owned holding
companies acquired a majority voting interest in the
shares of MMD on or about December 2, 1989, and MMD
thereby became a Named Insured under all Dow liability
insurance policies effective on or after that date;
WHEREAS, as part of the transaction in which
Dow acquired a majority interest in MMD, the shares of
MDPI were transferred to MMD;
WHEREAS, some of the insurance policies
purchased by Dow contain aggregate limits of liability
which are reinstated by payment of an additional premium
by the Named Insured;
WHEREAS, some of the insurance policies
purchased by Dow contain a premium feature which is
partially retrospective and loss-responsive in nature;
i.e., the amount of the premium is determined, in part,
by the amounts paid by the insurer, plus applicable
reserves established by the insurer;
WHEREAS, some of the insurance policies
purchased by Dow contain a deductible obligation or a
self-insured retention, whereby the Named Insured must
pay certain amounts;
WHEREAS, the costs of purchasing various types
of insurance from various companies may be affected by
loss experience in a variety of ways;
WHEREAS, Hoechst has entered into an agreement
to acquire Dow's stock in MMD and Roussel Uclaf S.A. has
entered into an agreement to acquire certain Latin
American pharmaceutical businesses of various Dow
subsidiaries;
WHEREAS, Hoechst has insurance subsidiaries
named Hoechst Celanese Insurance Company and Elwood
Insurance Limited and Hoechst A.G. has an insurance
subsidiary named Hoechst Versicherungs A.G.
(collectively, the "Hoechst Insurance Subsidiaries");
WHEREAS, the Parties have divergent views and
interests which they wish to resolve by the agreements
set forth below concerning their respective obligations
to make certain payments and bear certain costs,
including but not limited to reinstatement premiums,
retrospective premiums, deductibles and retentions, in
the event claims are made or suits are brought against
MMD and/or its subsidiaries which are or may be covered
by various insurance policies purchased by Dow;
WHEREAS, the Parties further desire to
accomplish a partial separation of their insurance
interests and to attain a degree of certainty about their
respective rights and obligations with respect to
insurance coverage and their rights and obligations in
the event that existing insurance is insufficient to
cover certain claims against them.
NOW, THEREFORE, the Parties hereby agree as
follows:
1. MMD shall designate its new insurance
subsidiary ("New Sub") or one of the Hoechst Insurance
Subsidiaries (with the subsidiary selected being referred
to herein as "Newco"), which will reinsure the Dow
Insurance Subsidiaries with respect to all claims made or
suits brought against MMD and/or its subsidiaries which
are insured or reinsured, directly or indirectly, by the
Dow Insurance Subsidiaries under policies identified in
Appendix A hereto. The contract of reinsurance to be
issued by Newco (the "Newco Reinsurance Contract") will
be in a form commonly accepted in the domestic
reinsurance industry, written in such manner as to allow
the Dow Insurance Subsidiaries to take "reinsurance
credit" on their statutory reports. The Newco
Reinsurance Contract will be effective January 1, 1995.
Newco shall not be liable under the Newco Reinsurance
Contract for any sums paid by the Dow Insurance
Subsidiaries in respect of any of the claims identified
in Appendix B hereto [DOW To Review], nor for any sums
paid by Dorinco prior to January 1, 1995 in respect of
claims submitted by MMD prior to January 1, 1995.
2. The amount to be paid to Newco by the Dow
Insurance Subsidiaries as a premium for the reinsurance
required by paragraph 1 is $45,000,000 payable after the
execution of the Newco Reinsurance Contract and the later
of the date Hoechst purchases Dow's stock in MMD as
contemplated by the Stock Purchase Agreement referred to
in Paragraph 7(a) hereof (the "Effective Date") or, if
Newco is New Sub, three business days after notice to the
Dow Insurance Subsidiaries of receipt by Newco of its
Certificate of Authority.
3. This Paragraph 3 shall apply only if New
Sub is designated to be Newco. Commencing upon receipt
by New Sub of its Certificate of Authority, Dorinco
agrees to assist New Sub, at New Sub's election, by
retroceding to New Sub certain third party reinsurance.
Prior to the year-end renewal period, and at other times
as may be appropriate, Dorinco and New Sub shall meet and
New Sub shall be given the opportunity to review the
proposed Dorinco third party book of business. New Sub
shall indicate to Dorinco at that time the Dorinco lines
of third party business, if any, in which it seeks to
participate by quota share retrocession and the specific
amount of ceded premiums it wishes to accept on each line
of third party business; provided, however, that in no
event shall Dorinco be required to cede more than
$25,000,000 in premium on all lines of business in the
aggregate to New Sub. New Sub shall also provide Dorinco
such other information as Dorinco may reasonably require
to determine the nature and extent of New Sub's desired
level of quota share participation by retrocession in the
specified lines of third party business. Dorinco may
write additional reinsurance on the lines of business
designated by New Sub and will exercise its reasonable
best efforts to cede to New Sub the levels of premiums
indicated by New Sub on the lines of third party business
designated by New Sub, with New Sub assuming its quota
share of premiums, losses and expenses with respect to
the reinsurance of the selected lines. Such contracts of
reinsurance between Dorinco and New Sub will be in a form
commonly accepted in the domestic reinsurance industry,
written in such manner as to allow Dorinco to take
"reinsurance credit" on its statutory reports. In return
for the retrocessions provided by Dorinco, New Sub shall
pay to Dorinco a ceding commission equal to one percent
of the insurance premiums retroceded to New Sub by
Dorinco. Dorinco agrees to provide New Sub with the
assistance referenced in this Paragraph 3 for an initial
period of three years commencing from New Sub's receipt
of its Certificate of Authority, extendable for an
additional two years upon mutual agreement of Dorinco and
New Sub. New Sub shall have the right to cancel all or
any part of any retrocession from Dorinco, effective at
the conclusion of any calendar year, provided notice of
intent to cancel is received by Dorinco at least six
months in advance.
4. (a) MMD shall reimburse and indemnify Dow
for any and all reinstatement premiums, retrospective
premiums, deductibles, retentions, and any other costs
incurred and paid by Dow to its insurers under any
insurance or reinsurance policy issued to Dow prior to
the Effective Date (including policies issued by Dow
Insurance Subsidiaries), which result from claims made by
MMD and/or its subsidiaries; provided, however, that MMD
shall not be required to reimburse or indemnify Dow
pursuant to this Paragraph 4 for any amount which will
otherwise be paid to Dow or its subsidiaries by Newco
pursuant to the Newco Reinsurance Contract or for costs
that Dow must pay under Paragraphs 6 through 9 below.
(b) In the event that MMD or one of its
subsidiaries elects to report a claim or circumstance
under the 1994-1995 ACE Insurance Company, Ltd. ("ACE")
insurance policy bearing policy number DOW 5115/4 ("the
1994-1995 ACE Policy"), with respect to claims by MMD or
one of its subsidiaries, then MMD agrees to make all Loss
Recoverable Payments, as defined in the 1994-1995 ACE
Policy, which result from amounts paid by ACE to MMD or
one of its subsidiaries. Except as set forth elsewhere
in subparagraphs 4(a) and (b), any other premium
adjustments on insurance policies purchased or renewed by
Dow on or after the Effective Date shall be the sole
responsibility of Dow and will not be chargeable to MMD
or one of its subsidiaries.
5. Dow shall provide MMD with quarterly
reports indicating any amounts paid by Dow and due from
MMD pursuant to Paragraph 4. MMD shall pay Dow any
undisputed amount specified in any such report within 30
days of MMD's receipt of any such report. MMD shall,
upon reasonable notice to Dow, have the right to audit
documentation, including relevant invoices and checks,
supporting such reports. Any disputes under Paragraph 4
will be subject to binding arbitration.
6. One of the Dow Insurance Subsidiaries
(that Dow Insurance Subsidiary is referred to hereafter
as the "Dow Insurance Subsidiary") will issue an
insurance policy in form and substance reasonably
satisfactory to Hoechst, Dow and the Dow Insurance
Subsidiary, which policy shall include the terms and
conditions described below, and shall indemnify the
Covered Entities (as defined below) against Losses (as
defined below) incurred and paid by the Covered Entities
in excess of an aggregate of $150 million of Losses
arising from Claims (as defined below) against Covered
Entities now-pending or asserted during the fifteen years
subsequent to the Effective Date resulting from or
relating to an anti-nauseant drug sold under trademarks
Bendectin, Debendox, Lenotan, Merbental and Dectamin
("the Bendectin Policy"). It is agreed that any
expenditures by MMD before the date of this Agreement
made on account of Claims resulting from or related to
Bendectin shall not be "Losses" unless they are included
on Schedule 6(a). Such expenditures on Schedule 6(a)
shall be Losses only to the extent that such expenditures
are verified by Dow and not paid by insurance.
7. The Bendectin Policy shall include the
following terms and conditions:
(a) "Covered Entities" shall include (i)
Hoechst A.G. and its subsidiaries and affiliates to
the extent that they own directly or indirectly any
of the entities or businesses acquired by Hoechst in
its acquisition of MMD pursuant to the Agreement and
Plan of Merger, dated as of May 3, 1995, by and
among Hoechst, H Pharma Acquisition Corp.
("Acquisition"), Dow and MMD and the Stock Purchase
Agreement, dated as of May 3, 1995, by and among
Hoechst, Acquisition, Dow and certain subsidiaries
of Dow (the "Stock Purchase Agreement"); (ii)
Roussel Uclaf S.A. ("Roussel Uclaf") and its
affiliates and subsidiaries to the extent that they
own directly or indirectly any of the entities or
businesses acquired directly or indirectly by
Roussel Uclaf pursuant to the Purchase Agreement,
dated May 3, 1995 among Latin American
Pharmaceutical Inc., Dow Quimica Argentina S.A., Dow
Quimica Mexicana S.A., Dow Productos Quimicos LTDA,
Mineracao e Quimica de Nordeste, Dow Quimica S.A.,
Merrell Lepetit Farmaceutica Industrial LTDA,
Laboratorios Lepetit de Mexico S.A. de C.V. and
Roussel Uclaf (the "LAPG Purchase Agreement");
(iii) MMD and all of its present and former
subsidiaries; and (iv) all successors and assigns of
the entities referred to in clauses (i), (ii) and
(iii) above; provided, however, that their Claims
under the Bendectin Policy must relate to the
products sold prior to the Effective Date under the
trademarks Bendectin, Debendox, Lenotan, Merbental
and Dectamin (collectively "Bendectin").
(b) The Bendectin Policy will be subject
to an aggregate limit of liability of $250 million
so that the Dow Insurance Subsidiary that issues the
Bendectin Policy will have no obligation under the
Bendectin Policy to pay more than $250 million.
This limit of liability shall not be reduced by any
costs or expenses of the Dow Insurance Subsidiaries
in administration of claims under the Bendectin
Policy or by salaries or other expenses of employees
of Dow or the Dow Insurance Subsidiaries.
(c) The Bendectin Policy will be subject
to a per occurrence limit of $250 million.
(d) "Claims" shall include only those
claims made by specific individuals (including,
without limitation, class actions) arising from or
derived from use of a product (including, without
limitation, claims of loss of consortium or
inherited disease or birth or other defect or
increased risk of disease or birth or other defect
inherited, directly or indirectly from a user of
such product). Subject to the limitations in the
immediately preceding sentence, "Claims" shall
include those alleging, without limitation, bodily
injury, mental and emotional injury (including fear
of cancer or other disease or defect and increased
risk of cancer or other disease or defect), as well
as claims seeking medical monitoring.
(e) "Loss" or "Losses" shall include all
out-of-pocket payments with respect to settlements,
compensatory, statutory and punitive damages, and
hospital and medical expenses, as well as fees,
costs and expenses of the investigation, adjustment,
defense and appeal of any Claim. "Losses" shall not
include costs or expenses of Covered Entities in
administration of Claims or salaries of employees of
the Covered Entities.
(f) Subject to subparagraph 7(j) below,
beginning on the Effective Date and on each of the
fourteen subsequent anniversaries of the Effective
Date, MMD shall pay to the Dow Insurance Subsidiary
that issued the Bendectin Policy an annual premium
of $100,000.
(g) Subject to the remainder of this
subparagraph, the Covered Entities have the sole
right to control the defense of all Claims. Before
the $150 million retention under the Bendectin
Policy is exhausted, MMD will give notice to and
consult with Dow and the Dow Insurance Subsidiary
concerning settlements of Claims arising from or
related to Bendectin in excess of $5 million. The
Covered Entities will not settle any Claims arising
from or related to Bendectin after the $150 million
retention under the Bendectin Policy is exhausted
without the consent of Dow Insurance Subsidiary,
which will not be unreasonably withheld. In the
event that the Covered Entity and the Dow Insurance
Subsidiary cannot agree on an appropriate settlement
of the Claim, the matter shall be submitted to
binding arbitration before a practitioner
experienced in product liability defense or a
retired judge, in either case mutually agreeable to
the Dow Insurance Subsidiary and the Covered Entity.
In the event the Dow Insurance Subsidiary and the
Covered Entity cannot agree upon the selection of an
arbitrator, the Dow Insurance Subsidiary and the
Covered Entity shall jointly ask JAMS/Endispute, or
its successor, to select a qualified arbitrator.
The decision of the arbitrator as to the action to
be taken shall be final and binding on both the Dow
Insurance Subsidiary and the Covered Entity.
(h) The term "Loss" shall not include any
payment by the Covered Entities that is actually
reimbursed by any third party insurer (net of charge
backs to the Covered Entities of any kind, which
charge backs shall include, without limitation,
reinstatement premiums, retrospective premiums,
deductibles, retentions, any payments by MMD or its
subsidiaries under paragraph 4 above and any other
costs incurred to obtain payment under any insurance
policy) pursuant to insurance in existence on the
Effective Date (other than the Bendectin Policy or
insurance that is ceded by the Dow Insurance
Subsidiaries to Newco under the Newco Reinsurance
Contract). The Dow Insurance Subsidiary shall have
the right to decline to allow a deduction from
insurance recoveries for the costs of further
prosecution by the Covered Entities of an insurance
coverage action which the Dow Insurance Subsidiary
deems to be unreasonable; provided, however, that
this sentence applies only to the extent that the
fees and costs of such insurance coverage action
exceed the Covered Entity's recovery. The Bendectin
Policy shall be null and void with respect to a
particular Loss to the extent that such Loss is
covered and paid (after giving effect to all
applicable charge backs of the types described
above) by any insurance other than the Bendectin
Policy and insurance ceded by Dow or its
subsidiaries to Newco under the Newco Reinsurance
Contract.
(i) A Claim relating to conduct of a
business or entity acquired by any of the Covered
Entities after the Effective Date, except to the
extent that such business or entity is or becomes a
successor or assign of the liabilities of any of
the Covered Entities, shall not give rise to a Loss
under this Agreement or the Bendectin Policy. In
connection with any sale or transfer of all or part
of any of the Covered Entities, the Covered Entities
in their sole discretion, may assign, in whole or in
part, the rights to, along with related obligations
under, the Bendectin Policy to such buyer or
transferee.
(j) Hoechst shall have the right to
cancel the Bendectin Policy at any time, in which
case the Dow Insurance Subsidiary that issued the
Bendectin Policy shall refund to Hoechst the pro
rata portion of the $100,000 annual premium
allocated to the remainder of the policy year, and
the issuer of the Bendectin Policy shall have no
further liability or obligation to make any future
payment of any kind under the Bendectin Policy,
except with respect to Claims asserted against the
Covered Entities and noticed to the Dow Insurance
Subsidiary on or before the date of cancellation.
(k) The determination of which Dow
Insurance Subsidiary shall issue the Bendectin
Policy required by Paragraphs 6 and 7 shall be made
by Dow and the Dow Insurance Subsidiaries solely in
their discretion, and Dow shall guaranty the payment
obligations of the Dow Insurance Subsidiary that
issues the Bendectin Policy. If, and only if, the
full $250 million in coverage available under the
Bendectin Policy has been paid so that the $250
million aggregate limit of that policy is exhausted,
Dow agrees that it then will reimburse the Covered
Entities for 50% of any additional payments made by
the Covered Entities for Losses arising from Claims
against Covered Entities resulting from or related
to Bendectin which are now-pending or asserted
within the 15-year period ending on the fifteenth
anniversary of the Effective Date.
8. Gruppo Lepetit, S.p.A. (with its present
and former subsidiaries, and all of their successors and
assigns, referred to herein as "Lepetit") is a subsidiary
of MMD. While Dow does not believe that Lepetit has any
material exposure to Claims (as defined in Paragraph
7(d)) resulting from its sale or distribution of breast
implants, in order to facilitate the sale of MMD and its
subsidiaries to Hoechst and the closing of the LAPG
Purchase Agreement, Dow will pay to Hoechst or its
designee, subject to the limitations set forth below, $55
millon on the Effective Date, which may be used by
Hoechst for any purpose. In connection with this
payment, Hoechst shall establish an account for record-
keeping purposes only with the following characteristics:
(a) For record of account purposes, the
initial amount of the account shall be $55 million.
(b) For record of account purposes, the
account, as adjusted from time to time pursuant to
subparagraph (c) below, shall bear interest
compounded annually at an interest rate equal to the
average yield-to-maturity of a U.S. treasury bond
with 20 years remaining to maturity in effect as of
the fifth business day prior to the Effective Date.
(c) For record of account purposes, if
and when Lepetit has made payments for Losses
arising from Claims that result from or relate to
breast implants and that arise from activities of
Lepetit prior to the Effective Date ("Breast Implant
Claims"), the account shall be reduced by the amount
of such payments. An expenditure will not be a
payment for purposes of the preceding sentence to
the extent Lepetit is reimbursed by any third party
insurance or pursuant to Paragraph 9 hereof (other
than insurance ceded by the Dow Insurance
Subsidiaries to Newco under the Newco Reinsurance
Contract) in existence on the Effective Date (it
being agreed that any such reimbursement shall be
reduced by the amount of all applicable charge backs
of the types referred to in paragraph 7(h) above).
There shall be no other deductions from the account.
Hoechst shall on a yearly basis, beginning one year from
the Effective Date, give Dow a statement of this account.
Dow shall have the right to audit the account on a yearly
basis. On the first business day following the twentieth
anniversary of the Effective Date, Hoechst shall pay Dow
an amount equal to any balance in the account net of
reserves established by an actuarial estimate performed
by a mutually agreed-upon independent actuary with
respect to each then-pending Claim. Upon final
resolution of any Claim for which a reserve has been
established, an amount equal to the remaining reserve, if
any, after payment of all Losses applicable to such
Claim, shall be paid to Dow. When all such reserved
Claims have been finally resolved, an amount equal to the
remaining reserve, if any, shall be paid to Dow
immediately. In the event that the total reserve
established at the end of 20 years proves insufficient to
cover the total Losses for the open Claims reserved at
the end of 20 years, Dow shall be obligated to pay to
Hoechst an amount equal to the deficiency of the reserve
but in no case more than the amount that was refunded to
Dow as provided above after the expiration of the twenty
year period. In the event that Hoechst receives a
recovery from an insurer with respect to a Loss or
portion of a Loss which was previously charged against
the record account, the amount of such recovery (but not
to exceed the portion of the Loss previously charged
against the account) shall be paid to Dow by Hoechst.
9. Dow has in effect a $50 million excess
insurance policy (Policy No. XLUMB-00167) issued by XL
Insurance Company, Ltd. ("XL") for the policy year 1993-
1994 ("the 1993-1994 XL Policy"). Lepetit and MMD are
insured under the 1993-1994 XL Policy, and Dow, various
Dow subsidiaries other than Lepetit and MMD, and Lepetit
and MMD each believe that they are entitled to coverage
under the 1993-1994 XL Policy. Dow shall pay any charges
required to extend the period for Lepetit to report
claims resulting from or related to Breast Implant Claims
under the 1993-1994 XL Policy. In the event that Dow or
any of its subsidiaries or affiliates receives any
payment from XL that reduces limits available to Lepetit
(and only Lepetit) under the 1993-1994 XL Policy (or any
successor thereto), Dow shall obtain and maintain, at its
own expense, insurance from XL, one of the Dow Insurance
Subsidiaries or any other insurance company under which
the insurer shall agree to pay to Lepetit any amount
which would have been payable under the 1993-1994 XL
Policy (or the applicable successor policy) but for the
fact that some portion of the $50 million limits
available under that policy (or the applicable successor
policy) was depleted by payments by XL (or the successor
insurer) to Dow or one of its subsidiaries other than
Lepetit. Notwithstanding anything provided herein, Dow
will take all actions and pay all expenses necessary to
preserve the XL Policy for Lepetit or, at its sole
option, Dow may obtain from one of the Dow Insurance
Subsidiaries or any other insurer, and maintain, at its
own expense, an insurance policy providing Lepetit with
the same benefits, on the same terms and conditions, as
the 1993-1994 XL Policy with policy limits reduced from
$50 million to reflect any amounts already paid to
Lepetit under the 1993-1994 XL Policy. Dow shall
guaranty the payment of any insurer under any policy
obtained by Dow to satisfy its obligations under this
Paragraph 9, including the obligations of XL under the
1993-1994 XL Policy. Because Dow's obligation under this
Paragraph 9 shall be to provide Lepetit (through the
1993-1994 XL Policy or otherwise) a full $50 million of
coverage, which shall not be reduced except by payments
to Lepetit, any payment to XL or any successor to XL that
is necessary under the 1993-1994 XL Policy (or any
successor policy) to achieve access to the full $50
million of coverage (less payments to Lepetit),
including, without limitation, reinstatement or
retrospective premiums, will be made by Dow. Dow's
obligations under this Paragraph 9 shall continue until
all Claims asserted on or before twenty years from the
Effective Date have been disposed of or otherwise
satisfied. For purposes of paragraphs 8 and 9, Lepetit
shall include Gruppo Lepetit, S.p.A. and all of its
present or former subsidiaries and all of its respective
successors and assigns. In connection with any sale or
transfer of all or part of Lepetit, Lepetit may, in its
sole discretion, assign, in whole or in part, the rights
to, along with related obligations under, this Paragraph
9 to such buyer or transferee.
10. Additional details concerning the agreed-
upon effects of this Agreement and the sale of MMD and
its subsidiaries upon certain insurance policies covering
MMD and its subsidiaries are set forth in Appendix C. To
the extent there is any conflict between Appendix C and
this Agreement, this Agreement shall govern. The Parties
agree that Dow shall relinquish any rights it has under
insurance policies issued to the entities or businesses
acquired by Hoechst under the Stock Purchase Agreement
but only with respect to time periods such policies were
in effect prior to the time such entities or businesses
were acquired by Dow, including without limitation, such
pre-acquisition insurance policies issued to Richardson-
Merrell Inc., Marion Labs Inc., The Rugby Group, Inc. and
Gruppo Lepetit, S.p.A. and their predecessors.
11. This Agreement does not affect the Covered
Entities' rights to coverage under any insurance or
reinsurance policy purchased by Dow which formerly
provided or currently provides coverage to the Covered
Entities. With respect to such policies issued by the
Dow Insurance Subsidiaries, the Dow Insurance
Subsidiaries agree that they will continue the practices
established in the past with respect to such policies.
Dow will use reasonable best efforts to assist the
Covered Entities in presenting and collecting claims
under policies issued to Dow by third party insurers.
Within 90 days of the execution of this Agreement, Dow
will provide to Hoechst copies of all Dow insurance
policies which formerly provided or currently provide
coverage to any of the Covered Entities. Dow shall on a
yearly basis give Hoechst a statement indicating the
status of exhaustion of all such policies and Hoechst
shall have the right to audit upon reasonable notice to
Dow.
12. Hoechst, MMD and their subsidiaries will
exercise their reasonable best efforts to recover any
insurance which will inure, directly or indirectly, to
the benefit of Dow or its subsidiaries, including without
limitation the Dow Insurance Subsidiaries, under this
Agreement. This Paragraph shall not be interpreted to
require the Covered Entities to file or prosecute any
legal proceedings against their insurers. In the event
that a Covered Entity elects not to prosecute a lawsuit
for such insurance recoveries and Dow elects to pursue
such an action, the following rules shall apply
concerning recoveries obtained by Dow:
(a) With respect to recoveries arising
from Losses resulting from or related to Bendectin:
(1) to the extent that the $150
Million retention under the Bendectin Policy is not yet
exhausted, the Covered Entity will receive the recovery,
net of the fees and expenses paid by Dow in pursuing the
coverage action and the Covered Entities' $150 Million
retention under the Bendectin Policy will be increased by
the same amount;
(2) to the extent that the $150
Million retention under the Bendectin Policy is exhausted
and the Dow Insurance Subsidiary has paid the Covered
Entity the underlying Loss, the Dow Insurance Subsidiary
will receive the recovery and the Dow Insurance
Subsidiary will be responsible for all fees and expenses
of pursuing the coverage action; and
(3) to the extent that the $250
Million limit of the Bendectin Policy is exhausted and
Dow has paid the Covered Entity 50 percent of the
underlying Loss, the Covered Entity will receive 50
percent of the recovery, net of 50 percent of the fees
and expenses of pursuing the coverage action, and Dow
will keep the remainder of the recovery.
(b) With respect to recoveries arising
from Losses resulting from or related to Breast Implant
Claims:
(1) to the extent there is still a
positive balance in the record of account referred to in
Paragraph 8: (i) Dow will receive the recovery, (ii) Dow
will be responsible for all fees and expenses of pursuing
the coverage action, and (iii) the record of account
referred to in Paragraph 8 will not be affected by such
recovery; and
(2) to the extent there is no
remaining positive balance in the record of account
referred to in Paragraph 8, Dow shall have no rights to
pursue the Covered Entities' claims against their
insurers.
13. The Covered Entities shall have discretion
concerning the reasonableness of any settlements with
their third party insurers, which shall be deemed
reasonable absent a showing of bad faith, except as
provided elsewhere herein. With respect to Breast
Implant Claims only, when a Covered Entity reaches a
written letter of intent or agreement in principle to
settle with any of its third party insurers and at the
time of the settlement there is still a positive balance
in the record of account referred to in paragraph 8, the
Covered Entity shall give Dow notice of such letter of
intent or agreement in principle and 20-days within which
to approve the settlement or take assignment of the claim
against such insurer. If Dow elects to take assignment
of the claim against such insurer, Dow must, as a
condition of such assignment, pay the Covered Entity the
full amount to be paid to the Covered Entity under the
proposed letter of intent or agreement in principle. The
balance in the record of account established under
paragraph 8 hereto shall be increased by the amount of
such payment by Dow to the Covered Entity. Dow will be
entitled to retain any recoveries it receives from its
prosecution of such claim against such insurer. When
there is no remaining positive balance left in the record
of account described in paragraph 8 and no outstanding
insurance recoverables, Dow will have no rights
concerning settlements proposed by the Covered Entities.
14. This Agreement is a commercial resolution
of negotiations concerning the separation of complex
insurance and risk management programs of MMD, Lepetit
and Dow and its other subsidiaries. Dow does not believe
that any party to this Agreement, including Lepetit, has
any legitimate financial exposure due to sale or
distribution of breast implants, and nothing in this
Agreement should be viewed as an admission by Dow of any
kind. This Agreement represents a compromise of disputed
claims and shall not be construed as an admission by any
party as to the correct interpretation or application of
any insurance policies purchased by Dow.
15. This Agreement may be executed in
counterparts.
16. The parties shall not be obligated to
perform their obligations under this Agreement until the
Effective Date. This Agreement shall terminate upon any
termination of the Stock Purchase Agreement referred to
in paragraph 7(a) hereof.
17. In connection with entering into this
Agreement, Dow represents and warrants to Hoechst that,
on the basis of work performed by and on behalf of Dow in
response to Hoechst's inquiries regarding the
distribution of breast implants by Lepetit and otherwise,
nothing has come to Dow's attention which has led Dow to
believe that any of the following statements are untrue:
(a) The actual number of breast implants
manufactured by Dow Corning Corporation which were
sold in the countries indicated in Schedule 17(a)
hereto did not exceed in any such country in any
year indicated therein the number indicated therein
as having been sold in such country in such year;
(b) Lepetit has not sold or distributed
any breast implants (i) in Italy since 1992, (ii) in
Spain or Portugal since 1982 or early 1983 or (iii)
in any country other than Italy, Spain or Portugal
since 1977; and
(c) All of the breast implants sold or
distributed by Lepetit in any of the member
countries of the European Community were acquired by
Lepetit from corporations or other business entities
located or domiciled in member countries of the
European Community (which corporations and business
entities acted as the importers of such breast
implants for purposes of the laws of the applicable
member countries of the European Community).
18. This Agreement (i) constitutes the entire
agreement among the Parties hereto with respect to the
subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral,
among the parties with respect to the subject matter
hereof and (ii) shall not be assigned by operation of law
or otherwise.
19. All notices, requests, claims, demands and
other communications hereunder shall be in writing and
shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid,
return receipt requested), to the other party as follows:
if to Hoechst:
Hoechst Corporation
Route 202-206
P.O. Box 2500
Somerville, New Jersey 08876-1258
Fax: 908-231-4848
Attention: Harry R. Benz
with copies to:
Hoechst AG
65926 Frankfurt am Main
Germany
Fax: 011-49-69-319-113
Attention: Peter Schuster
and
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Fax: 212-735-2000
Attentionn: Roger S. Aaron
and
Franklin M. Gittes
if to MMD:
Marion Merrell Dow Inc.
9300 Ward Parkway
Kansas City, Missouri 64114
Fax: 816-966-3805
Attention: General Counsel
with copies to:
Shook, Hardy & Bacon PC
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2118
Fax: 816-421-5547
Attention: Jennings J. Newcom
and
Randall B. Sunberg
if to Dow or the Dow Insurance Subsidiaries:
The Dow Chemical Company
2030 Dow Center
Midland, Michigan 48674
Fax: 517-636-0861
Attention: Jane M. Gootee
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Fax: 312-701-7711
Attention: Scott J. Davis
or to such other address as the person to whom notice is
given may have previously furnished to the other in
writing in the manner set forth above.
20. The representations of Dow set forth in
Section 17 shall survive indefinitely.
21. This Agreement shall be governed by and
construed in accordance with the law of the State of
Delaware, without regard to the principles of conflicts
of law thereof.
22. The parties hereto agree that irreparable
damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other
remedy at law or in equity.
IN WITNESS WHEREOF, each of the Parties has
caused this Agreement to be executed on its behalf by its
representatives thereunto duly authorized, all as of the
day and year first above written.
The Dow Chemical Company Dorinco Reinsurance
Company
By: /s/ John C. Lillich By: /s/ Paul D. Brink
John C. Lillich Paul D. Brink
Corporate Director of President
Mergers & Acquisitions
Marion Merrell Dow Inc. Dorintal Reinsurance Ltd.
By: /s/ Fred W. Lyons, Jr. By: /s/ Daniel A. Marino
Fred W. Lyons, Jr. Daniel A. Marino
Chairman and Chief Assistant Vice
Executive Officer President
Hoechst Corporation Timber Insurance Ltd.
By: /s/ Harry R. Benz By: /s/ Philip M. Roels
Harry R. Benz Philip M. Roels
Secretary and Treasurer Vice President
EXHIBIT 7
CONFORMED COPY
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of May 3, 1995,
is between Hoechst Corporation, a Delaware corporation
("Hoechst"), and The Dow Chemical Company, a Delaware
corporation ("Dow").
WHEREAS, Dow directly and indirectly owns
approximately 71% of the outstanding common stock of
Marion Merrell Dow Inc., a Delaware corporation ("MMD");
WHEREAS, at the request of MMD, and pursuant to the
terms of an Agreement to Provide Guaranty, dated as of
October 7, 1993 (the "Agreement to Provide Guaranty"),
between Dow and MMD, Dow entered into a Dow Guaranty,
dated as of October 8, 1993 (the "Dow Guaranty"), in
favor of the Investors (as defined in the Dow Guaranty)
in Carderm Capital L.P., a Delaware limited partnership
in which subsidiaries of MMD hold a controlling interest;
WHEREAS, Dow, certain subsidiaries of Dow, Hoechst
and H Pharma Acquisition Corp. have entered into a Stock
Purchase Agreement dated as of the date hereof (the
"Stock Purchase Agreement"), providing for the purchase
by Hoechst of all of the shares of MMD owned directly or
indirectly by Dow; and
WHEREAS, Hoechst and Dow desire to specify certain
arrangements with respect to the Dow Guaranty.
NOW, THEREFORE, in consideration of the foregoing
and the agreements herein contained, and intending to be
legally bound, Hoechst and Dow agree as follows:
Section 1. Capitalized Terms. Capitalized terms
used but not defined in this Agreement shall have the
meanings assigned to such terms in the Stock Purchase
Agreement.
Section 2. Indemnification by Hoechst. From and
after the earlier of the purchase by Acquisition of the
Dow Shares pursuant to the Stock Purchase Agreement and
the Merger (such earlier date being referred to as the
"Indemnification Date"), Hoechst shall indemnify and hold
harmless Dow and each of its subsidiaries, affiliates,
directors, officers, employees, agents, and
representatives (collectively, the "Dow Group"), from and
against all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and
expenses, including, without limitation, interest,
penalties and attorney's fees, disbursements and expenses
asserted against, resulting to, or imposed upon or
incurred by any member of the Dow Group, directly or
indirectly, resulting from or arising out of the Dow
Guaranty; provided, that, any payments made by Hoechst to
Dow pursuant to this Section 2 shall be net of any
payments made by MMD to Dow pursuant to the Agreement to
Provide Guaranty. Nothing herein contained shall, or be
deemed to, release MMD from its obligations and covenants
under the Agreement to Provide Guaranty or any other
agreement relating to Carderm Capital L.P.
Section 3. Termination or Substitution of Dow
Guaranty. From and after the Indemnification Date,
Hoechst shall use its reasonable best efforts, at its own
cost and expense, to terminate the Dow Guaranty or
substitute Hoechst in Dow's stead under the Dow Guaranty,
and in any event obtain a full and unconditional release
of liability of Dow under the Dow Guaranty with the
consent of the Investors.
Section 4. Guaranty Fee. On the Indemnification
Date, Dow agrees to pay Hoechst, or its designee, the pro
rata portion of the guaranty fee paid to Dow. Hoechst's
portion of the guaranty fee shall equal the fraction of
the original $1,113,000 guaranty fee, the numerator of
which is 2,436 minus the number of whole days from
October 7, 1993 to the Indemnification Date, and the
denominator of which is 2,436.
Section 5. Governing Law. This Agreement shall be
governed by and construed in accordance with the law of
the State of Delaware, without regard to the principles
of conflicts of law thereof. Any suit, action or
proceeding seeking to enforce any provision of, or based
on any matter arising out of or in connection with, this
Agreement or the transactions contemplated by this
Agreement may be brought against any of the parties in
the United States District Court for the District of
Delaware or any state court sitting in the City of
Wilmington, Delaware, and each of the parties hereby
consents to the exclusive jurisdiction of such courts
(and of the appropriate appellate courts) in any such
suit, action or proceeding and waives any objection to
venue laid therein. Process in any such suit, action or
proceeding may be served on any party anywhere in the
world, whether within or without the State of Delaware.
Without limiting the foregoing, each of the parties
agrees that service of process upon such party at the
address referred to below, together with written notice
of such service to such party, shall be deemed effective
service of process upon such party.
Dow: The Dow Chemical Company
2030 Dow Center
Midland, Michigan 48674
Attn.: General Counsel
Hoechst: Hoechst Corporation
Route 202-206
Somerville, NJ 08876-1258
Attn: Treasurer
Section 6. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
be deemed to be an original, but all of which shall
constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be duly executed on its behalf by their
respective authorized representatives as of the day and
year first above written.
HOECHST CORPORATION
By: /s/ Harry R. Benz
Name: Harry R. Benz
Title: Secretary and Treasurer
THE DOW CHEMICAL COMPANY
By: /s/ Enrique C. Falla
Name: Enrique C. Falla
Title: Executive Vice Presi-
dent and Chief Finan-
cial Officer
EXHIBIT 8
TAX ALLOCATION AGREEMENT
Among
The Dow Chemical Company
Hoechst Corporation
and
Marion Merrell Dow Inc.
Dated as of May 3, 1995
TABLE OF CONTENTS
Page
Section 1. Certain Defined Terms . . . . . . . . . . . 1
Audit . . . . . . . . . . . . . . . . . . . 1
Combined Report . . . . . . . . . . . . . . . 2
Combined Reporting . . . . . . . . . . . . . 2
Combined Return . . . . . . . . . . . . . . 2
Combined Taxes . . . . . . . . . . . . . . 2
Effective Date . . . . . . . . . . . . . . 2
Extended Due Date . . . . . . . . . . . . . 2
MMD Member Liability . . . . . . . . . . . . 2
MMD Matter . . . . . . . . . . . . . . . . 3
Non-Federal Taxes . . . . . . . . . . . . . 3
Non-Federal Tax Return . . . . . . . . . . 3
Separate Taxable Income . . . . . . . . . . . 3
Tax Authority . . . . . . . . . . . . . . . . 4
Tax Returns . . . . . . . . . . . . . . . . 4
Taxes . . . . . . . . . . . . . . . . . . . 4
Section 2. Preparation and Filing of Non-Federal Tax
Returns . . . . . . . . . . . . . . . . . . 4
2.1. Non-Federal Tax Returns . . . . . . . 4
2.2. Consistent Preparation of Combined
Returns . . . . . . . . . . . . . . . 4
2.3 Combined Returns for Periods that Include
the Effective Date . . . . . . . . . 5
Section 3. Payment of Taxes . . . . . . . . . . . . . 5
3.1. Non-Federal Taxes for Combined Returns 5
3.2. True-up; Combined Taxes . . . . . . . 5
Section 4. Redetermination . . . . . . . . . . . . . . 6
4.1. Definition of Redetermination . . . . 6
4.2. Redetermination of Non-Federal Taxes 6
Section 5. Audits, Disputes, Etc . . . . . . . . . . . 7
5.1. Non-Federal Taxes . . . . . . . . . . 7
5.2. Notification . . . . . . . . . . . . 7
Section 6. Mutual Cooperation . . . . . . . . . . . . 8
Section 7. Resolution of Certain Conflicts . . . . . . 9
Section 8. Tax Returns for Periods Beginning on or
After the Effective Date . . . . . . . . . 9
Section 9. Other Taxes . . . . . . . . . . . . . . . . 9
Section 10. Statute of Limitations. . . . . . . . . . . 9
Section 11. Miscellaneous . . . . . . . . . . . . . . . 9
a. Effectiveness . . . . . . . . . . . . 9
b. Entire Agreement . . . . . . . . . . 10
c. Severability . . . . . . . . . . . . 10
d. Time of Payment . . . . . . . . . . . 10
e. Governing Law . . . . . . . . . . . . 10
f. Notices . . . . . . . . . . . . . . . 10
g. Modification or Amendment . . . . . . 12
h. Successors and Assigns . . . . . . . 12
i. No Third-Party Beneficiaries . . . . 12
j. MMD Payments . . . . . . . . . . . . 12
k. Hoechst Payments . . . . . . . . . . 12
Exhibits
Schedule 1(h)
This Tax Allocation Agreement (the "Agreement"), is
entered into between The Dow Chemical Company, a Delaware
corporation ("DCC"), Marion Merrell Dow Inc., a Delaware
corporation ("MMD"), and the Hoechst Corporation, a Delaware
corporation ("Hoechst") on May 3, 1995.
WITNESSETH:
WHEREAS, DCC and certain of its affiliates own
outstanding shares of common stock, par value $0.10 per
share, of MMD;
WHEREAS, MMD and its subsidiaries (hereafter
collectively referred to as the "MMD Group") and DCC and its
subsidiaries (excluding the MMD Group (or any member
thereof)) (hereafter collectively referred to as the "DCC
Group") file certain tax returns on a consolidated,
combined, or unitary basis;
WHEREAS, pursuant to the (i) Agreement and Plan of
Merger, dated as of May 3, 1995 (the "Merger Agreement"),
among MMD, DCC, Hoechst, and H Pharma Acquisition Corp., a
Delaware corporation ("Acquisition"), and (ii) Stock
Purchase Agreement, dated as of May 3, 1995 (the "Stock
Purchase Agreement"), among Parent, Acquisition, DCC,
Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of DCC, Dow Holdings Inc., a Delaware corporation
and a wholly-owned subsidiary of DCC, the DCC Group will
cease to own any outstanding shares of common stock, par
value $0.10 per share, of and will cease to file any tax
returns with the MMD Group (or any members of the MMD Group)
on a consolidated, combined, or unitary basis for any
taxable periods beginning after the Effective Date (as
defined herein);
WHEREAS, it is the intent and desire of the parties
hereto to provide for (i) allocations of certain liabilities
for Taxes (as defined herein), (ii) the preparation and
filing of Non-Federal Tax Returns (as defined herein), (iii)
the payment of Non-Federal Taxes (as defined herein), (iv)
mutual cooperation provisions, and (v) certain related
matters:
NOW, THEREFORE, in consideration of the mutual
covenants and promises contained herein, the parties hereto
agree as follows:
Section 1. Certain Defined Terms. For purposes of
this Agreement, the following terms shall have the following
meanings:
a. "Audit" includes any audit, assessment of Non-
Federal Taxes, other examination by any Tax Authority (as
defined herein), proceeding, or appeal of such proceeding
relating to Non-Federal Taxes, whether administrative or
judicial.
b. "Combined Report" means any Combined Return
where DCC makes all payments to the appropriate Tax
Authority on behalf of all members of the MMD Group and the
DCC Group.
c. "Combined Reporting" means any Combined Return
where the DCC Group and the MMD Group make separate payments
to the appropriate Tax Authority on each entity's behalf.
d. "Combined Return" means any Non-Federal Tax
Return (including both Combined Reports and Combined
Reporting) that is filed on a consolidated, combined, or
unitary basis between or among (i) the MMD Group (or any
member thereof) and (ii) the DCC Group (or any member
thereof).
e. "Combined Taxes" means all Non-Federal Taxes
reported and paid on a Combined Return that are imposed on a
consolidated, combined, or unitary basis with respect to the
assets, earnings, and/or operations of (i) the MMD Group (or
any member thereof) and (ii) the DCC Group (or any member
thereof).
f. "Effective Date" means the earlier of the
consummation of the (i) Merger (as defined in the Merger
Agreement) pursuant to the Merger Agreement or (ii)
completion of the acquisition of beneficial ownership of the
Shares (as defined in the Stock Purchase Agreement) pursuant
to the Stock Purchase Agreement.
g. "Extended Due Date" means with respect to any
Non-Federal Tax Return (including Combined Returns), the
extended due date for filing the relevant Non-Federal Tax
Return.
h. "MMD Member Liability" shall equal, for each
Combined Report, (i) the Separate Taxable Income for each
member of the MMD Group that is included in a Combined
Return and has nexus in the jurisdiction for which the
Combined Return is filed divided by (ii) the sum of the
Separate Taxable Income for all members of the MMD Group and
the DCC Group that are included in the Combined Return and
have nexus in such jurisdiction multiplied by (iii) the
total Combined Tax for such Combined Report. Such MMD
Member Liability described above is consistent with the
method used in the past in determining such MMD Member
Liability. A member of the MMD Group will be determined to
possess or lack nexus with a state if either (i) such member
was determined by MMD and DCC to have nexus with the state
when the Combined Return in question was filed prior to the
date of the signing of this Agreement or (ii) if a Combined
Return has not been filed as of the date of signing of this
Agreement, (a) the member of the MMD Group is listed as
possessing or lacking nexus with respect to a state on
Schedule 1(h) attached hereto; provided, however, unless MMD
and DCC agree that a nexus determination on Schedule 1(h) is
materially inaccurate pursuant to Wisconsin Department of
Revenue v. William Wrigley, Jr., Co., 112 S. Ct. 2447 (1992)
and Pub. L. No. 86-272, or (b) with respect to any state not
specified on Schedule 1(h), MMD and DCC shall, consistent
with the past practice used with respect to the states
listed in Schedule 1(h), determine the presence or absence
of nexus pursuant to the general application of Wisconsin
Department of Revenue v. William Wrigley, Jr., Co., 112 S.
Ct. 2447 (1992) and Pub. L. No. 86-272, unless the state
determines that such member possesses or lacks nexus with
the state and such determination is upheld in any
administrative hearing or Tax litigation or is not being
contested by MMD or DCC. A member of the DCC Group will be
determined to possess or lack nexus with a state in a manner
that is consistent with past practice and pursuant to the
general application of Wisconsin Department of Revenue v.
William Wrigley, Jr. Co., 112 S. Ct. 2447 (1992) and Pub. L.
No. 86-272, unless the state determines that such member
possesses or lacks nexus with the state and such
determination is upheld in any administrative hearing or Tax
litigation or is not being contested by DCC.
i. "MMD Matter" shall have the meaning ascribed
thereto in Section 5.1 of this Agreement.
j. "Non-Federal Taxes" includes all state, local,
and foreign taxes, charges, fees, levies, imposts, duties,
or other assessments of a similar nature, including without
limitation, ad valorem, alternative or add-on minimum,
capital stock, custom duty, disability, employment,
environmental, estimated, excise, franchise, governmental
fee or other like assessment or charge of any kind
whatsoever, gross receipts, income, license, occupation,
payroll, premium, profits, property (including real,
personal, and intangible), registration, sales, severance,
social security (or similar), stamp, transfer, unemployment,
use, value-added, windfall profits, withholding, or other
tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
k. "Non-Federal Tax Return" means any return,
declaration, statement, report, schedule, certificate, form,
information return, or any other document (including any
related or supporting information), including an amended
return, required to be supplied to, or filed with, a Tax
Authority with respect to Non-Federal Taxes;
l. "Separate Taxable Income" means, for any Non-
Federal jurisdiction, with respect to each member of the MMD
Group and the DCC Group, the taxable income allocable to
such jurisdiction for any taxable year (but in no case less
than zero), determined without reference to any carrybacks
or carryforwards of any net operating loss, net capital
loss, charitable contribution or other item attributable to
any other taxable period, as determined on a basis that is
consistent with the manner in which the member of the MMD
Group and DCC Group's Separate Taxable Income has been
determined in the past. If no Combined Return has
previously been filed with a Tax Authority, the Separate
Taxable Income shall be determined by DCC in a reasonable
manner in accordance with its past practice of computing
Separate Taxable Income in Non-Federal Tax Returns filed
with other Tax Authorities.
m. "Tax Authority" includes any federal, state,
local, foreign or other governmental authority responsible
for the administration of any Taxes (domestic, foreign, or
possessions).
n. "Tax Returns" shall mean Non-Federal Tax
Returns and all federal tax returns (including federal
income tax returns);
o. "Taxes" shall mean Non-Federal Taxes and all
federal taxes (including federal income taxes).
Section 2. Preparation and Filing of Non-Federal Tax
Returns.
2.1. Non-Federal Tax Returns. With respect to
any Combined Return filed after the Effective Date, DCC
shall prepare, or cause to be prepared, such Combined Return
consistent with past practice. MMD shall provide to DCC all
finalized and complete information necessary for DCC to
prepare the Combined Return (including, but not limited to,
a pro forma federal income tax return) no later than 26 days
prior to the Extended Due Date of such Combined Return.
With respect to each such Combined Return, DCC shall prepare
a finalized and complete pro forma Combined Return that is
reasonably acceptable to MMD and suitable for filing with
the appropriate Tax Authority. DCC shall submit each pro
forma Combined Return to MMD, for MMD's review and approval
(which approval shall not be withheld so long as the
Combined Return is prepared in accordance with past
practice), no later than two weeks prior to the Extended Due
Date. MMD shall review such pro forma Combined Return
within one week of receipt of such Combined Return. Upon
filing a Combined Return with the appropriate Tax Authority,
DCC shall provide MMD with a copy of the Combined Return
that has been filed with the appropriate Tax Authority. DCC
shall not file any Combined Return with respect to the Non-
Federal Taxes of any jurisdiction for which DCC would not
have filed a Combined Return under its past practice unless
required to do so by the appropriate Tax Authority.
2.2. Consistent Preparation of Combined Returns.
The Combined Returns described in this Section 2, shall be
prepared on a basis that is consistent with the manner in
which such Combined Returns were prepared and filed prior to
the date hereof, unless a contrary treatment is required by
law or final or temporary regulation or MMD and DCC
otherwise agree. If no Combined Return has previously been
filed with a Tax Authority, DCC shall prepare, or cause to
be prepared, the Combined Return in accordance with its past
practice of preparing, or causing to be prepared, Combined
Returns with other Tax Authorities.
2.3 Combined Returns for Periods that Include the
Effective Date. With respect to any Combined Returns that
include periods after the Effective Date, DCC shall file a
Combined Return with the appropriate Tax Authority
reflecting income, gain, loss, deductions or credits of each
included member of the MMD Group and the DCC Group for the
period up to and including the Effective Date based on a
closing of the member of the MMD Group's books on the
Effective Date. Each of the members of the MMD Group shall
prepare and provide to DCC a closing of the books
computation. However, if either (i) a specified method is
mandated by the Tax Authority or (ii) the Tax Authority
refuses to accept a Combined Return prepared on such a basis
and requires DCC to include income, gain, loss, deductions
or credits of any member of the MMD Group in the Combined
Return on a different basis, such Combined Return or any
amended Combined Return shall be prepared in accordance with
such rules.
Section 3. Payment of Taxes.
3.1. Non-Federal Taxes for Combined Returns.
Consistent with past practice, DCC shall pay, or cause to be
paid, to the appropriate Tax Authorities all Combined Taxes,
if any, due and payable for all Combined Reports. Members
of the MMD Group shall pay any refunds received from a Tax
Authority with respect to a Combined Report within 30 days
of receipt of such refund; provided, however that the
payment of a refund shall not reduce, or offset any
obligation that DCC may have under Section 4.2 hereof.
3.2. True-up; Combined Taxes. Within 90 days
after the earlier of (i) filing any Combined Report or (ii)
paying any Combined Tax, DCC shall prepare, or cause to be
prepared, and submit to each member of the MMD Group a true-
up calculation, as determined on a basis that is consistent
with the manner in which such calculations have been
determined in the past that computes the MMD Member
Liability calculated pursuant to Section 1(h) of this
Agreement for such period. Each member of the MMD Group
shall promptly review such calculation, and, unless such
member has any reasonable objections, shall make a cash
payment to DCC equal to the MMD Member Liability within 20
days of the receipt of the true-up calculation.
Section 4. Redetermination.
4.1. Definition of Redetermination. In the
event of any (i) determination by a Tax Authority that any
member of the DCC Group is required to file a Combined
Return with any member of the MMD Group for a taxable period
(where DCC and such member of the MMD Group did not file a
Combined Return with such Tax Authority for such taxable
period) or (ii) redetermination of (a) any Tax item of
income, gain, loss, deduction, or credit or any other item
affecting the Tax liability of MMD or DCC for any Combined
Return of any member of the MMD Group or the DCC Group that
is includable in a Combined Return or (b) the question
whether a member of the MMD Group or DCC Group has nexus to
a particular state, all as a result of a final assessment,
settlement, or compromise with any Tax Authority (including
any federal adjustment) or a judicial decision that has
become final (collectively, a "Redetermination"), (i) DCC
shall recompute (a) the Combined Taxes, (b) the Separate
Taxable Income of each member of the MMD Group or DCC Group,
and (c) the MMD Member Liability to take into account such
Redetermination (ii) DCC shall provide such computations to
MMD for MMD's review and approval (which approval shall not
be unreasonably withheld) (iii) MMD shall review such
computations within five days of receipt of such
computations, and (iv) upon obtaining MMD's approval, DCC
shall file, to the extent permitted or required by law, an
amended Combined Return with the appropriate Tax Authority.
Upon filing an amended Combined Return with the appropriate
Tax Authority, DCC shall provide MMD with a copy of the
original Combined Return (unless previously provided) and
the amended Combined Return that has been filed with the
appropriate Tax Authority.
4.2. Redetermination of Non-Federal Taxes. If a
Redetermination results in an increase or decrease in the
MMD Member Liability calculated pursuant to Section 1(h) of
this Agreement, each member of the MMD Group shall pay to
DCC any increase in the MMD Member Liability for such year
within ninety days of DCC's payment of any additional
Combined Tax to the appropriate Tax Authority and DCC shall
pay to each member of the MMD Group any decrease in the MMD
Member Liability for such year within ninety days of DCC's
receipt of a refund from the appropriate Tax Authority. If
there is no increase or decrease in Combined Taxes as a
result of the Redetermination or DCC otherwise makes no
payment or receives no refund from the appropriate Tax
Authority, MMD or DCC shall make any payment due pursuant to
Section 4.1 to their respective counterpart within ninety
days of the Redetermination.
Section 5. Audits, Disputes, Etc
5.1. Non-Federal Taxes. DCC shall have the
sole authority to defend and contest a claim made by a Tax
Authority on Audit or by appropriate claim for refund or
credit of Combined Taxes with respect to any Combined
Returns; provided, however, that DCC shall (i) act in good
faith with respect to the MMD Group in defending and
settling a claim, (ii) not act in a manner that at the same
time would benefit DCC (or any of its affiliates) and
adversely affect the MMD Group, and (iii) not settle any
Non-Federal Tax matter for which MMD may have liability
under this Agreement ("MMD Matter") without the prior
written consent of MMD, which consent shall not be
unreasonably withheld. In the event MMD wants to contest a
MMD Matter, MMD may request DCC's written consent, which
consent shall not be unreasonably withheld, that MMD be
entitled to contest, resolve and defend against any MMD
Matter, at MMD's expense; provided, however, that DCC shall
not be obligated to provide such requested consent, if DCC
determines that (i) MMD may assert a position with respect
to such MMD Matter that is contrary to or undermines a
position that has been or may be asserted by DCC with
respect to a similar Non-Federal Tax matter or (ii)
provision of such consent would unreasonably delay or hinder
DCC's resolution of any Audit or other Non-Federal Tax
matter. DCC shall have the exclusive right to file any
amended Combined Return or sign a closing agreement;
provided, however, that DCC shall not file any such amended
Combined Return or sign a closing agreement that contains a
MMD Matter without the prior written consent of MMD, which
consent shall not be unreasonably withheld. However,
nothing herein shall (i) entitle MMD to interfere with DCC's
right to take any actions it deems appropriate in connection
with the disposition of any proposed adjustments on Tax
Returns filed by DCC (other than Combined Returns, but
including, but not limited to, federal Tax Returns) or (ii)
entitle DCC to interfere with MMD's right to take any
actions it deems appropriate in connection with the
disposition of any Tax Returns filed by MMD (including, but
not limited to, federal Tax Returns).
5.2. Notification. The parties shall forward to
their respective counterpart any notice of any pending or
threatened Audit (including any federal audit) or other
proceeding within 20 days of the party's receipt of such
notice that may affect such counterpart's liability for
Taxes. The parties shall promptly notify their respective
counterpart of any proposed adjustment of any item on any
Tax Return within 20 days of receipt of notice of the
proposed adjustment if such proposed adjustment may affect
the Tax liability of the counterpart. The parties shall
advise the other party of the status of any conferences,
meetings and proceedings with Tax Authorities or appearances
before any court pertaining to such adjustment or
adjustments on any Combined Return or any other Tax Return
that may affect the Tax liability of the other party and
shall advise the other party of the outcome of such
proceedings.
Section 6. Mutual Cooperation. DCC and MMD (or any
subsidiaries or successors of such entities) shall cooperate
with each other in the filing of any Tax Return, amendment
thereto, or consent contemplated by this Agreement and to
take such action as such other party may reasonably request,
including (but not limited to):
a. providing data for the preparation of any
original or amended Tax Returns;
b. cooperating fully with each other in connection
with (i) the preparation and filing of any Combined Returns,
(ii) the computation of the MMD Member Liability (including
adjustments to the MMD Member Liability as a result of
Redetermination), and (iii) the exchange of information
relating to the operations and business of the MMD Group or
the DCC Group which is relevant to the MMD Group or the DCC
Group in preparing any Tax Returns required to be filed by
DCC or MMD (or any of their respective affiliates),
including, but not limited to, information relating to (a)
intercompany loans between the MMD's subsidiaries and DCC or
its subsidiaries that trigger United States federal income
tax under the Internal Revenue Code, and require DCC to
provide detailed information on the sourcing of interest
payment by MMD subsidiaries and (b) the calculations of the
research and development credit for MMD which is currently
calculated as part of the DCC credit. Such cooperation
shall include, without limitation, the furnishing of or
making available of records, books of account or other
materials and access to personnel of MMD and DCC (and their
affiliates) necessary or helpful for the preparation of Tax
Returns or the defense against assertions of any Tax
Authority (including any federal tax authority) as to any
Tax Returns, so long as such access does not unreasonably
interfere with the business activities of such personnel.
The requesting party shall pay any out-of-pocket expenses
incurred by the other party but will not compensate the
other party for other expenses, including time spent by
employees of the other party assisting the requesting party;
c. cooperating in any Audit (including any federal
audit), including the execution of limited powers of
attorney that do not permit the entry into of any settlement
agreement, unless otherwise mutually agreed to by the
parties;
d. filing protests or otherwise contesting any
Audit (including any federal audit), including the filing of
petitions for redetermination or prosecuting actions for
refund in any court and pursuing the appeal of any such
actions;
e. retaining and providing on demand books,
records, documentation or other information relating to any
Tax Return until the expiration of the applicable statute of
limitation (giving effect to any extension, waiver, or
mitigation thereof), providing additional information and
explanation of material provided hereunder, and the use of
the parties' commercially reasonable efforts to obtain any
documentation from a governmental authority or third party
that may be necessary or helpful in connection with the
foregoing.
Section 7. Resolution of Certain Conflicts. In the
event that DCC and MMD cannot agree on the calculation of
any MMD Member Liability, Separate Taxable Income, or other
amount covered by this Agreement, DCC and MMD will engage an
independent, certified public accounting firm of national
reputation, reasonably acceptable to each party, to make
such calculation and the decision of such firm will be
conclusive. Such calculation shall be made in accordance
with the terms of this Agreement and past practice between
DCC and MMD. The cost of such engagement will be borne
solely by the party that does not prevail in substantial
part in the determination of the firm that is engaged;
provided, however, that if such firm determines that neither
party prevailed in substantial part, the cost of such
engagement shall be shared equally by DCC and MMD.
Section 8. Tax Returns for Periods Beginning on or
After the Effective Date. Except as where required by law,
DCC shall not prepare any Combined Returns or file any
Combined Returns with a Tax Authority for Tax periods
beginning on or after the day after the Effective Date.
Section 9. Other Taxes. To the extent DCC pays any
Taxes (including, but not limited to payroll taxes, but
other than Taxes specifically covered by another section of
this Agreement) on behalf of the MMD Group for any period up
to and including the Effective Time, DCC will continue to
rebill the MMD Group for any Taxes paid on behalf of such
members and such members of the MMD Group agree to make
payments to DCC of such amounts within twenty days of the
receipt of such bill and supporting documentation including
a written explanation reasonably satisfactory to MMD.
Section 10. Statute of Limitations. MMD, and each
member of the MMD Group, agrees to extend the statute of
limitations on any Combined Returns to the extent requested
by DCC.
Section 11. Miscellaneous.
a. Effectiveness. This Agreement will be
effective as of the Effective Date.
b. Entire Agreement. Except as provided in the
Merger Agreement, this Agreement contains the entire
agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements
with respect to such subject matter.
c. Severability. In case any one or more of the
provisions contained in this Agreement should be invalid,
illegal or unenforceable, the enforceability of the
remaining provisions hereof will not in any way be effected
or impaired thereby.
d. Time of Payment. Any payment required to be
made under this Agreement for which the terms of payment are
not specifically provided elsewhere in this Agreement shall
be paid within 90 days following the date on which the
amount of the underlying liability to which such payment
relates is paid. Any amount required to be paid under this
Agreement, which is not paid by the end of such 90-day
period, will thereafter bear interest at the 90-day London
Interbank Offered Rate plus 50 basis points from the date of
such payment to the appropriate Tax Authority to the date of
full payment to the appropriate party hereunder.
e. Governing Law. This Agreement shall be
governed by and construed in accordance with the law of the
State of Delaware, without regard to the principles of
conflicts of law thereof.
f. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been
duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return
receipt requested), to the other party as follows:
if to MMD or a member of the MMD Group:
Marion Merrell Dow Inc.
9300 Ward Parkway
Kansas City, Missouri 64114
Fax: (816) 966-3235
Attention: Kevin M. Hartley (Tax Department)
with a copy to:
Hoechst Celanese Corporation
Route 202-206
P.O. Box 2500
Somerville, New Jersey 08876-1258
Fax: 908-231-4811
Attention: John M. Kacani
Vice-President Taxes
and a copy to:
Skadden, Arps, Slate, Meagher & Flom
1440 New York Ave., N.W.
Washington, D.C. 20005
Fax: 202-393-5760
Attention: J. Phillip Adams
and
Clifford R. Gross
and a copy to:
Shook, Hardy & Bacon PC
One Kansas City Street
1200 Main Place
Kansas City, Missouri 64105-2118
Fax: 816-421-5547
Attention: Richard D. Martinson
if to DCC, to:
The Dow Chemical Company
2030 Dow Center
Midland, Michigan 48674
Fax: 517-636-5850
Attention: Dorra Bost (Tax Department)
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3491
Fax: 312-707-7711
Attention: Scott J. Davis
and
Timothy C. Sherck
or to such other address as the person to whom notice is
given may have previously furnished to the other in writing
in the manner set forth above.
g. Modification or Amendment. This Agreement may
not be modified or amended without the prior written consent
of DCC, Hoechst, and MMD.
h. Successors and Assigns. A party's rights and
obligations under this Agreement may not be assigned or
delegated without the prior written consent of the other
party. All of the provisions of this Agreement will be
binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.
i. No Third-Party Beneficiaries. This Agreement
is solely for the benefit of the parties to this Agreement
and should not be deemed to confer upon third parties any
remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without this
Agreement.
j. MMD Payments. To the extent that any member of
the MMD Group fails to make any payments due to DCC provided
under the terms of this Agreement on a timely basis, MMD
shall become liable for such payments and will make such
payments pursuant to the terms of this Agreement.
k. Hoechst Payments. To the extent that MMD fails
to make any payments due to DCC provided under the terms of
this Agreement on a timely basis, Hoechst shall become
liable for such payments and will make such payments
pursuant to the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first written above.
The Dow Chemical Company
By: /s/ Charles J. Hahn
Title: Tax Director and
Asst. Secretary
Date: May 3, 1995
Marion Merrell Dow Inc.
By: /s/ Charles D. Dalton
Title: Vice President
Date: May 3, 1995
Hoechst Corporation
By: /s/ Harry R. Benz
Title: Secretary and Treasurer
Date: May 3, 1995
EXHIBIT 9
COMPUTERIZED PROCESS CONTROL SOFTWARE AGREEMENT
(LEASES AND SERVICES)
This lease and service agreement, hereinafter
"Agreement," is made and entered into effective May 3,
1995, by and between ROFAN SERVICES INC. (hereinafter
"Lessor") and MERRELL DOW PHARMACEUTICALS INC.
(hereinafter "Lessee"), located at:
LESSOR: ROFAN SERVICES INC.
Address: 2030 Willard H. Dow Center
Midland, MI 48674
Corporation of: State of Delaware
Authorized leasing representative for MOD5 SYSTEMS.
LESSEE: MERRELL DOW PHARMACEUTICALS INC.
Address: 2110 E. Galbraith Road
Cincinnati, OH 45215
Lessor and Lessee hereby agree this Agreement
consists in its entirety of this executed covering
document and the following attachments:
APPENDIX A - SERVICE AGREEMENT
APPENDIX B - MOD5 SPECIAL SERVICE ADDENDUM
SCHEDULE 1 - LEASED MOD5 SOFTWARE
Lessor agrees to lease to Lessee and Lessee agrees
to lease from Lessor in accordance with the terms and
conditions of this Agreement MOD5 SOFTWARE as delineated
in Schedule 1 to integrally generate, transmit and manage
process control at the PLANTS listed in Schedule 1
attached hereto and made a part hereof. This Agreement
constitutes the entire understanding between Lessee and
Lessor pertaining to all MOD5 SOFTWARE for Lessee's
PLANTS and supersedes any prior or contemporaneous
agreements and all negotiations, representations and
proposals written or oral pertaining to this subject.
1. Definitions
Terms used in this Agreement shall have the meanings
ascribed to them as follows:
1.1 Software Definitions
(a) MOD5 SOFTWARE means (1) MOD5 CAN SOFTWARE, (2)
SERIAL GRAPHICS SOFTWARE, and (3) GPI based on specially
designed, direct digital control, redundant computer
technology to provide process control and process
operation information for execution on MOD5 HARDWARE.
(b) MOD5 SYSTEM is a specific implementation of
MOD5 HARDWARE and MOD5 SOFTWARE in a PLANT. Within a
given PLANT there may be one or more MOD5 SYSTEMS.
(c) MOD5 CAN SOFTWARE means MOD5 OVERHEADS
including associated FIRMWARE, DOWTRAN SUPPORT TOOLS, and
MOD5 COMPILER.
(d) FIRMWARE is a physical means containing
electronically retrievable information pertaining to MOD5
SOFTWARE.
(e) INTERFACE PROCESSOR is a functional
interconnection within a system between the MOD5
OVERHEADS and other MOD5 SOFTWARE, which contains
hardware, dedicated executable software, and FIRMWARE.
(f) DOWTRAN is a specific language designed for the
process control supplication engineer to convert and
express the CONTROL SCHEMA into an APPLICATION PROGRAM
for a manufacturing process. The APPLICATION PROGRAM is
further transformed into COMPILED DOWTRAN using a MOD5
COMPILER.
(g) MOD5 OVERHEADS means the redundantly deployed,
executable operating system software and, optionally,
protocol use rights, for the MOD5 COMPUTER that executes
the COMPILED DOWTRAN and implements diagnostics, inputs,
outputs, alarms and event logging.
(h) DOWTRAN SUPPORT TOOLS are utility programs
which execute on the MINICOMPUTER to assist the
application engineer in writing the APPLICATION PROGRAM
in DOWTRAN.
(i) APPLICATION PROGRAM is the set of sequential
human readable representations of the evolving CONTROL
SCHEMA in DOWTRAN, where the set is designated with an
essentially consistent logical identifier.
(j) COMPILED DOWTRAN is the set of respective
sequential instances of machine readable code,
redundantly deployed, which results from the compilation
process executed by the MOD5 COMPILER to convert the
APPLICATION PROGRAM written in DOWTRAN into said machine
readable code.
(k) CONTROL SCHEMA comprises the entire collection
of concepts, process dynamics and control models, and
associated decision models which are referenced to define
the APPLICATION PROGRAM.
(l) MOD5 COMPILER is a computer program which
executes on the MINICOMPUTER to produce COMPILED DOWTRAN
from the APPLICATION PROGRAM written in the DOWTRAN
language.
(m) GPI means an executable subset of process
information and related software specially designed and
developed for execution on the MINICOMPUTER which
displays and stores process information and related
information to assist operations personnel.
(n) SERIAL GRAPHICS SOFTWARE means Lessor supplied
software, associated FIRMWARE, and protocol use rights to
implement SERIAL GRAPHICS.
1.2 Associated Hardware Definitions
(a) MOD5 HARDWARE means a user defined hardware
configuration designed to implement the MOD5 CAN SOFTWARE
which comprises two or more MOD CANS, two or more MOD5
COMPUTERS, and one or more INTERFACE PROCESSORS. MOD5
HARDWARE further comprises the Lessor specified hardware
(excluding FIRMWARE) resident within the MOD5 COMPUTER
which is used in the linking of the MOD5 COMPUTER to at
least one INTERFACE PROCESSOR.
(b) MOD CAN is a modular input/output device with
associated electronics which receives inputs and
originates output relative to PLANT instrumentation.
(c) MOD5 COMPUTER is a Lessor specified, high speed
control computer.
(d) MINICOMPUTER is a member of a family of
computers manufactured by the Digital Equipment
Corporation comprising VAX (or, optionally, AXP) hardware
executing the currently supported version of the VMS (or,
optionally, Open VMS) operating system specified by
Lessor, said computers otherwise referred to as VAX/VMS
(or, optionally, AXP/Open VMS) systems, to be separately
acquired by Lessee.
(e) SERIAL GRAPHICS is a programmable display panel
means which executes SERIAL GRAPHICS SOFTWARE for
consistent holistic display of immediate (REAL-TIME)
information, within the context of a fixed pictorial
background, depicting the status of a set of PROCESS
CONTROL SIGNALS in the domain of a particular APPLICATION
PROGRAM as its derived COMPILED DOWTRAN executes on its
affiliated redundant MOD5 COMPUTER system. The SERIAL
GRAPHICS programmable display panel system communicates
with its affiliated redundant MOD5 COMPUTER system using
a network protocol.
1.3 Miscellaneous Definitions
(a) PROCESS CONTROL SIGNALS is the set of analog
inputs, analog outputs, digital inputs, digital outputs
and the individual instances of process variables
contained within serial data messages transmitted to/from
the MOD5 OVERHEADS utilized to implement an APPLICATION
PROGRAM at a given PLANT.
(b) HARDWARE CONSUMABLES include, without
limitation, fuses, light bulbs, chart paper and other
such utility sundry items.
(c) REMEDIAL PRODUCT NOTICE is a change in hardware
design and/or software design and/or announcements of
procedures as may be desirable for continuing
effectiveness.
(d) REAL-TIME is generically defined as a method of
executing the MOD5 OVERHEADS in a MOD5 COMPUTER in which
an event causes a given reaction within an actual time
limit and wherein MOD5 COMPUTER actions are specifically
controlled within the context of and by external
conditions and actual times.
(e) PLANT means Lessee's facilities referred to in
the attached Schedule 1. MOD5 SYSTEMS for each PLANT are
specified by the number of CANS, and the installed
version of computer processing unit(s), MOD5 OVERHEADS,
GPI and DOWTRAN respectively.
(f) EFFECTIVE DATE is the date first set forth
above.
2. Term
The Term of this Agreement shall begin on the
EFFECTIVE DATE hereof and, subject to the provisions
herein for termination, shall continue for a period of
five (5) years. Lessee may extend this Term for an
additional six (6) months on ninety (90) days advance
notice. Lessee may terminate this lease as to any MOD5
SYSTEM at any time during the Term of this agreement on
ninety (90) days advance written notice to Lessor. The
obligations of Article 6 shall survive any expiration or
accelerated termination of this Agreement for a period of
ten (10) years from the EFFECTIVE DATE.
3. Payments
3.1 Lease Charges Lease charges for MOD5 SOFTWARE
leased hereunder are set forth in the accompanying
Schedule 1. These charges shall be invoiced within
thirty (30) days of the EFFECTIVE DATE and upon each
yearly anniversary thereof during the term of this
Agreement and shall be payable within thirty (30) days of
receipt of an invoice therefor.
3.2 Taxes Lessee shall pay all taxes, however
designated, which are levied or based on the lease
including, without limitation, property taxes, local fees
or excise taxes,but excluding taxes thereon based on
income to Lessor. In the event Lessee defaults in the
payment of any such tax, Lessor may pay such tax and
shall be reimbursed by Lessee, with interest, as
additional lease charges.
4. Terms of Possession and Use
4.1 Lessor and Lessee agree that all MOD5 SOFTWARE
leased by Lessor hereunder will be kept by Lessee in its
sole possession and control and will at all times be
located at the PLANTS designated in the attached Schedule
1. The parties will mutually cooperate to keep Schedule
1 current as to installed MOD5 SYSTEMS at each PLANT.
4.2 Lessee shall enjoy all rights of possession and
use of MOD5 SOFTWARE leased hereunder subject to Lessor's
rights under Paragraph 4.3. upon the occurrence of one or
more of the following conditions:
(a) Lessee breaches the secrecy obligations of
Article 6;
(b) Lessee fails to make payments within sixty (60)
days after notice of payments in arrears;
(c) Lessee ceases to own or control facilities in
which MOD5 SYSTEMS are installed, unless Lessee's
transfer of ownership or control occurs pursuant to
Article 14;
(d) Lessee ceases to use MOD5 SYSTEMS, or uses them
for a purpose other than their original
installation, or modifies them by integrally
combining internal MOD5 SYSTEM physical or logical
components with systems of others with the proviso
that when switching from a MOD5 SYSTEM to a
different process control system at a given PLANT
the MOD5 SYSTEM may be operated (as far as
reasonably possible in decoupled status) in parallel
with the other system;
(e) Lessor is prevented by a Force Majeure
condition from supporting MOD5 SOFTWARE acquired by
Lessee hereunder.
(f) Lessee terminates this Agreement totally or in
part as to any MOD5 SYSTEM.
4.3 In the event one or more conditions of
Paragraphs 4.2(a), (b), (c), (d), or (e) occurs. Lessor
may terminate this Agreement and its support of MOD5
SYSTEMS and MOD5 SOFTWARE shall be returned to Lessor.
In the event Lessee exercises rights of unilateral
termination under Paragraph 4.2(f), Lessor will terminate
its support of such MOD5 SYSTEM and MOD5 SOFTWARE
associated with such SYSTEM shall be returned to Lessor,
subject to Lessee rights specified in Article 5. Lessee
will permit reasonable access of Lessor to the PLANTS to
assist in the removal and return of MOD5 SOFTWARE.
5. Lessor Property
5.1 Lessor and Lessee agree that all MOD5 SOFTWARE
leased hereunder remains the personal property of Lessor
or Lessor's grantor and, subject to Lessee's reasonable
operating, safety and secrecy requirements. Lessee shall
permit access of Lessor or Lessor's designee to the
PLANTS at any time after termination of this Agreement to
permit removal of the same. Lessee will keep and
maintain the MOD5 SOFTWARE free and clear of all liens,
charges and encumbrances.
5.2 The glossaried and commented DOWTRAN language
listing of the APPLICATION PROGRAM produced by Lessee
shall be considered derivative software and, as such, it
is owned by Lessee with the proviso that Lessee will
diligently pursue protecting Lessor's interests pursuant
to Article 6. To facilitate Lessee's understanding of
the retained derivative APPLICATION PROGRAM, Lessee may
also retain the accompanying DOWTRAN application training
manuals and any cross references to sub-routine listings
in the APPLICATION PROGRAM. Upon expiration of this
lease these written materials retained by Lessee shall be
considered proprietary information of Lessor licensed to
Lessee subject to the terms of Article 6. The compiled
DOWTRAN listing from the MOD5 COMPILER is property of and
shall be returned to Lessor along with MOD5 SOFTWARE.
6. Confidentiality
MOD5 SYSTEMS comprise unique, valuable, proprietary
information. Lessee agrees to maintain and protect
Lessor's interests in proprietary information and will
accordingly keep all information pertaining to MOD5
SYSTEMS in confidence and not use the same except as is
necessary to the enjoyment and exercise of the leases
granted by Lessor hereunder at the PLANTS listed in the
attached Schedule 1. Lessee will take diligent action to
fulfill the foregoing obligations by instruction and
agreement with its employees or agents respecting the
confidentiality of this information and shall obtain from
them their written commitments to comply with terms of
confidentiality.
7. Software Copies
MOD5 SOFTWARE may only be copied, in whole or part,
with proper inclusion of Lessor's copyright notice and
any other proprietary notice required by Lessor, as
necessary and incidental to the use of such software for
archival and backup purposes or to replace a worn or
defective copy. All such copies shall be subject to the
terms and conditions of this Agreement and shall be kept
and used at the designated PLANTS. If Lessee is unable
to operate the MOD5 SOFTWARE on originally installed
equipment, the MOD5 SOFTWARE may be transferred
temporarily to another system during the period of
equipment malfunction.
8. Warranties, Disclaimers and Validations
8.1 THE EXPRESSED WARRANTIES HEREIN CONTAINED ARE
IN LIEU OF ANY AND ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY AND OF
FITNESS FOR A PARTICULAR PURPOSE. Lessor warrants that
MOD5 SOFTWARE as delivered will operate substantially as
indicated in documentation provided by Lessor and will
replace or provide instructions to adjust malfunctioning
components of MOD5 SOFTWARE on receiving notice thereof
from Lessee. Lessor will expeditiously address the
notice with, alternatively at Lessor's discretion,
replacement of the component with a currently available
MOD5 SOFTWARE component or instructions for corrective
logical modification of, or other accommodative procedure
for, the MOD5 SOFTWARE addressing the malfunction.
Lessee shall promptly, upon discovery, notify Lessor of
any alleged deficiency which may exist.
8.2 Lessor warrants that the MOD5 SOFTWARE as
delivered by Lessor under this Agreement shall not
infringe copyrights or patent rights of a third party
existing on the EFFECTIVE DATE. Upon prompt written
notice from Lessee providing all pertinent details of a
claim of such asserted infringement, Lessor will
undertake to investigate and at Lessor's expense to
settle or to defend against such a claim, provided Lessee
grants any necessary authority and gives its full support
and cooperation, or to obtain the right for Lessee to
continue to use the MOD5 SOFTWARE, or to replace or
modify the allegedly infringing components of the MOD5
SOFTWARE which Lessor has so delivered to avoid any such
claim that is found to be valid. Without prejudice to
the generality of the foregoing, such expense shall
extend to reasonable attorneys' fees incurred by Lessee
in respect of such claim. If an award is rendered
against Lessee, in any litigation that the Lessor defends
hereunder for infringement by the components of the MOD5
software which Lessor has so delivered, then Lessor shall
reimburse Lessee for damages and costs awarded by the
judicial authority in respect to those components.
8.3 Lessee acknowledges that it is responsible for
each APPLICATION PROGRAM and is not relying on Lessor's
skill or judgment to select or furnish MOD5 SOFTWARE and
associated MOD5 HARDWARE suitable for operation of a
particular manufacturing process and that there are no
warranties which are not contained in this Agreement.
Lessee acknowledges that it has made the selection of the
associated MOD5 HARDWARE. Lessor shall not be liable for
special, incidental or consequential damages arising out
of or in connection with the performance of systems
utilizing MOD5 SOFTWARE and associated MOD5 HARDWARE.
Lessor shall not be responsible for any loss or damage
caused by, nor shall any payments due hereunder abate by
reason of, any interruption in or loss of service or use
of the equipment or any part thereof arising from any
reason not solely attributable to Lessor. Without
limiting the generality of the foregoing, examples of the
foregoing include errors in the APPLICATION PROGRAM,
normal wear and tear of the MOD5 SOFTWARE, or gradual
deterioration of the MOD5 SOFTWARE.
8.4 Lessor's total obligation after the EFFECTIVE
DATE under this Article shall in no event exceed one
hundred percent (100%) of the total amount of the
payments actually received by Lessor under this
Agreement.
8.5 Whenever and to the extent validation of MOD5
SYSTEMS has occurred under FDA regulations to date,
Lessee shall retain those reports in support of
validation. If revalidation of the process control
system is necessary because of extended requirements of
the FDA regulations, Lessor shall provide information
reasonably required.
8.6 With regard to any FDA validations in progress,
or those to be conducted in the future, Lessor shall
provide information reasonably required under FDA
regulations with respect to MOD5 SYSTEMS validation.
9. Liability, Indemnity and Risk of Loss
Lessee assumes all risks and liabilities, whether or
not covered by insurance, and shall indemnify and hold
Lessor and its employees harmless for any liability,
claim, loss, damage or expense for injuries to or deaths
of persons and for damage to property, howsoever arising
from or incident to the possession, use, operation or
storage of MOD5 SOFTWARE and associated MOD5 HARDWARE,
and operation of the MOD5 SYSTEM, save and except for any
matter attributable to the sole negligence or willful
misconduct of Lessor. Said assumption of risks and
liabilities by Lessee shall apply whether such injury or
death to persons be to agents or employees of Lessee or
be to third persons and whether such damage be to
property of Lessee or to property of others.
10. MOD5 SOFTWARE Maintenance and Support
10.1 Throughout the Term hereunder after
installation of the MOD5 SOFTWARE, Lessee shall maintain
site conditions to provide an acceptable operating
environment for the MOD5 SOFTWARE as referenced in
documentation provided by Lessor. Lessee is responsible
for maintenance not provided under the Service Agreement
attached hereto as Appendix A and installation of the
MOD5 SOFTWARE. Lessee will maintain the MOD5 SOFTWARE in
a current and up-to-date condition adapting the
APPLICATION PROGRAM to accommodate REMEDIAL PRODUCT
NOTICES when recommended by Lessor, which will be
supplied by Lessor or by vendors approved by Lessor.
Such adaptations will normally address operating
reliability. Lessor will counsel Lessee, as requested
pursuant to the attached Service Agreement, to accomplish
the foregoing and Lessee shall permit Lessor or Lessor's
designee access to the MOD5 SOFTWARE for providing any
necessary assistance, such access to include network
access if deemed appropriate.
10.2 Lessor agrees to supply Maintenance and
Support Services for Maintenance and Support Services for
MOD5 SOFTWARE, including maintenance and adjustment of
associated MOD5 HARDWARE, solely in accordance with the
Service Agreement which is incorporated as Appendix A of
this Agreement. Lessor is not responsible for supply,
maintenance and adjustment of the MINICOMPUTER, and other
commercially sourced computer(s) or commercially sourced
operating system(s) used in association with MOD5
SOFTWARE.
10.3 Subject to Lessee's reasonable operating,
safety and secrecy requirements, Lessee shall grant
Lessor PLANT access to the MINICOMPUTER and other
commercially sourced computer(s) used with MOD5 SOFTWARE
during normal working hours for inspection and
installation of REMEDIAL PRODUCT NOTICES and for any
other reasonable purpose, such access to include network
access if deemed appropriate. Lessee shall immediately
notify Lessor of all details concerning any malfunction
arising out of the alleged or apparent improper
manufacture, functioning or operation of the MOD5
SOFTWARE.
11. Notices
Lessee and Lessor agree that notices required
hereunder shall be deemed received the seventh day after
mailing, if mailed air postage prepaid to Lessor or
Lessee as the case may be at their respective address
given below.
If to Lessor, to: Rofan Services, Inc.
2030 Willard H. Dow Center
Midland, MI 48674
Attention: M. N. Trask, Vice
President
If to Lessee, to: Merrell Dow Pharmaceuticals Inc.
2110 E. Galbraith Road
Cincinnati, OH 45215
Attention: _________________
Either party may change such address for notice by
sending to the other party a written notice.
12. Severability
Any provision hereof prohibited by, or unlawful or
unenforceable under, any applicable law of any
jurisdiction shall be ineffective as to such jurisdiction
without invalidating the remaining provisions of this
Agreement. In the event a material provision is
affected, the parties shall reformulate their mutual
undertakings in such manner as to preserve, as much as
possible, their original intentions and objects of this
Agreement, consistent with the laws of such jurisdiction.
13. Alterations
Except for Lessee's remedial modification of
APPLICATION PROGRAM, no alterations to MOD5 SOFTWARE
shall be made without first obtaining in each instance
the prior written approval of Lessor which approval shall
be expeditiously considered and not be unreasonably
withheld.
14. Conflicts and Assignability
This Agreement does not operate as an acceptance of
any conflicting terms or conditions and shall prevail
over any conflicting provision of any subsequent purchase
order or other instrument of Lessee, it being understood
that any purchase order or the request of Lessee acted
upon by Lessor shall be for the convenience of Lessee
only but shall not operate to amend or modify in any
respect the terms hereof. This Agreement may only be
altered, modified, supplemented or deviated from by
further agreement in writing executed by an authorized
representative of each Lessor and Lessee. Lessee and
Lessor acknowledge that by executing this Agreement each
has reviewed the attachments listed above and each agrees
to be legally bound and dutifully perform its obligations
thereunder. Lessor reserves the right to assign this
Agreement to a parent, affiliate or sister company of
Lessor, but otherwise this Agreement shall not be
assignable by either party except to a successor of the
entire PLANT, which undertakes all obligations assumed by
lessee hereunder by an agreement executed and copied to
Lessor and to whom Lessor has no reasonable objection.
15. Applicable Law
The laws of the State of Michigan shall be applied
in the construction and interpretation of this Agreement.
No law of conflicts or choice of law shall supersede this
provision except as provided in Article 6.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed on their behalf by their duly
authorized representatives.
LESSOR: LESSEE:
ROFAN SERVICES INC. MERRELL DOW PHARMACEUTICALS
INC.
By:/s/ John C. Lillich By:/s/ Charles D. Dalton
Name: John C. Lillich Name: Charles D. Dalton
Title: President Title: Vice President
Date: May 3, 1995 Date: May 3, 1995
APPENDIX A
SERVICE AGREEMENT
MAINTENANCE
1. Services
(i) To facilitate efficient use of MOD5 SOFTWARE,
Lessor agrees to provide and Lessee agrees to acquire
MOD5 SOFTWARE Maintenance Services as provided hereunder.
Lessee has responsibility to acquire,through separate
arrangements with Lessor or another party, reasonable
MOD5 HARDWARE training and/or services necessary to apply
DOWTRAN to the CONTROL SCHEMA and to remedially modify
and APPLICATION PROGRAM.
(ii) Maintenance Services for MOD5 SOFTWARE
include the notification of and assistance for
implementation, where necessary, of REMEDIAL PRODUCT
NOTICES for MOD5 SOFTWARE and remedial maintenance
consultation for MOD5 SOFTWARE, MOD5 HARDWARE, FIRMWARE
and other maintenance conducted by Lessee. Repair of
subassemblies and printed circuit boards will by done by
Lessor for Lessee's account, i.e., at Lessee's expense,
working with the vendor of such components. Acquisition
and installation of HARDWARE CONSUMABLES shall be the
responsibility of Lessee.
(iii) Lessor shall provide backup support for MOD5
SOFTWARE and MOD5 HARDWARE after Lessee has undertaken
reasonable effort to resolve any MOD5-related problem.
Telephone support shall be provided within 24 hours of
notification of the problem and on-site service shall be
provided within 48 hours of any such notification.
(iv) Lessee shall be responsible for the
appointment of one or more computer systems professionals
or process control professionals fluent in the English
language having a level of technical qualifications and
experience acceptable to Lessor, whose acceptance will
not be unreasonably withheld, as manager for the MOD5
SOFTWARE. The MOD5 SOFTWARE manager shall enter into a
secrecy agreement with Lessor to protect Lessor's
technology and shall cooperate with Lessor in enabling
access to the MOD5 SOFTWARE when appropriate.
(v) "Special Services" reasonably required by
lessee at its PLANT sites any time during the Term and
upon termination of this lease, such as, for example,
services that may be required to assist Lessee in
completing FDA validations of process control in progress
or for such technical support as may be reasonably
necessary in switching from MOD5 process control to
another process control system shall be provided by
Lessor on reasonable notice for a period up to twelve
(12) workdays (8 hours per workday) over each successive
twelve (12) month period during the term of this lease
measured from its EFFECTIVE DATE. Special Service
workdays not used within a given twelve (12) month period
shall not carry over to a subsequent period.
(vi) Lessee and Lessor from time to time may agree
on additional or new Special Services beyond those agreed
in this Agreement. Any such additional or new Special
Services may be agreed to in a MOD5 Special Service
Addendum. For each separate request for services from
Lessee, Lessor shall prepare and submit to Lessee a
written service proposal. The parties shall discuss the
service proposal and negotiate to agreement regarding the
nature, scope, terms and detail of the work. If
agreement on the total scope is reached, the parties
shall develop a Special Service Addendum which shall
define in detail the scope of services and tasks to be
performed, the schedule for completion and the billing
basis for such Special services. Each MOD5 Special
Service Addendum shall be effective only if signed by an
authorized representative of each party. Each Special
Service Addendum shall be sequentially numbered. A
sample Special Service Addendum is attached as Appendix
B.
2. Service Limitations
Services are contingent upon the proper use of the
MOD5 SOFTWARE and the acquisition of associated MOD5
HARDWARE suitable for running MOD5 SOFTWARE. Services do
not include any of the following: electrical work
external to the INTERFACE PROCESSOR, MINICOMPUTER, or
other commercially sourced computer(s) or commercially
sourced operating system(s) associated with the MOD5
SYSTEM; replacing or providing HARDWARE CONSUMABLES;
refinishing MOD5 SOFTWARE; or maintenance of accessories,
attachments, machines or other devices not provided by
Lessor. Service shall not include practices which in
Lessor's judgment are unsafe or impractical for Lessor to
render because of alterations to the MOD5 SOFTWARE or
connection of the PLANTS by mechanical or electrical
means to machine devices furnished by a supplier other
than Lessor. Service will not be performed on MOD5
SOFTWARE located in an unsafe or hazardous environment,
as determined by Lessor. Service to be provided does not
include service necessitated by elements external to the
MOD5 SOFTWARE which are not within Lessor's operation or
maintenance instructions or installation site preparation
guidelines including,but not limited to, humidity,
temperature, power failure, surges, air conditioning,
grounding, static charge control, service resulting from
accident, neglect, alterations, improper use or misuse of
the MOD5 SOFTWARE or by repairs attempted by Lessee's
personnel or service to a version other than the
installed version of MOD5 SOFTWARE and MOD5 HARDWARE.
3. Service Charge
(i) For Maintenance Services described in Article
1 performed at Lessee's PLANTS, Lessee shall pay Lessor a
service charge in the amount of Lessor's standard charge
for such services, plus reasonable travel and living
expenses. This fee is presently $125.00 per hour.
(ii) For home based maintenance and support
services described in Article 1 above conducted at the
home locations of Lessor and its suppliers, Lessee shall
pay Lessor an annual fee as shown on Schedule 1
determined by multiplying the total number of MOD CANS on
which MOD5 SOFTWARE is run by a standard service fee.
(iii) Special Services pursuant to Article 1(v)
shall be without charge for up to 2 workdays in a single
visit within each successive 12 month period during the
Term of this lease. For additional workdays and
additional visits within each 12 month period Lessee
shall pay Lessor a professional consulting fee of $150.00
per hour for up to an additional 10 workdays. Lessee
shall reimburse Lessor for reasonable travel and lodging
expenses of such consultancy.
(iv) Service charges accruing under this Article 3
will be invoiced and shall be payable within thirty (30)
days of receipt of an invoice therefor.
APPENDIX B
MOD5 SERVICE ADDENDUM NO. ___
(Reference Article 1(vi) Appendix A)
(A) Scope of Special Services:
(B) Compensation:
(C) Term or Schedule of Completion:
(D) Changes to Scope of Services:
(E) Representatives:
(F) Responsibility for Reporting:
(G) Termination:
This Special Service Addendum may be terminated (i)
by either party with or without cause at any time
upon 30 days written notice, or (ii) by the non-
breaching party upon 2 days written notice in the
event the other party fails to cure its breach of a
material obligation under the Agreement or this
Special Service Addendum within 20 days of its
receipt of a notice alleging such breach from the
other party.
SCHEDULE 1
LEASED MOD5 SOFTWARE
NUMBER OF LEASE ANNUAL
SITE PLANT MOD CANS CHARGES SUPPORT FEES
CINCINNATI, DRY PRODUCTS 2
OHIO LIQUID PRODUCTS 2
GRANEX 2
NEW TECH 2
SIM CAN 1
9 none $11,700.00
(ANTEDATES
LEASING)
MOD5 SYSTEMS DESCRIPTION:
NUMBER OF SYSTEMS: 5
VERSIONS:
CPU: MOD5 +
OVERHEAD SOFTWARE: 6.42
GPI: CONVERTING TO GPI
(CURRENTLY USING DOWPIX)
MIDLAND, BLDG.827 21 PAID-UP $24,700.00
MICHIGAN (EXCLUDES MOD4)
MOD5 SYSTEMS DESCRIPTION:
NUMBER OF SYSTEMS: 6
VERSIONS:
CPU: MOD4 (2 CANS)
MOD5 + (17 CANS)
MOD5E (2 CANS)
OVERHEAD SOFTWARE: 7.71 (15 CANS)
6.04 (4 CANS)
GPI: 2.11
DSS: 2.11
VMS: 5.5-2
MODSERVER SOFTWARE: 5.17
NUMBER OF LEASE ANNUAL
SITE PLANT MOD CANS CHARGES SUPPORT FEES
MIDLAND, BLDG.1 11 PAID-UP $14,300.00
MICHIGAN
MOD5 SYSTEMS DESCRIPTION:
NUMBER OF SYSTEMS: 3
VERSIONS:
CPU: MOD5E
OVERHEAD SOFTWARE: 7.71
GPI: 2.11
DSS: 2.11
VMS: 5.5-2
MODSERVER SOFTWARE: 5.17
MIDLAND, BLDG.1381 11 PAID-UP $14,300.00
MICHIGAN
MOD5 SYSTEMS DESCRIPTION:
NUMBER OF SYSTEMS: 2
VERSIONS:
CPU: MOD5E
OVERHEAD SOFTWARE: 7.71
GPI: 2.11
DSS: 2.11
VMS: 5.5-2h4
MODSERVER SOFTWARE: 5.17
TOTAL ANNUAL SUPPORT FEES: $65,000,000
PERSONAL CONFIDENTIALITY AGREEMENT
DECLARATIONS:
The undersigned employee of Merrell Dow
Pharmaceuticals Inc. (MDPI) has certain responsibilities
for maintaining and operating MOD5 SYSTEMS for
manufacturing process control.
The undersigned Affiliate of The Dow Company (Dow)
is willing to continue supporting MOD5 SYSTEMS used by
MDPI according to the terms of the "Computerized Process
Control Software Agreement" entered into between
Affiliate and MDPI with the proviso that the latter
appoint a MOD5 SOFTWARE technical manager with
appropriate competencies in the English language and
pertinent technical qualifications.
ASSURANCES:
The undersigned acknowledges he/she has been
assigned such responsibilities regarding MOD5 SYSTEMS BY
MDPI and affirms:
1. That he/she is familiar with the "Computerized
Process Control Software Agreement" mentioned above,
including those terms thereof regarding confidentiality
of information.
2. That pursuant to the terms of the Agreement
he/she will not disclose to others proprietary
information about MOD5 SYSTEMS nor make any unauthorized
copies of documents containing such Information, and
moreover agrees that no personal rights to use any
Information acquired in working with MOD5 SYSTEMS are
expressly or impliedly acquired hereunder.
It is understood by the undersigned and Affiliate of
Dow that these obligations shall not apply to Information
which is or becomes part of the public domain through no
fault of the undersigned or is received by the
undersigned on a nonconfidential basis from a third party
who is not under an obligation of confidence to Dow or a
Dow Affiliate.
ACCEPTED BY ROFAN SERVICES INC.
MDPI Representative:
__________________________ By:_________________________
Name:_____________________ Name:_______________________
Title:____________________ Title:______________________
Date:_____________________ Date:_______________________
Upon termination of the Special Service Addendum, Lessor
shall invoice Lessee for all services performed by Lessor
under this Special Service Addendum prior to the termination
for which Lessor was not previously compensated, and for
expenses necessary to shut down the project.
ACCEPTED AND AGREED, as of the later of the two dates noted in
the signature blocks, by each Party's authorized representative.
Lessor: Lessee:
ROFAN SERVICES INC. MERRELL DOW PHARMACEUTICALS
INC.
By:_________________________ By:_________________________
Name:_______________________ Name:_______________________
Title:______________________ Title:_______________________
Date:_______________________ Date:________________________
EXHIBIT 10
COMPUTERIZED PROCESS SOFTWARE AGREEMENT
(LEASES AND SERVICES)
This lease and service agreement, hereinafter
"Agreement," is made and entered into effective May 3,
1995, by and between ROFAN AUTOMATION AND INFORMATION
SYSTEMS B.V. (hereinafter "Lessor") and GRUPPO LEPETIT
S.p.A. (hereinafter "Lessee"), located at:
LESSOR: ROFAN AUTOMATION AND INFORMATION
SYSTEMS. B.V.
Address: Aert van Nesstraat 45
3012 CA Rotterdam, The Netherlands
Corporation of: Kingdom of the Netherlands
Authorized leasing representative for MOD5 SYSTEMS.
LESSEE: GRUPPO LEPETIT S.p.A.
Address: Via Roberto Lepetit 8
20020 Lainate, Italy
Corporation of: Italy
Lessor and Lessee hereby agree this Agreement consists
in its entirety of this executed covering document and the
following attachments:
APPENDIX A - SERVICE AGREEMENT
APPENDIX B - MOD5 SPECIAL SERVICE ADDENDUM
SCHEDULE 1 - LEASED MOD5 SOFTWARE
Lessor agrees to lease to Lessee and Lessee agrees
to lease from Lessor in accordance with the terms and
conditions of this Agreement MOD5 SOFTWARE as delineated
in Schedule 1 to integrally generate, transmit and manage
process control at the PLANTS listed in Schedule 1
attached hereto and made a part hereof. This Agreement
constitutes the entire understanding between Lessee and
Lessor pertaining to all MOD5 SOFTWARE for Lessee's
PLANTS and supersedes any prior or contemporaneous
agreements and all negotiations, representations and
proposals written or oral pertaining to this subject.
1. Definitions
Terms used in this Agreement shall have the meanings
ascribed to them as follows:
1.1 Software Definitions
(a) MOD5 SOFTWARE means (1) MOD5 CAN SOFTWARE,
(2) SERIAL GRAPHICS SOFTWARE, and (3) GPI based on
specially designed, direct digital control, redundant
computer technology to provide process control and
process operation information for execution on MOD5
HARDWARE.
(b) MOD5 SYSTEM is a specific implementation
of MOD5 HARDWARE and MOD5 SOFTWARE in a PLANT. Within a
given PLANT there may be one or more MOD5 SYSTEMS.
(c) MOD5 CAN SOFTWARE means MOD5 OVERHEADS
including associated FIRMWARE, DOWTRAN SUPPORT TOOLS, AND
MOD5 COMPILER.
(d) FIRMWARE is a physical means containing
electronically retrievable information pertaining to MOD5
SOFTWARE.
(e) INTERFACE PROCESSOR is a functional
interconnection within a system between the MOD5
OVERHEADS and other MOD5 SOFTWARE, which contains
hardware, dedicated executable software, and FIRMWARE.
(f) DOWTRAN is a specific language designed
for the process control application engineer to convert
and express the CONTROL SCHEMA into an APPLICATION
PROGRAM for a manufacturing process. The APPLICATION
PROGRAM is further transformed into COMPILED DOWTRAN
using a MOD5 COMPILER.
(g) MOD5 OVERHEADS means the redundantly
deployed, executable operating system software and,
optionally, protocol use rights, for the MOD5 COMPUTER
that executes the COMPILED DOWTRAN and implements
diagnostics, inputs, outputs, alarms and event logging.
(h) DOWTRAN SUPPORT TOOLS are utility programs
which execute on the MINICOMPUTER to assist the
application engineer in writing the APPLICATION PROGRAM
in DOWTRAN.
(i) APPLICATION PROGRAM is the set of
sequential human readable representations of the evolving
CONTROL SCHEMA in DOWTRAN, where the set is designated
with an essentially consistent logical identifier.
(j) COMPILED DOWTRAN is the set of respective
sequential instances of machine readable code,
redundantly deployed, which results from the compilation
process executed by the MOD5 COMPILER to convert the
APPLICATION PROGRAM written in DOWTRAN into said machine
readable code.
(k) CONTROL SCHEMA comprises the entire
collection of concepts, process dynamics and control
models, and associated decision models which are
referenced to define the APPLICATION PROGRAM.
(l) MOD5 COMPILER is a computer program which
executes on the MINICOMPUTER to produce COMPILED DOWTRAN
from the APPLICATION PROGRAM written in the DOWTRAN
language.
(m) GPI means an executable subset of process
information and related software specially designed and
developed for execution on the MINICOMPUTER which
displays and stores process information and related
information to assist operations personnel.
(n) SERIAL GRAPHICS SOFTWARE means Lessor
supplied software, associated FIRMWARE, and protocol use
rights to implement SERIAL GRAPHICS.
1.2 Associated Hardware Definitions
(a) MOD5 HARDWARE means a user defined
hardware configuration designed to implement the MOD5 CAN
SOFTWARE which comprises two or more MOD CANS, two or
more MOD5 COMPUTERS, and one or more INTERFACE
PROCESSORS. MOD5 HARDWARE further comprises the Lessor
specified hardware (excluding FIRMWARE) resident within
the MOD5 COMPUTER which is used in the linking of the
MOD5 COMPUTER to at least one INTERFACE PROCESSOR.
(b) MOD CAN is a modular input/output device
with associated electronics which receives inputs and
originates output relative to PLANT instrumentation.
(c) MOD5 COMPUTER is a Lessor specified, high
speed control computer.
(d) MINICOMPUTER is a member of a family of
computers manufactured by the Digital Equipment
Corporation comprising VAX (or, optionally, AXP) hardware
executing the currently supported version of the VMS (or,
optionally, Open VMS) operating system specified by
Lessor, said computers otherwise referred to as VAX/VMS
(or, optionally, AXP/Open VMS) systems, to be separately
acquired by Lessee.
(e) SERIAL GRAPHICS is a programmable display
panel means which executes SERIAL GRAPHICS SOFTWARE for
consistent holistic display of immediate (REAL-TIME)
information, within the context of a fixed pictorial
background, depicting the status of a set of PROCESS
CONTROL SIGNALS in the domain of a particular APPLICATION
PROGRAM as its derived COMPILED DOWTRAN executes on its
affiliated redundant MOD5 COMPUTER system. The SERIAL
GRAPHICS programmable display panel system communicates
with its affiliated redundant MOD5 COMPUTER system using
a network protocol.
1.3 Miscellaneous Definitions
(a) PROCESS CONTROL SIGNALS is the set of
analog inputs, analog outputs, digital inputs, digital
outputs and the individual instances of process variables
contained within serial data messages transmitted to/from
the MOD5 OVERHEADS utilized to implement an APPLICATION
PROGRAM at a given PLANT.
(b) HARDWARE CONSUMABLES include, without
limitation, fuses, light bulbs, chart paper and other
such utility sundry items.
(c) REMEDIAL PRODUCT NOTICE is a change in
hardware design and/or software design and/or
announcements of procedures as may be desirable for
continuing effectiveness.
(d) REAL-TIME is generally defined as a method
of executing the MOD5 OVERHEADS in a MOD5 COMPUTER in
which an event causes a given reaction within an actual
time limit and wherein MOD5 COMPUTER actions are
specifically controlled within the context of and by
external conditions and actual times.
(e) PLANT means Lessee's facilities referred
to in the attached Schedule 1. MOD5 SYSTEMS for such
PLANT are specified by the number of CANS, and the
installed version of computer processing unit(s), MOD5
OVERHEADS, GPI and DOWTRAN respectively.
(f) EFFECTIVE DATE is the date first set forth
above.
2. Term
The Term of this Agreement shall begin on the
EFFECTIVE DATE hereof and, subject to the provisions
herein for termination, shall continue for a period of
five (5) years. Lessee may extend this Term for an
additional six (6) months on ninety (90) days advance
notice. Lessee may terminate this lease as to any MOD5
SYSTEM at any time during the Term of this agreement on
ninety (90) days advance written notice to Lessor. The
obligations of Article 6 shall survive any expiration or
accelerated termination of this Agreement for a period of
ten (10) years from the EFFECTIVE DATE.
3. Payments
3.1 Lease Charges. Lease charges for MOD5 SOFTWARE
leased hereunder are set forth in the accompanying
Schedule 1. These charges shall be invoiced within
thirty (30) days of the EFFECTIVE DATE and upon each
yearly anniversary thereof during the term of this
Agreement and shall be payable within thirty (30) days of
receipt of an invoice therefor.
3.2 Taxes. Lessee shall pay all taxes, however
designated, which are levied or based on the lease
including, without limitation, property taxes, local fees
or excise taxes, but excluding taxes thereon based on
income to Lessor. In the event Lessee defaults in the
payment of any such tax, Lessor may pay such tax and
shall be reimbursed by Lessee, with interest, as
additional lease charges.
4. Terms of Possession and Use
4.1 Lessor and Lessee agree that all MOD5 SOFTWARE
leased by Lessor hereunder will be kept by Lessee in its
sole possession and control and will at all times be
located at the PLANTS designated in the attached
Schedule 1. The parties will mutually cooperate to keep
Schedule 1 current as to installed MOD5 SYSTEMS at each
PLANT.
4.2 Lessee shall enjoy all rights of possession and
use of MOD5 SOFTWARE leased hereunder subject to Lessor's
rights under Paragraph 4.3, upon the occurrence of one or
more of the following conditions:
(a) Lessee breaches the secrecy
obligations of Article 6;
(b) Lessee fails to make payments within
sixty (60) days after notice of payments in
arrears;
(c) Lessee ceases to own or control
facilities in which MOD5 SYSTEMS are installed,
unless Lessee's transfer of ownership or
control occurs pursuant to Article 14;
(d) Lessee ceases to use MOD5 SYSTEMS, or
uses them for a purpose other than their
original installation, or modifies them by
integrally combining internal MOD5 SYSTEM
physical or logical components with systems of
others with the proviso that when switching
from a MOD5 SYSTEM to a different process
control system at a given PLANT the MOD5 SYSTEM
may be operated (as far as reasonably possible
in decoupled status) in parallel with the other
system;
(e) Lessor is prevented by a Force
Majeure condition from supporting MOD5 SOFTWARE
acquired by Lessee hereunder.
(f) Lessee terminates this Agreement
totally or in part as to any MOD5 SYSTEM.
4.3 In the event one or more conditions of
Paragraphs 4.2(a), (b), (c), (d), or (e) occurs, Lessor
may terminate this Agreement and its support of MOD5
SYSTEMS and MOD5 SOFTWARE shall be returned to Lessor.
In the event Lessee exercises rights of unilateral
termination under Paragraph 4.2(f), Lessor will terminate
its support of such MOD5 SYSTEM and MOD5 SOFTWARE
associated with such SYSTEM shall be returned to Lessor,
subject to Lessee rights specified in Article 5. Lessee
will permit reasonable access of Lessor to the PLANTS to
assist in the removal and return of MOD5 SOFTWARE.
5. Lessor Property
5.1 Lessor and Lessee agree that all MOD5 SOFTWARE
leased hereunder remains the personal property of Lessor
or Lessor's grantor and, subject to Lessee's reasonable
operating, safety and secrecy requirements, Lessee shall
permit access of Lessor or Lessor's designee to the
PLANTS at any time after termination of this Agreement to
permit removal of the same. Lessee will keep and
maintain the MOD5 SOFTWARE free and clear of all liens,
charges and encumbrances.
5.2 The glossaried and commented DOWTRAN language
listing of the APPLICATION PROGRAM produced by Lessee
shall be considered derivative software and, as such, it
is owned by Lessee with the proviso that Lessee will
diligently pursue protecting Lessor's interests pursuant
to Article 6. To facilitate Lessee's understanding of
the retained derivative APPLICATION PROGRAM, Lessee may
also retain the accompanying DOWTRAN application training
manuals and any cross references to sub-routine listings
in the APPLICATION PROGRAM. Upon expiration of this
lease these written materials retained by Lessee shall be
considered proprietary information of Lessor licensed to
Lessee subject to the terms of Article 6. The compiled
DOWTRAN listing from the MOD5 COMPILER is property of and
shall be returned to Lessor along with MOD5 SOFTWARE.
6. Confidentiality
6.1 MOD5 SYSTEMS comprise unique, valuable,
proprietary information. Lessee agrees to maintain and
protect Lessor's interests in proprietary information and
will accordingly keep all information pertaining to MOD5
SYSTEMS in confidence and not use the same except as is
necessary to the enjoyment and exercise of the leases
granted by Lessor hereunder at the PLANTS listed in the
attached Schedule 1. Lessee will take diligent action to
fulfill the foregoing obligations by instruction and
agreement with its employees or agents respecting the
confidentiality of this information and shall obtain from
them their written commitments to comply with terms of
confidentiality.
6.2 Lessee shall adhere to the U.S. Export
Administration Laws and Regulations and shall not
knowingly reexport, directly or indirectly, any MOD5
SOFTWARE or MOD5 HARDWARE, or any technical data received
from Lessor or the direct products of such technical data
in violation of 15 CFR Part 779 of the U.S. Export
Administration Regulations unless proper authorization of
the U.S. Government and the written consent of Lessor
have previously been obtained. No law of conflicts or
choice of law shall supersede this provision.
7. Software Copies
MOD5 SOFTWARE may only be copied, in whole or part,
with proper inclusion of Lessor's copyright notice and
any other proprietary notice required by Lessor, as
necessary and incidental to the use of such software for
archival and backup purposes or to replace a worn or
defective copy. All such copies shall be subject to the
terms and conditions of this Agreement and shall be kept
and used at the designated PLANTS. If Lessee is unable
to operate the MOD5 SOFTWARE on originally installed
equipment, the MOD5 SOFTWARE may be transferred
temporarily to another system during the period of
equipment malfunction.
8. Warranties, Disclaimers and Validations
8.1 THE EXPRESSED WARRANTIES HEREIN CONTAINED ARE
IN LIEU OF ANY AND ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY AND OF
FITNESS FOR A PARTICULAR PURPOSE. Lessor warrants that
MOD5 SOFTWARE as delivered will operate substantially as
indicated in documentation provided by Lessor and will
replace or provide instructions to adjust malfunctioning
components of MOD5 SOFTWARE on receiving notice thereof
from Lessee. Lessor will expeditiously address the
notice with, alternatively at Lessor's discretion,
replacement of the component with a currently available
MOD5 SOFTWARE component or instructions for corrective
logical modification of, or other accommodative procedure
for, the MOD5 SOFTWARE addressing the malfunction.
Lessee shall promptly, upon discovery, notify Lessor of
any alleged deficiency which may exist.
8.2 Lessor warrants that the MOD5 SOFTWARE as
delivered by Lessor under this Agreement shall not
infringe copyrights or patent rights of a third party
existing on the EFFECTIVE DATE. Upon prompt written
notice from Lessee providing all pertinent details of a
claim of such asserted infringement, Lessor will
undertake to investigate and at Lessor's expense to
settle or to defend against such a claim, provided Lessee
grants any necessary authority and gives its full support
and cooperation, or to obtain the right for Lessee to
continue to use the MOD5 SOFTWARE, or to replace or
modify the allegedly infringing components of the MOD5
SOFTWARE which Lessor has so delivered to avoid any such
claim that is found to be valid. Without prejudice to
the generality of the foregoing, such expense shall
extend to reasonable attorneys' fees incurred by Lessee
in respect of such claim. If an award is rendered
against Lessee, in any litigation that the Lessor defends
hereunder for infringement by the components of the MOD5
SOFTWARE which Lessor has so delivered, then Lessor shall
reimburse Lessee for damages and costs awarded by the
judicial authority in respect to those components.
8.3 Lessee acknowledges that it is responsible for
each APPLICATION PROGRAM and is not relying on Lessor's
skill or judgment to select or furnish MOD5 SOFTWARE and
associated MOD5 HARDWARE suitable for operation of a
particular manufacturing process and that there are no
warranties which are not contained in this Agreement.
Lessee acknowledges that it has made the selection of the
associated MOD5 HARDWARE. Lessor shall not be liable for
special, incidental or consequential damages arising out
of or in connection with the performance of systems
utilizing MOD5 SOFTWARE and associated MOD5 HARDWARE.
Lessor shall not be responsible for any loss or damage
caused by, nor shall any payments due hereunder abate by
reason of, any interruption in or loss of service or sue
of the equipment or any part thereof arising from any
reason not solely attributable to Lessor. Without
limiting the generality of the foregoing, examples of the
foregoing include errors in the APPLICATION PROGRAM,
normal wear and tear of the MOD5 SOFTWARE, or gradual
deterioration of the MOD5 SOFTWARE.
8.4 Lessor's total obligation after the EFFECTIVE
DATE under this Article shall in no event exceed one
hundred percent (100%) of the total amount of the
payments actually received by Lessor under this
Agreement.
8.5 Whenever and to the extent validation of MOD5
SYSTEMS has occurred under FDA regulations to date,
Lessee shall retain those reports in support of
validation. If revalidation of the process control
system is necessary because of extended requirements of
the FDA regulations, Lessor shall provide information
reasonably required.
8.6 With regard to any FDA validations in progress,
or those to be conducted in the future, Lessor shall
provide information reasonably required under FDA
regulations with respect to MOD5 SYSTEMS validation.
9. Liability, Indemnity and Risk of Loss
Lessee assumes all risks and liabilities, whether or
not covered by insurance, and shall indemnify and hold
Lessor and its employees harmless for any liability,
claim, loss, damage or expense for injuries to or deaths
of persons and for damage to property, howsoever arising
from or incident to the possession, use, operation or
storage of MOD5 SOFTWARE and associated MOD5 HARDWARE,
and operation of the MOD5 SYSTEM, save and except for any
matter attributable to the sole negligence or willful
misconduct of Lessor. Said assumption of risks and
liabilities by Lessee shall apply whether such injury or
death to persons be to agents or employees of Lessee or
be to third persons and whether such damage be to
property of Lessee or to property of others.
10. MOD5 SOFTWARE Maintenance and Support
10.1 Throughout the Term hereunder after
installation of the MOD5 SOFTWARE, Lessee shall maintain
site conditions to provide an acceptable operating
environment for the MOD5 SOFTWARE as referenced in
documentation provided by Lessor. Lessee is responsible
for maintenance not provided under the Service Agreement
attached hereto as Appendix A and installation of the
MOD5 SOFTWARE. Lessee will maintain the MOD5 SOFTWARE in
a current and up-to-date condition adapting the
APPLICATION PROGRAM to accommodate REMEDIAL PRODUCT
NOTICES when recommended by Lessor, which will be
supplied by Lessor or by vendors approved by Lessor.
Such adaptations will normally address operating
reliability. Lessor will counsel Lessee, as requested
pursuant to the attached Service Agreement, to accomplish
the foregoing and Lessee shall permit Lessor or Lessor's
designee access to the MOD5 SOFTWARE for providing any
necessary assistance, such access to include network
access if deemed appropriate.
10.2 Lessor agrees to supply Maintenance and
Support Services for MOD5 SOFTWARE, including maintenance
and adjustment of associated MOD5 HARDWARE, solely in
accordance with the Service Agreement which is
incorporated as Appendix A of this Agreement. Lessor is
not responsible for supply, maintenance and adjustment of
the MINICOMPUTER, and other commercially sourced
computer(s) or commercially sourced operating system(s)
used in association with MOD5 SOFTWARE.
10.3 Subject to Lessee's reasonable operating,
safety and secrecy requirements, Lessee shall grant
Lessor PLANT access to the MINICOMPUTER and other
commercially sourced computer(s) used with MOD5 SOFTWARE
during normal working hours for inspection and
installation of REMEDIAL PRODUCT NOTICES and for any
other reasonable purpose, such access to include network
access if deemed appropriate. Lessee shall immediately
notify Lessor of all details concerning any malfunction
arising out of the alleged or apparent improper
manufacture, functioning or operation of the MOD5
SOFTWARE.
11. Notices
Lessee and Lessor agree that notices required
hereunder shall be deemed received the seventh day after
mailing, if mailed air postage prepaid to Lessor Lessee
as the case may be at their respective address given
below.
If to Lessor, to:
Rofan Automation and Information
Systems B.V.
P.O. Box 48
4530 AA Terneuzen, The Netherlands
Attention: Hans Naninck, Director
If to Lessee, to:
Gruppo Lepetit S.p.A.
Via Roberto Lepetit 8
20020 Lainate, Italy
Attention:
Either party may change such address for notice by
sending to the other party a written notice.
12. Severability
Any provision hereof prohibited by, or unlawful or
unenforceable under, any applicable law of any
jurisdiction shall be ineffective as to such jurisdiction
without invalidating the remaining provisions of this
Agreement. In the event a material provision is
affected, the parties shall reformulate their mutual
undertakings in such manner as to preserve, as much as
possible, their original intentions and objects of this
Agreement, consistent with the laws of such jurisdiction.
13. Alterations
Except for Lessee's remedial modification of
APPLICATION PROGRAM, no alterations to MOD5 SOFTWARE
shall be made without first obtaining in each instance
the prior written approval of Lessor which approval shall
be expeditiously considered and not be unreasonably
withheld.
14. Conflicts and Assignability
This Agreement does not operate as an acceptance of
any conflicting terms or conditions and shall prevail
over any conflicting provision of any subsequent purchase
order or other instrument of Lessee, it being understood
that any purchase order or the request of Lessee acted
upon by Lessor shall be for the convenience of Lessee
only but shall not operate to amend or modify in any
respect the terms hereof. This Agreement may only be
altered, modified, supplemented or deviated from by
further agreement in writing executed by an authorized
representative of each Lessor and Lessee. Lessee and
Lessor acknowledge that by executing this Agreement each
has reviewed the attachments listed above and each agrees
to be legally bound and dutifully perform its obligations
thereunder. Lessor reserves the right to assign this
Agreement to a parent, affiliate or sister company of
Lessor, but otherwise this Agreement shall not be
assignable by either party except to a successor of the
entire PLANT, which undertakes all obligations assumed by
Lessee hereunder by an agreement executed and copied to
Lessor and to whom Lessor has no reasonable objection.
15. Applicable Law
The laws of the Kingdom of the Netherlands shall be
applied in the construction and interpretation of this
Agreement. No law of conflicts or choice of law shall
supersede this provision except as provided in Article 6.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed on their behalf by their duly
authorized representatives.
LESSOR: LESSEE:
ROFAN AUTOMATION AND
INFORMATION SYSTEMS B.V. GRUPPO LEPETIT S.p.A.
By:/s/ John C. Lillich By:/s/ Helio Giglio
Name: John C. Lillich Name: Helio Giglio
Title: Attorney In Fact Title: Controller
Date: May 3, 1995 Date: May 3, 1995
By:/s/ Jane M. Gootee
Name: Jane M. Gootee
Title: Attorney In Fact
Date: May 3, 1995
APPENDIX A
SERVICE AGREEMENT
MAINTENANCE
1. Services
(i) To facilitate efficient use of MOD5 SOFTWARE,
Lessor agrees to provide and Lessee agrees to acquire MOD5
SOFTWARE Maintenance Services as provided hereunder. Lessee
has responsibility to acquire, through separate arrangements
with Lessor or another party, reasonable MOD5 HARDWARE
training and/or services necessary to apply DOWTRAN to the
CONTROL SCHEMA and to remedially modify an APPLICATION
PROGRAM.
(ii) Maintenance Services for MOD5 SOFTWARE include
the notification of and assistance for implementation, where
necessary, of REMEDIAL PRODUCT NOTICES for MOD5 SOFTWARE and
remedial maintenance consultation for MOD5 SOFTWARE, MOD5
HARDWARE, FIRMWARE and other maintenance conducted by
Lessee. Repair of subassemblies and printed circuit boards
will by done by Lessor for Lessee's account, i.e., at
Lessee's expense, working with the vendor of such
components. Acquisition and installation of HARDWARE
CONSUMABLES shall be the responsibility of Lessee.
(iii) Lessor shall provide backup support for MOD5
SOFTWARE and MOD5 HARDWARE after Lessee has undertaken
reasonable effort to resolve any MOD5-related problem.
Telephone support shall be provided within 24 hours of
notification of the problem and on-site service shall be
provided within 48 hours of any such notification.
(iv) Lessee shall be responsible for the appointment
of one or more computer systems professionals or process
control professionals fluent in the English language having
a level of technical qualifications and experience
acceptable to Lessor, whose acceptance will not be
unreasonably withheld, as manager for the MOD5 SOFTWARE.
The MOD5 SOFTWARE manager shall enter into a secrecy
agreement with Lessor to protect Lessor's technology and
shall cooperate with Lessor in enabling access to the MOD5
SOFTWARE when appropriate.
(v) "Special Services" reasonably required by Lessee
at its PLANT sites any time during the Term and upon
termination of this lease, such as, for example, services
that may be required to assist Lessee in completing FDA
validations of process control in progress or for such
technical support as may be reasonably necessary in
switching from MOD5 process control to another process
control system shall be provided by Lessor on reasonable
notice for a period up to twelve (12) workdays (8 hours per
workday) over each successive twelve (12) month period
during the term of this lease measured from its EFFECTIVE
DATE. Special Service workdays not used within a given
twelve (12) month period shall not carry over to a
subsequent period.
(vi) Lessee and Lessor from time to time amy agree on
additional or new Special Services beyond those agreed in
this Agreement. Any such additional or new special Services
may be agreed to in a MOD5 Special Service Addendum. For
each separate request for services from Lessee, Lessor shall
prepare and submit to Lessee a written service proposal.
The parties shall discuss the service proposal and negotiate
to agreement regarding the nature, scope, terms and detail
of the work. If agreement on the total scope is reached,
the parties shall develop a Special Service Addendum which
shall define in detail the scope of services and tasks to be
performed, the schedule for completion and the billing basis
for such Special Services. Each MOD5 Special Service
Addendum shall be effective only if signed by an authorized
representative of each party. Each Special Service Addendum
shall be sequentially numbered. A sample Special Service
Addendum is attached as Appendix B.
2. Service Limitations
Services are contingent upon the proper use of the MOD5
SOFTWARE and the acquisition of associated MOD5 HARDWARE
suitable for running MOD5 SOFTWARE. Services do not include
any of the following: electrical work external to the
INTERFACE PROCESSOR, MINICOMPUTER, or other commercially
sourced computer(s) or commercially sourced operating
system(s) associated with the MOD5 SYSTEM; replacing or
providing HARDWARE CONSUMABLES; refinishing MOD5 SOFTWARE;
or maintenance of accessories, attachments, machines or
other devices not provided by Lessor. Service shall not
include practices which in Lessor's judgment are unsafe or
impractical for Lessor to render because of alterations to
the MOD5 SOFTWARE or connection of the PLANTS by mechanical
or electrical means to machine devices furnished by a
supplier other than Lessor. Service will not be performed
on MOD5 SOFTWARE located in an unsafe or hazardous
environment, as determined by Lessor. Service to be
provided does not include service necessitated by elements
external to the MOD5 SOFTWARE which are not within Lessor's
operation or maintenance instructions or installation site
preparation guidelines including, but not limited to,
humidity, temperature, power failure, surges, air
conditioning, grounding, static charge control, service
resulting from accident, neglect, alterations, improper use
or misuse of the MOD5 SOFTWARE or by repairs attempted by
Lessee's personnel or service to a version other than the
installed version of MOD5 SOFTWARE and MOD5 HARDWARE.
3. Service Charges
(i) For Maintenance Services described in Article 1
performed at Lessee's PLANTS, Lessee shall pay Lessor a
service charge in the amount of Lessor's standard charge for
such services, plus reasonable travel and living expenses.
This fee is presently U.S. $125.00 per hour.
(ii) For home based maintenance and support services
described in Article 1 above conducted at the home locations
of Lessor and its suppliers, Lessee shall pay Lessor an
annual fee as shown on Schedule 1 determined by multiplying
the total number of MOD CANS on which MOD5 SOFTWARE is run
by a standard service fee in U.S. Dollars.
(iii) Special Services pursuant to Article 1(v) shall
be without charge for up to 2 workdays in a single visit
within each successive 12 month period during the Term of
this lease. For additional workdays and additional visits
within each 12 month period Lessee shall pay Lessor a
professional consulting fee of U.S. $150.00 per hour for up
to an additional 10 workdays. Lessee shall reimburse Lessor
for reasonable travel and lodging expenses of such
consultancy.
(iv) Service charges accruing under this Article 3
will be invoiced and shall be payable within thirty (30)
days of receipt of an invoice therefor. Payment for
services shall be in U.S. Dollars. In the case of expenses
incurred in another currency, such expenses shall first be
translated by Lessor into U.S. Dollars using the daily
average rate quoted in Amsterdam by Bank Mendes Gans for
purchase of U.S. Dollars with the expense currency on the
date of invoice, and then invoiced in U.S. Dollars to
Lessee.
APPENDIX B
MOD5 SPECIAL SERVICE ADDENDUM NO.
(Reference Article 1(vi) Appendix A)
(A) Scope of Special Services:
(B) Compensation:
(C) Term or Schedule of Completion:
(D) Changes to Scope of Services:
(E) Representatives:
(F) Responsibility for Reporting:
(G) Termination:
This Special Service Addendum may be terminated (i) by
either party with or without cause at any time upon 30
days written notice, or (ii) by the non-breaching party
upon 2 days written notice in the event the other party
fails to cure its breach of a material obligation under
the Agreement or this Special Service Addendum within
20 days of its receipt of a notice alleging such breach
from the other party. Upon termination of the Special
Service Addendum, Lessor shall invoice Lessee for all
services performed by Lessor under this Special Service
Addendum prior to the termination for which Lessor was
not previously compensated, and for expenses necessary
to shut down the project.
ACCEPTED AND AGREED, as of the later of the two dates noted
in the signature blocks, by each Party's authorized
representative.
Lessor: Lessee:
ROFAN AUTOMATION AND GRUPPO LEPETIT S.p.A.
INFORMATION SYSTEMS B.V.
By: By:
Name: Name:
Title: Title:
Date: Date:
SCHEDULE 1
LEASED MOD5 SOFTWARE
NUMBER OF LEASE ANNUAL
SITE PLANT MOD CANS CHARGES SUPPORT FEES
BRINDISI, FERMENTATION 5 NONE U.S.$6,500.00
ITALY (ANTEDATES
LEASING)
MOD5 SYSTEMS DESCRIPTION:
NUMBER OF SYSTEMS: 1
VERSION:
CPU: MOD5 +
OVERHEAD SOFTWARE: REL. 0643
GPI: REL. V 2.00
DSS: REL. V 2.00
MODSERVER
HARDWARE: AS STADE STANDARD
SOFTWARE: REL. V 2.0e
BRINDISI, RIFA RECOVERY 2 U.S.$16,800.00 U.S.$2,600.00
ITALY
5 NONE U.S.$6,500.00
(ANTEDATES
LEASING)
MOD5 SYSTEMS DESCRIPTION:
NUMBER OF SYSTEMS: 2
VERSION:
CPU: MOD5 +
OVERHEAD SOFTWARE: REL. 0643
GPI: REL. V 2.00
DSS: REL. V 2.00
MODSERVER
HARDWARE: AS STADE STANDARD
SOFTWARE: REL. V 2.0e
NUMBER OF LEASE ANNUAL
SITE PLANT MOD CANS CHARGES SUPPORT FEES
BRINDISI, CHEMICAL 5 U.S. $16,800.00 U.S.$6,500.00
ITALY DEVELOPMENT
PILOT
MOD5 SYSTEM DESCRIPTION:
NUMBER OF SYSTEMS: 1
VERSION:
CPU: MOD5 +
OVERHEAD SOFTWARE: REL. 0643
GPI: REL. V 2.00
DSS: REL. V 2.00
MODSERVER
HARDWARE: AS STADE STANDARD
SOFTWARE: REL. V 2.0e
GARESSIO, BUILDING 1 8 + NONE U.S.$11,700.00
ITALY
1 SPARE (ANTEDATES
LEASING)
MOD5 SYSTEM DESCRIPTION:
NUMBER OF SYSTEMS: 2 + 1 SPARE
VERSION:
CPU: MOD5 +
OVERHEAD SOFTWARE: COMPILER VERSION 6.43**
GPI: 2.11
DSS: VAX VMS 5.5-2
*CPU MOD5 + TO BE REPLACED WITH MOD5E BY JULY 1995.
**A CHANGE TO COMPILER VERSION 7.7 IS PLANNED.
NUMBER OF LEASE ANNUAL
SITE PLANT MOD CANS CHARGES SUPPORT FEES
GARESSIO,
ITALY DISTILLERY 2 NONE U.S.$2,600.00
(ANTEDATES LEASING)
1 U.S.$8,400.00 U.S.$1,300.00
(TO BE INSTALLED
BY JUNE 1995)
MOD5 SYSTEM DESCRIPTION:
NUMBER OF SYSTEMS: 2 + 1 SPARE
VERSION:
CPU: MOD5 +
OVERHEAD SOFTWARE: COMPILER VERSION 6.43**
GPI: 2.11
DSS: VAX VMS 5.5-2
*CPU MOD5 + TO BE REPLACED WITH MOD5E BY JULY 1995.
**A CHANGE TO COMPILER VERSION 7.7 IS PLANNED.
____________ ______________
TOTAL ANNUAL LEASE CHARGES: U.S.$42,000.00
TOTAL ANNUAL SUPPORT FEES: U.S.$33,800.00
PERSONAL CONFIDENTIALITY AGREEMENT
DECLARATIONS:
The undersigned employee of GRUPPO LEPETIT S.p.A.
(Gruppo) has certain responsibilities for maintaining and
operating MOD5 SYSTEMS for manufacturing process control.
The undersigned Affiliate of The Dow Chemical
Company (Dow) is willing to continue supporting MOD5
SYSTEMS used by Gruppo according to the terms of the
"Computerized Process Control Software Agreement" entered
into between Affiliate and Gruppo with the proviso that
the latter appoint a MOD5 SOFTWARE technical manager with
appropriate competencies in the English language and
pertinent technical qualifications.
ASSURANCES:
The undersigned acknowledges he/she has been
assigned such responsibilities regarding MOD5 SYSTEMS by
Gruppo and affirms:
1. That he/she is familiar with the "Computerized
Process Control Software Agreement" mentioned above,
including those terms thereof regarding confidentiality
of Information.
2. That pursuant to the terms of the Agreement
he/she will not disclose to others proprietary
information about MOD5 SYSTEMS nor make any unauthorized
copies of documents containing such information, and
moreover agrees that no personal rights to sue any
information acquired in working with MOD5 SYSTEMS are
expressly or impliedly acquired hereunder.
It is understood by the undersigned and Affiliate of
Dow that these obligations shall not apply to Information
which is or becomes part of the public domain through no
fault of the undersigned or is received by the
undersigned on a nonconfidential basis from a third party
who is not under an obligation of confidence to Dow or a
Dow Affiliate.
ACCEPTED BY
ROFAN AUTOMATION AND
Gruppo Representative: INFORMATION SYSTEMS
B.V.
By: By:
Name: Name:
Title: Title:
Date: Date:
EXHIBIT 11
COMPUTERIZED PROCESS CONTROL SOFTWARE AGREEMENT
(LEASES AND SERVICES)
This lease and service agreement, hereinafter
"Agreement," is made and entered into effective May 3,
1995, by and between ROFAN AUTOMATION AND INFORMATION
SYSTEMS B.V. (hereinafter "Lessor") and BIOCHIMICA DEL
SALENTO S.p.A. (hereinafter "Lessee"), located at:
LESSOR: ROFAN AUTOMATION AND
INFORMATION SYSTEMS
B.V.
Address: Aert van Nesstraat 45
3012 CA Rotterdam, The
Netherlands
Corporation of: Kingdom of the Netherlands
Authorized leasing representative for MOD5 SYSTEMS.
LESSEE: BIOCHIMICA DEL SALENTO
S.p.A.
Address: Via Murat 25
20159, Milan, Italy
Corporation of: Italy
Lessor and Lessee hereby agree this Agreement
consists in its entirety of this executed covering
document and the following attachments:
APPENDIX A - SERVICE AGREEMENT
APPENDIX B - MOD5 SPECIAL SERVICE ADDENDUM
SCHEDULE 1 - LEASED MOD5 SOFTWARE
Lessor agrees to lease to Lessee and Lessee agrees
to lease from Lessor in accordance with the terms and
conditions of this Agreement MOD5 SOFTWARE as delineated
in Schedule 1 to integrally generate, transmit and manage
process control at the PLANTS listed in Schedule 1
attached hereto and made a part hereof. This Agreement
constitutes the entire understanding between Lessee and
Lessor pertaining to all MOD5 SOFTWARE for Lessee's
PLANTS and supersedes any prior or contemporaneous
agreements and all negotiations, representations and
proposals written or oral pertaining to this subject.
1. Definitions
Terms used in this Agreement shall have the meanings
ascribed to them as follows:
1.1 Software Definitions
(a) MOD5 SOFTWARE means (1) MOD5 CAN SOFTWARE, (2)
SERIAL GRAPHICS SOFTWARE, and (3) GPI based on specially
designed, direct digital control, redundant computer
technology to provide process control and process
operation information for execution on MOD5 HARDWARE.
(b) M0D5 SYSTEM is a specific implementation of
M0D5 HARDWARE AND M0D5 SOFTWARE in a PLANT. Within a
given PLANT there may be one or more M0D5 SYSTEMS.
(c) M0D5 CAN SOFTWARE means M0D5 OVERHEADS
including associated FIRMWARE, DOWTRAN SUPPORT TOOLS, and
M0D5 COMPLIER.
(d) FIRMWARE is a physical means containing
electronically retrievable information pertaining to M0D5
SOFTWARE.
(e) INTERFACE PROCESSOR is a functional
interconnection within a system between the M0D5
OVERHEADS and other M0D5 SOFTWARE, which contains
hardware, dedicated executable software, and FIRMWARE.
(f) DOWTRAN is a specific language designed for the
process control application engineer to convert and
express the CONTROL SCHEMA into an APPLICATION PROGRAM
for a manufacturing process. The APPLICATION PROGRAM is
further transformed into COMPILED DOWTRAN using a M0D5
COMPILER.
(g) M0D5 OVERHEADS means the redundantly deployed,
executable operating system software and, optionally,
protocol use rights, for the M0D5 COMPUTER that executes
the COMPILED DOWTRAN and implements diagnostics, inputs,
outputs, alarms and event logging.
(h) DOWTRAN SUPPORT TOOLS are utility programs
which execute on the MINICOMPUTER to assist the
application engineer in writing the APPLICATION PROGRAM
in DOWTRAN.
(i) APPLICATION PROGRAM is the set of sequential
human readable representations of the evolving CONTROL
SCHEMA in DOWTRAN, where the set is designated with an
essentially consistently logical identifier.
(j) COMPILED DOWTRAN is the set of respective
sequential instances of machine readable code,
redundantly deployed, which results from the compilation
process executed by the M0D5 COMPILER to convert the
APPLICATION PROGRAM written in DOWTRAN into said machine
readable code.
(k) CONTROL SCHEMA comprises the entire collection
of concepts, process dynamics and control models, and
associated decision models which are referenced to
defined the APPLICATION PROGRAM.
(l) M0D5 COMPILER is a computer program which
executes on the MINICOMPUTER to produce COMPILED DOWTRAN
from the APPLICATION PROGRAM written in the DOWTRAN
language.
(m) GPI means an executable subset of process
information and related software specially designed and
developed for execution on the MINICOMPUTER which
displays and stores process information and related
information to assist operations personnel.
(n) SERIAL GRAPHICS SOFTWARE means Lessor supplied
software, associated FIRMWARE, and PROTOCOL use rights to
implement SERIAL GRAPHICS.
1.2 Associated Hardware Definitions
(a) M0D5 HARDWARE means a user defined hardware
configuration designed to implement the M0D5 CAN SOFTWARE
which comprises two or more MOD CANS, two or more M0D5
COMPUTERS, and one or more INTERFACE PROCESSORS. M0D5
HARDWARE further comprises the Lessor specified hardware
(excluding FIRMWARE) resident within the M0D5 COMPUTER
which is used in the linking of the M0D5 COMPUTER to at
least one INTERFACE PROCESSOR.
(b) MOD CAN is a modular input/output device with
associated electronics which receives inputs and
originates output relative to PLANT instrumentation.
(c) M0D5 COMPUTER is a Lessor specified, high speed
control computer.
(d) MINICOMPUTER is a member of a family of
computers manufactured by the Digital Equipment
Corporation comprising VAX (or, optionally, AXP) hardware
executing the currently supported version of the VMS (or,
optionally, Open VMS) operating system specified by
Lessor, said computers otherwise referred to as VAX/VMS
(or, optionally, AXP/Open VMS) systems, to be separately
acquired by Lessee.
(e) SERIAL GRAPHICS is a programmable display panel
means which executes SERIAL GRAPHICS SOFTWARE for
consistent holistic display of immediate (REAL-TIME)
information, within the context of a fixed pictorial
background, depicting the status of a set of PROCESS
CONTROL SIGNALS in the domain of a particular APPLICATION
PROGRAM as its served COMPILED DOWTRAN executes on its
affiliated redundant M0D5 COMPUTER system. The SERIAL
GRAPHICS programmable display panel system communicates
with its affiliated redundant M0D5 COMPUTER system using
a network protocol.
1.3 Miscellaneous Definitions
(a) PROCESS CONTROL SIGNALS is the set of analog
inputs, analog outputs, digital inputs, digital outputs
and the individual instances of process variables
contained within serial data messages transmitted to/from
the M0D5 OVERHEADS utilized to implement an APPLICATION
PROGRAM at a given PLANT.
(b) HARDWARE CONSUMABLES include, without
limitation, fuses, light bulbs, chart paper and other
such utility sundry items.
(c) REMEDIAL PRODUCT NOTICE is a change in hardware
design and/or software design and/or announcements of
procedures as may be desirable for continuing
effectiveness.
(d) REAL-TIME is generically defined as a method of
executing the M0D5 OVERHEADS in a M0D5 COMPUTER in which
an event causes a given reaction within an actual time
limit and wherein M0D5 COMPUTER actions are specifically
controlled within the context of and by external
conditions and actual times.
(e) PLANT means Lessee's facilities referred to in
the attached Schedule 1. M0D5 SYSTEMS for each PLANT are
specified by the number of CANS, and the installed
version of computer processing unit(s), M0D5 OVERHEADS,
GPI and DOWTRAN respectively.
(f) EFFECTIVE DATE is the date first set forth
above.
2. Term
The Term of this Agreement shall begin on the
EFFECTIVE DATE hereof and, subject to the provisions
herein for termination, shall continue for a period of
five (5) years. Lessee may extend this Term for an
additional six (6) months on ninety (90) days advance
notice. Lessee may terminate this lease as to any M0D5
SYSTEM at any time during the Term of this agreement on
ninety (90) days advance written notice to Lessor. The
obligations of Article 6 shall survive any expiration or
accelerated termination of this Agreement for a period of
ten (10) years from the EFFECTIVE DATE.
3. Payments
3.1 Lease Charges Lease charges for M0D5 SOFTWARE
leased hereunder are set forth in the accompanying
Schedule 1. These charges shall be invoiced within
thirty (30) days of the EFFECTIVE DATE and upon each
yearly anniversary thereof during the term of this
Agreement and shall be payable within thirty (30) days of
receipt of an invoice therefor.
3.2 Taxes Lessee shall pay all taxes, however
designated, which are levied or based on the lease
including, without limitation, property taxes, local fees
or excise taxes, but excluding taxes thereon based on
income to Lessor. In the event Lessee defaults in the
payment of any such tax, Lessor may pay such tax and
shall be reimbursed by Lessee, with interest, as
additional lease charges.
4. Terms of Possession and Use
4.1 Lessor and Lessee agree that all M0D5 SOFTWARE
leased by Lessor hereunder will be kept by Lessee in its
sole possession and control and will at all times be
located at the PLANTS designated in the attached Schedule
1. The parties will mutually cooperate to keep Schedule
1 current as to installed M0D5 SYSTEMS at each PLANT.
4.2 Lessee shall enjoy all rights of possession and
use of M0D5 SOFTWARE leased hereunder subject to Lessor's
rights under Paragraph 4.3, upon the occurrence of one or
more of the following conditions:
(a) Lessee breaches the secrecy obligations of
Article 6;
(b) Lessee fails to make payments within sixty
(60) days after notice of payments in arrears;
(c) lessee ceases to own or control facilities
in which M0D5 SYSTEMS are installed, unless Lessee's
transfer of ownership or control occurs pursuant to
Article 14;
(d) Lessee ceases to use M0D5 SYSTEMS, or uses
them for a purpose other than their original
installation, or modifies them by integrally
combining internal M0D5 SYSTEM physical or logical
components with systems of others with the proviso
that when switching from a M0D5 SYSTEM to a
different process control system at a given PLANT
the M0D5 SYSTEM may be operated (as far as
reasonably possible in decoupled status) in parallel
with the other system;
(e) Lessor is prevented by a Force Majeure
condition from supporting M0D5 SOFTWARE acquired by
Lessee hereunder.
(f) Lessee terminates this Agreement totally
or in part as to any M0D5 SYSTEM.
4.3 In the event one or more conditions of
Paragraphs 4.2(a), (b), (c), (d), or (e) occurs, Lessor
may terminate this Agreement and its support of M0D5
SYSTEMS and M0D5 SOFTWARE shall be returned to Lessor.
In the event Lessee exercises rights of unilateral
termination under Paragraph 4.2(f), Lessor will terminate
its support of such MOD5 SYSTEM and MOD5 SOFTWARE
associated with such SYSTEM shall be returned to Lessor,
subject to Lessee rights specified in Article 5. Lessee
will permit reasonable access of Lessor to the PLANTS to
assist in the removal and return of M0D5 SOFTWARE.
5. Lessor Property
5.1 Lessor and Lessee agree that all MOD5 SOFTWARE
leased hereunder remains the personal property of Lessor
or Lessor's grantor and, subject to Lessee's reasonable
operating, safety and secrecy requirements. Lessee shall
permit access of Lessor or lessor's designee to the
PLANTS at any time after termination of this Agreement to
permit removal of the same. Lessee will keep and
maintain the MOD5 SOFTWARE free and clear of all liens,
charges and encumbrances.
5.2 The glossaried and commented DOWTRAN language
listing of the APPLICATION PROGRAM produced by Lessee
shall be considered derivative software and, as such, it
is owned by Lessee with the proviso that Lessee will
diligently pursue protecting Lessor's interests pursuant
to Article 6. To facilitate Lessee's understanding of
the retained derivative APPLICATION PROGRAM, Lessee may
also retain the accompanying DOWTRAN application training
manuals and any cross references to sub-routine listings
in the APPLICATION PROGRAM. Upon expiration of this
lease these written materials retained by Lessee shall be
considered proprietary information of Lessor licensed to
Lessee subject to the terms of Article 6. The compiled
DOWTRAN listing from the M0D5 COMPILER is property of and
shall be returned to Lessor along with M0D5 SOFTWARE.
6. Confidentiality
6.1 MOD5 SYSTEMS comprise unique, valuable,
proprietary information. Lessee agrees to maintain and
protect Lessor's interests in proprietary information and
will accordingly keep all information pertaining to M0D5
SYSTEMS in confidence and not use the same except as is
necessary to the enjoyment and exercise of the leases
granted by Lessor hereunder at the PLANTS listed in the
attached Schedule 1. Lessee will take diligent action to
fulfill the foregoing obligations by instruction and
agreement with its employees or agents respecting the
confidentiality of this information and shall obtain from
them their written commitments to comply with terms of
confidentiality.
6.2 Lessee shall adhere to the U.S. Export
Administration Laws and Regulations and shall not
knowingly reexport, directly or indirectly, any MOD5M
SOFTWARE or MOD5 HARDWARE, or any technical data received
from Lessor or the direct products of such technical data
in violation of 15 CFR Part 779 of the U.S. Export
Administration Regulations unless proper authorization of
the U.S. Government and the written consent of Lessor
have previously been obtained. No law of conflicts or
choice of law shall supersede this provision.
7. Software Copies
M0D5 SOFTWARE may only be copied, in whole or part,
with property inclusion of Lessor's copyright notice and
any other proprietary notice required by Lessor, as
necessary and incidental to the use of such software for
archival and backup purposes or to replace a worn or
defective copy. All such copies shall be subject to the
terms and conditions of this Agreement and shall be kept
and used at the designated PLANTS. If Lessee is unable
to operate the MOD5 SOFTWARE on originally installed
equipment, the MOD5 SOFTWARE may be transferred
temporarily to another system during the period of
equipment malfunction.
8. Warranties, Disclaimers and Validations
8.1 THE EXPRESSED WARRANTIES HEREIN CONTAINED ARE
IN LIEU OF ANY AND ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY AND OF
FITNESS FOR A PARTICULAR PURPOSE. Lessor warrants that
M0D5 SOFTWARE as delivered will operate substantially as
indicated in documentation provided by the Lessor and
will replace or provide instructions to adjust
malfunctioning components of MOD5 SOFTWARE on receiving
notice thereof from Lessee. Lessor will expeditiously
address the notice, with, alternatively at Lessor's
discretion, replacement of the component with a currently
available MOD5 SOFTWARE component or instructions for
corrective logical modification of, or other
accommodative procedure for, the MOD5 SOFTWARE addressing
the malfunction. Lessee shall promptly, upon discovery,
notify Lessor of any alleged deficiency which may exist.
8.2 Lessor warrants that the MOD5 SOFTWARE as
delivered by Lessor under this Agreement shall not
infringe copyrights or patent rights of a third party
existing on the EFFECTIVE DATE. Upon prompt written
notice from Lessee providing all pertinent details of a
claim of such asserted infringement, Lessor will
undertake to investigate and at Lessor's expense to
settle or to defend against such a claim, provided Lessee
grants any necessary authority and gives its full support
and cooperation, or to obtain the right for Lessee to
continue to use the MOD5 SOFTWARE, or to replace or
modify the allegedly infringing components of the MOD5
SOFTWARE which Lessor has so delivered to avoid any such
claim that is found to be valid. Without prejudice to
the generality of the foregoing, such expense shall
extend to reasonable attorneys' fees incurred by Lessee
in respect of such claim. If an award is rendered
against Lessee, in any litigation that the Lessor defends
hereunder for infringement by the components of the MOD5
SOFTWARE which lessor has so delivered, then Lessor shall
reimburse Lessee for damages and costs awarded by the
judicial authority in respect to those components.
8.3 Lessee acknowledges that it is responsible for
each APPLICATION PROGRAM and is not relying on Lessor's
skill or judgment to select or furnish MOD5 SOFTWARE and
associated MOD5 HARDWARE suitable for operation of a
particular manufacturing process and that there are no
warranties which are not contained in this Agreement.
Lessee acknowledges that it has made the selection of the
associated MOD5 HARDWARE. Lessor shall not be liable for
special, incidental or consequential damages arising out
of or in connection with the performance of systems
utilizing MOD5 SOFTWARE and associated MOD5 HARDWARE.
Lessor shall not be responsible for any loss or damage
caused by, nor shall any payments due hereunder abate by
reason of, any interruption in or loss of service or use
of the equipment or any part thereof arising from any
reason not solely attributable to Lessor. Without
limiting the generality of the foregoing, examples of the
foregoing include errors in the APPLICATION PROGRAM,
normal wear and tear of the MOD5 SOFTWARE, or gradual
deterioration of the MOD5 SOFTWARE.
8.4 Lessor's total obligation after the EFFECTIVE
DATE under this Article shall in no event exceed one
hundred percent (100%) of the total amount of the
payments actually received by Lessor under this
Agreement.
8.5 Whenever and to the extent validation of MOD5
SYSTEMS has occurred under FDA regulations to date,
Lessee shall retain those reports in support of
validation. If revalidation of the process control
system is necessary because of extended requirements of
the FDA regulations, Lessor shall provide information
reasonably required.
8.6 With regard to any FDA validations in progress,
or those to be conducted in the future, Lessor shall
provide information reasonably required under FDA
regulations with respect to MOD5 SYSTEMS validation.
9. Liability, Indemnity and Risk of Loss
Lessee assumes all risks and liabilities, whether or
not covered by insurance, and shall indemnify and hold
Lessor and its employees harmless for any liability,
claim, loss, damage or expense for injuries to or deaths
of persons and for damage to property, howsoever arising
from or incident to the possession, use, operation or
storage of MOD5 SOFTWARE and associated MOD5 HARDWARE,
and operation of the MOD5 SYSTEM, save and except for any
matter attributable to the sole negligence or willful
misconduct of Lessor. Said assumption of risks and
liabilities by Lessee shall apply whether such injury or
death to persons be to agents or employees of Lessee or
be to third persons and whether such damage be to
property of Lessee or to property of others.
10. MOD5 SOFTWARE Maintenance and Support
10.1 Throughout the Term hereunder after
installation of the MOD5 SOFTWARE, Lessee shall maintain
site conditions to provide an acceptable operating
environment for the MOD5 SOFTWARE as referenced in
documentation provided by Lessor. Lessee is responsible
for maintenance not provided under the Service Agreement
attached hereto as Appendix A and installation of the
MOD5 SOFTWARE. Lessee will maintain the MOD5 SOFTWARE in
a current and up-to-date condition adapting the
APPLICATION PROGRAM to accommodate REMEDIAL PRODUCT
NOTICES when recommended by Lessor, which will be
supplied by Lessor or by vendors approved by Lessor.
Such adaptations will normally address operating
reliability. Lessor will counsel Lessee, as requested
pursuant to the attached Service Agreement, to accomplish
the foregoing and Lessee shall permit Lessor or Lessor's
designee access to the MOD5 SOFTWARE for providing any
necessary assistance, such access to include network
access if deemed appropriate.
10.2 Lessor agrees to supply Maintenance and Support
Services for MOD5 SOFTWARE, including maintenance and
adjustment of associated MOD5 HARDWARE, solely in
accordance with the Service Agreement which is
incorporated as Appendix A of this Agreement. Lessor is
not responsible for supply, maintenance and adjustment of
the MINICOMPUTER, and other commercially sourced
computer(s) or commercially sourced operating system(s)
used in association with MOD5 SOFTWARE.
10.3 Subject to Lessee's reasonable operating,
safety and secrecy requirements, Lessee shall grant
Lessor PLANT access to the MINICOMPUTER and other
commercially sourced computer(s) used with MOD5 SOFTWARE
during normal working hours for inspection and
installation of REMEDIAL PRODUCT NOTICES and for any
other reasonable purpose, such access to include network
access if deemed appropriate. Lessee shall immediately
notify Lessor of all details concerning any malfunction
arising out of the alleged or apparent improper
manufacture, functioning or operation of the MOD5
SOFTWARE.
11. Notices
Lessee and Lessor agree that notices required
hereunder shall be deemed received the seventh day after
mailing. If mailed air postage prepaid to Lessor or
Lessee as the case may be at their respective address
given below.
If to Lessor, to:
Rofan Automation and Information
Systems B.V.
P.O. Box 48
4530 AA Terneuzen,
The Netherlands
Attention: Hans Naninck, Director
If to Lessee, to: Biochimica del Salento S.p.A.
Via Murat 25
20159 Milan, Italy
Attention:
Either party may change such address for notice by
sending to the other party a written notice.
12. Severability
Any provision hereof prohibited by, or unlawful or
unenforceable under, any applicable law of any
jurisdiction shall be ineffective as to such jurisdiction
without invalidating the remaining provisions of this
Agreement. In the event a material provision is
affected, the parties shall reformulate their mutual
undertakings in such manner as to preserve, as much as
possible, their original intentions and objects of this
Agreement, consistent with the laws of such jurisdiction.
13. Alterations
Except for Lessee's remedial modification of
APPLICATION PROGRAM, no alterations to MOD5 SOFTWARE
shall be made without first obtaining in each instance
the prior written approval of Lessor which approval shall
be expeditiously considered and not be unreasonably
withheld.
14. Conflicts and Assignability
This Agreement does not operate as an acceptance of
any conflicting terms or conditions and shall prevail
over any conflicting provision of any subsequent purchase
order or other instrument of Lessee, it being understood
that any purchase order or the request of Lessee acted
upon by Lessor shall be for the convenience of Lessee
only but shall not operate to amend or modify in any
respect the terms hereof. This Agreement may only be
altered, modified, supplemented or deviated from by
further agreement in writing executed by an authorized
representative of each Lessor and Lessee. Lessee and
Lessor acknowledge that by executing this Agreement each
has reviewed the attachments listed above and each agrees
to be legally bound and dutifully perform its obligations
thereunder. Lessor reserves the right to assign this
Agreement to a parent, affiliate or sister company of
Lessor, but otherwise this Agreement shall not be
assignable by either party to a successor of the entire
PLANT, which undertakes all obligations assumed by Lessee
hereunder by an agreement executed and copied to Lessor
and to whom Lessor has no reasonable objection.
15. Applicable Law
The laws of the Kingdom of the Netherlands shall be
applied in the construction and interpretation of this
Agreement. No law of conflicts or choice of law shall
supersede this provision except as provided in Article 6.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed on their behalf by their duly
authorized representatives.
LESSOR: LESSER:
ROFAN AUTOMATION AND
INFORMATION SYSTEMS B.V. BIOCHIMICA DEL SALENTO
S.p.A.
By: /s/ John C. Lillich By: /s/ Helio Giglio
Name: John C. Lillich Name: Helio Giglio
Title: Attorney In Fact Title: Controller
Date: May 3, 1995 Date: May 3, 1995
By: /s/ Jane M. Gootee
Name: Jane M. Gootee
Title: Attorney In Fact
Date: May 3, 1995
APPENDIX A
SERVICE AGREEMENT
MAINTENANCE
1. Services
(i) To facilitate efficient use of MOD5 SOFTWARE,
Lessor agrees to provide and Lessee agrees to acquire
MOD5 SOFTWARE Maintenance Services as provided hereunder.
Lessee has responsibility to acquire, through separate
arrangements with Lessor or another party, reasonable
MOD5 HARDWARE training and/or services necessary to apply
DOWTRAN to the CONTROL SCHEMA and to remedially modify an
APPLICATION PROGRAM.
(ii) Maintenance Services for MOD5 SOFTWARE include
the notification of and assistance for implementation,
where necessary, of REMEDIAL PRODUCT NOTICES for MOD5
SOFTWARE and remedial maintenance consultation for MOD5
SOFTWARE, MOD5 HARDWARE, FIRMWARE and other maintenance
conducted by Lessee. Repair of subassemblies and printed
circuit boards will be done by Lessor for Lessee's
account, i.e., at Lessee's expense, working with the
vendor of such components. Acquisition and installation
of HARDWARE CONSUMABLES shall be the responsibility of
Lessee.
(iii) Lessor shall provide backup support for MOD5
SOFTWARE and MOD5 HARDWARE after Lessee has undertaken
reasonable effort to resolve any MOD5-related problem.
Telephone support shall be provided within 24 hours of
notification of the problem and on-site service shall be
provided within 48 hours of any such notification.
(iv) Lessee shall be responsible for the appointment
of one or more computer systems professionals or process
control professionals fluent in the English language
having a level of technical qualifications and experience
acceptable to Lessor, whose acceptance will not be
unreasonably withheld, as manager for the MOD5 SOFTWARE.
The MOD5 SOFTWARE manager shall enter into a secrecy
agreement with Lessor to protect Lessor's technology and
shall cooperate with Lessor in enabling access to the
MOD5 SOFTWARE when appropriate.
(v) "Special Services" reasonably required by
Lessee at its PLANT sites any time during the Term and
upon termination of this lease, such as, for example,
services that may be required to assist Lessee in
completing FDA validations of process control in progress
or for such technical support as may be reasonably
necessary in switching from MOD5 process control to
another process control system shall be provided by
Lessor on reasonable notice for a period up to twelve
(12) workdays (8 hours per workday) over each successive
twelve (12) month period during the term of this lease
measured from its EFFECTIVE DATE. Special Service
workdays not used within a given twelve (12) month period
shall not carry over to a subsequent period.
(vi) Lessee and Lessor from time to time may agree
on additional or new Special Services beyond those agreed
in this Agreement. Any such additional or new Special
Services may be agreed to in a MOD5 Special Service
Addendum. For each separate request for services from
Lessee, Lessor shall prepare and submit to Lessee a
written service proposal. The parties shall discuss the
service proposal and negotiate to agreement regarding the
nature, scope, terms and detail of the work. If
agreement on the total scope is reached, the parties
shall develop a Special Service Addendum which shall
define in detail the scope of services and tasks to be
performed, the schedule for completion and the billing
basis for such Special Services. Each MOD5 Special
Service Addendum shall be effective only if signed by an
authorized representative of each party. Each Special
Service Addendum shall be sequentially numbered. A
sample Special Service Addendum is attached as Appendix
B.
2. Service Limitations
Services are contingent upon the proper use of the
MOD5 SOFTWARE and the acquisition of associated MOD5
HARDWARE suitable for running MOD5 HARDWARE. Services do
not include any of the following: electrical work
external to the INTERFACE PROCESSOR, MINICOMPUTER, or
other commercially sourced computer(s) or commercially
sourced operating system(s) associated with the MOD5
SYSTEM; replacing or providing HARDWARE CONSUMABLES:
refinishing MOD5 SOFTWARE; or maintenance of accessories,
attachments, machines or other devices not provided by
Lessor. Service shall not include practices which in
Lessor's judgment are unsafe or impractical for Lessor to
render because of alterations to the MOD5 SOFTWARE or
connection of the PLANTS by mechanical or electrical
means to machine devices furnished by a supplier other
than Lessor. Service will not be performed on MOD5
SOFTWARE located in an unsafe or hazardous environment,
as determined by Lessor. Service to be provided does not
include service necessitated by elements external to the
MOD5 SOFTWARE which are not within Lessor's operation or
maintenance instructions or installation site preparation
guidelines including, but not limited to, humidity,
temperature, power failure, surges, air conditioning,
grounding, static charge control, service resulting from
accident, neglect, alterations, improper use or misuse of
the MOD5 SOFTWARE or by repairs attempted by Lessee's
personnel or service to a version other than the
installed version of MOD5 SOFTWARE and MOD5 HARDWARE.
3. Service Charges
(i) For Maintenance Services described in Article 1
performed at Lessee's PLANTS, Lessee shall pay Lessor a
service charge in the amount of Lessor's standard charge
for such services, plus reasonable travel and living
expenses. This fee is presently U.S. $125.00 per hour.
(ii) For home based maintenance and support services
described in Article 1 above conducted at the home
locations of Lessor and its suppliers, Lessee shall pay
Lessor an annual fee as shown on Schedule 1 determined by
multiplying the total number of MOD CANS on which MOD5
SOFTWARE is run by a standard service fee in U.S.
Dollars.
(iii) Special Services pursuant to Article 1(v) shall
be without charge for up to 2 workdays in a single visit
within each successive 12 month period during the Term of
this lease. For additional workdays and additional
visits within each 12 month period Lessee shall pay
Lessor a professional consulting fee of U.S. $150.00 per
hour for up to an additional 10 workdays. Lessee shall
reimburse Lessor for reasonable travel and lodging
expenses of such consultancy.
(iv) Service charges accruing under this Article 3
will be invoiced and shall be payable within thirty (30)
days of receipt of an invoice therefor. Payment for
services shall be in U.S. Dollars. In the case of
expenses incurred in another currency, such expenses
shall first be translated by Lessor into U.S. Dollars
using the daily average rate quoted in Amsterdam by Bank
Mendes Gans for purchase of U.S. Dollars with the expense
currency on the date of invoice, and then invoiced in
U.S. Dollars to Lessee.
APPENDIX B
MOD5 SPECIAL SERVICE ADDENDUM NO. ___
(Reference Article 1(vi) Appendix A)
(A) Scope of Special Services:
(B) Compensation:
(C) Term or Schedule of Completion:
(D) Changes to Scope of Services:
(E) Representatives:
(F) Responsibility for Reporting:
(G) Termination:
This Special Service Addendum may be terminated (i)
by either party with or without cause at any time
upon 30 days written notice, or (ii) by the non-
breaching party upon 2 days written notice in the
event the other party fails to cure its breach of a
material obligation under the Agreement or this
Special Service Addendum within 20 days of its
receipt of a notice alleging such breach from the
other party.
Upon termination of the Special Service
Addendum, Lessor shall invoice Lessee for all
services performed by Lessor under this Special
Service Addendum prior to the termination for
which Lessor was not previously compensated,
and for expenses necessary to shut down the
project.
ACCEPTED AND AGREED, as of the later of the two dates
noted in the signature blocks, by each Party's authorized
representative.
LESSOR: LESSEE:
ROFAN AUTOMATION AND BIOCHIMICA DEL SALENTO
INFORMATION SYSTEMS B.V S.p.A.
By:
Name: Name:
Title: Title:
Date: Date:
SCHEDULE I
LEASED MOD5 SOFTWARE
NUMBER OF LEASE ANNUAL
SITE PLANT MOD CANS CHARGES SUPPORT FEES
BRINDISI, BIOCHIMICA 9 NONE U.S. $11,700.00
ITALY DEL SALENTO (ANTEDATES LEASING)
PROCESS
MOD5 SYSTEMS DESCRIPTION:
NUMBER OF SYSTEMS: 2
VERSIONS:
CPU: MOD5+
OVERHEAD SOFTWARE: REL. 0643
GPI: REL. V 2.00
DSS: REL. V 2.00
MODSERVER
HARDWARE: AS STADE STANDARD
SOFTWARE: REL. V 2.0e
BRINDISI, BIOCHIMICA 1 NONE U.S. $ 1,300.00
ITALY DEL SALENTO (ANTEDATES LEASING)
SIMULATION/
MAINTENANCE
MOD5 SYSTEMS DESCRIPTION:
NUMBER OF SYSTEMS: 1
VERSIONS:
CPU: MOD5+
OVERHEAD SOFTWARE: REL. 0643
GPI: REL. V 2.00
DSS: REL. V 2.00
MODSERVER
HARDWARE: AS STADE STANDARD
SOFTWARE: REL. V 2.0e
TOTAL ANNUAL SUPPORT FEES: U.S. $13,000.00
PERSONAL CONFIDENTIALITY AGREEMENT
DECLARATIONS:
The undersigned employee of BIOCHIMICA DEL SALENTO
S.p.A. (Biochimica) has certain responsibilities for
maintaining and operating MOD5 SYSTEMS for manufacturing
process control.
The undersigned Affiliate of The Dow Chemical
Company (Dow) is willing to continue supporting MOD5
SYSTEMS used by Biochimica according to the terms of the
"Computerized Process Control Software Agreement" entered
into between Affiliate and Biochimica with the proviso
that the latter appoint a MOD5 SOFTWARE technical manager
with appropriate competencies in the English language and
pertinent technical qualifications:
ASSURANCES:
The undersigned acknowledges he/she has been
assigned such responsibilities regarding MOD5 SYSTEMS by
Biochimica and affirms:
1. That he/she is familiar with the "Computerized
Process Control Software Agreement" mentioned above,
including those terms thereof regarding confidentiality
of Information.
2. That pursuant to the terms of the Agreement
he/she will not disclose to others proprietary
information about MOD5 SYSTEMS nor make any unauthorized
copies of documents containing such Information, and
moreover agrees that no personal rights to use any
Information acquired in working with MOD5 SYSTEMS are
expressly or impliedly acquired hereunder.
It is understood by the undersigned and Affiliate of
Dow that these obligations shall not apply to Information
which is or becomes part of the public domain through no
fault of the undersigned or is received by the
undersigned on a nonconfidential basis from a third party
who is not under an obligation of confidence to dow or a
Dow Affiliate.
ACCEPTED BY ROFAN AUTOMATION AND
BIOCHIMICA Representative INFORMATION SYSTEMS B.V
By:
Name: Name:
Title: Title:
Date: Date:
EXHIBIT 12
CONFORMED COPY
MANUFACTURING AGREEMENT AMENDMENT
This Manufacturing Agreement Amendment ("Amendment") is
effective as of the date of purchase of shares of stock
of Marion Merrell Dow Inc., a Delaware corporation with
its principal place of business in Kansas City, Missouri
("MMD"), owned by The Dow Chemical Company, a Delaware
corporation with its principal place of business in
Midland, Michigan ("DOW"), by H Pharma Acquisition Corp.,
a Delaware corporation. This Amendment between DOW and
Merrell Dow Pharmaceuticals, Inc., a Delaware corporation
with its principal place of business in Cincinnati, Ohio
and a wholly-owned subsidiary of MMD ("MDPI"), amends the
Manufacturing Agreement between DOW and MDPI dated April
1, 1992 ("Manufacturing Agreement").
DOW and MDPI agree as follows:
1. This Amendment adopts the defined terms stated in
the Manufacturing Agreement.
2. Section 2.2(e) is amended and replaced in its
entirety with the following:
(e) For each year beginning with 1996, shall pay
to DOW
(i) a Fee of $9,700,000 per year payable in
accordance with Section 4.3;
(ii) plus $300,000 per year for reimbursement of
General Administrative Costs;
(iii) plus a sum for Gain Sharing as formalized
between the parties in the Operating
Principles. Gain Sharing shall be subject to
a $500,000 yearly cap.
3. Section 14.1 is amended and replaced in its entirety
with the following:
14.1 Term. The term of this Agreement shall
commence on April 1, 1992 and extend until June 30,
2000. The Agreement shall be automatically extended
for two additional one year periods through June 30,
2002, unless terminated under Section 14.2.
4. Section 14.2 is amended and replaced in its entirety
with the following:
14.2 Termination.
(a) Either party shall have the right to
terminate this Agreement effective June 30, 2000 or
June 30, 2001 by providing the other party with at
least three years' prior written notice of
termination.
(b) MDPI may terminate the manufacture of any
given Substance at the end of a calendar quarter by
providing one years' prior written notice to DOW.
Such termination shall not relieve MDPI of
responsibility for payment of the Fee, General
Administrative Costs, or Gain Sharing as stated in
Section 2.2; however, Dow shall use its reasonable
best efforts to reduce Production Costs for the
remaining Substances due to reduction in the number
of Substances being produced in the Dedicated
Facilities. If any accepted orders for a Substance
which is terminated are outstanding when termination
was supposed to occur, then such termination shall
not be effective until completion of the outstanding
orders.
5. Section 16.8 is amended and replaced in its entirety
with the following:
16.8 Disposition of Dedicated Facilities. MDPI
must sell to DOW and DOW must purchase from MDPI,
the Dedicated Facilities upon termination of this
Agreement. The purchase price is to be sixty
percent of the residual book value of the Dedicated
Facilities at the time of termination of this
Agreement. For the purpose of making this
calculation, the parties agree that as of April 1,
1995 the book value of the Dedicated Facilities
(assuming and including the completion of projects
in progress) was $92,000,000. The parties agree
that the residual book value of the Dedicated
Facilities shall be based on a 10 year straight line
depreciation from April 1, 1995. Any capital spent
by MDPI (other than capital for the completion of
the projects in progress on April 1, 1995) to
maintain, improve or add to the Dedicated Facilities
shall be MDPI's responsibility and DOW shall have no
obligation to pay MDPI for such improvements to the
Dedicated Facilities unless otherwise agreed in
writing. Therefore, assuming completion of projects
in progress on April 1, 1995, if the Agreement
terminates on June 30, 2000, DOW shall pay to MDPI
$27,600,000 for the Dedicated Facilities. The
Dedicated Facilities will be sold as is, where is,
and with a warranty that the facilities are free and
clear of any lawful security interests or liens but
with no other warranties.
6. DOW and MDPI may decide to extend the manufacturing
relationship addressed in this Amendment and the
Manufacturing Agreement. To the extent that the parties
have negotiations regarding an extension of the term of
the Manufacturing Agreement, DOW agrees to include in
those discussions the possibility for paying to MDPI an
increased percentage of the residual book value of the
Dedicated Facilities as stated in Section 16.8 of the
Manufacturing Agreement.
7. The parties agree that to the extent this Amendment
is inconsistent with the Ground Lease, this Amendment
supersedes the Ground Lease. Upon DOW's purchase of the
Dedicated Facilities from MDPI, the parties agree that
the Ground Lease simultaneously terminates to the extent
that it applies to the Dedicated Facilities.
Notwithstanding the foregoing, MDPI shall not be released
from its obligations under Article XIV of the Ground
Lease regarding the Dedicated Facilities except that MDPI
shall be relieved of any responsibility under Article
XIV(a) to remove, demolish, and dispose of any Buildings
and Equipment; and DOW shall not be released from its
obligations under Article XVIII of the Ground Lease.
8. All of the other terms and conditions of the
Manufacturing Agreement continue in full force and
effect.
The parties have caused this Agreement to be executed by
their duly authorized representatives.
THE DOW CHEMICAL COMPANY MERRELL DOW PHARMACEUTICALS, INC.
/s/ Enrique C. Falla /s/ Charles D. Dalton
Name: Enrique C. Falla Name: Charles D. Dalton
Title: Executive Vice Title: Vice President
President and
Chief Financial
Officer
EXHIBIT 13
CONFORMED COPY
SECOND AMENDMENT TO MASTER SERVICE AGREEMENTS
This Second Amendment to the Master Service
Agreements ("Amendment") is effective as of the date of
purchase of shares of stock of Marion Merrell Dow Inc., a
Delaware corporation with its principal place of business
in Kansas City, Missouri ("MMD"), owned by The Dow
Chemical Company, a Delaware corporation with its
principal place of business in Midland, Michigan ("DOW"),
by H Pharma Acquisition Corp., a Delaware corporation
(the "Effective Date"). This Amendment is by and among
MMD, DOW and Merrell Dow Pharmaceuticals Inc., a Delaware
corporation with its principal place of business in
Cincinnati, Ohio and a wholly-owned subsidiary of MMD
("MDPI").
WHEREAS, MMD and MDPI each made a Master Service
Agreement dated as of December 2, 1989 with DOW, which
Master Service Agreements were amended by the parties in
amendments dated January 1, 1992 and May 3, 1995;
WHEREAS, MMD, MDPI and DOW desire to clarify rights
and obligations associated with research and development
services provided by DOW under the Master Service
Agreements; and
WHEREAS, MMD, MDPI and DOW desire to modify the
notice of termination provisions, the duration of certain
services and clarify the compensation to be owed to DOW
for all services performed under the Master Service
Agreements.
MMD, MDPI and DOW agree as follows:
1. This Amendment adopts the terms "Dedicated
Facilities" and "Midland Facility" as those terms are
defined in the Manufacturing Agreement between MDPI and
DOW dated April 1, 1992, as amended ("Manufacturing
Agreement").
2. "Research Services" means the research and
development services described in Section 2(e) of the
Master Service Agreement between DOW and MDPI at the
Midland Facility. The Research Services shall include
but not be limited to the following types of activity:
(a) supply of bulk drug substances for pre-clinical and
clinical testing; (b) lab and pilot plant capability; (c)
raw material source identification and qualification in
conjunction with MMD personnel; (d) process experience to
establish drug substance specifications; (e) process
development information to support process registration;
(f) in process analytical development and quality control
methods; (g) support for the writing of INDs, DMFs and
NDAs; (h) status reports on a quarterly basis; (i)
technical and research and development reports on a
quarterly basis; (j) technical and research and
development reports on a project; (k) other services
reasonably required to support a project or as may be
agreed to by the parties. It is the intent of the
parties that the Research Services shall be of a similar
nature to those process development and research services
provided by DOW to MDPI under the Master Service
Agreement immediately prior to the date of this
Amendment.
3. For Research Services only, the term provided for in
Section 1 of the Master Service Agreement between MMD and
DOW and Section 1(a) of the Master Service Agreement
between MDPI and DOW shall be amended to extend until
June 30, 2000. This term as applied to Research Services
shall be automatically extended for two additional one
year periods through June 30, 2002, unless otherwise
terminated according to this Amendment. Either MMD or
MDPI, respectively, or DOW may terminate the respective
Master Service Agreement as applied to Research Services
at the end of a term by giving the other party three
years' prior written notice of termination. The shorter
termination notice provision for individual services
stated in the January 1, 1992 Amendment to Master Service
Agreements does not apply to Research Services. MDPI may
add or discontinue projects in the ordinary course of
business as has been the practice of MDPI prior to the
date of this Amendment.
4. For Research Services only, until notice of
termination is given, the fixed annual amount as
described in Section 4(a) of the Master Service Agreement
between MDPI and DOW may not decline by more than fifteen
percent per calendar year from the level existing the
prior calendar year. The 1995 fixed annual amount shall
be adjusted pro rata by paragraph 5 below. The first
calendar year the fixed annual amount may decline is
1996. After notice of termination, the fixed annual
amount may not decline by more than fifteen percent per
year the first year and twenty-five percent per year the
second year. There is no limit on the decline of the
fixed annual amount for the final year.
5. For all services, including Research Services,
performed after the Effective Date under the Master
Service Agreements, MMD and MDPI shall reimburse DOW 130
percent of the amount calculated according to Section 4
of the Master Service Agreement between MDPI and DOW.
The parties confirm, however, that there is no 30%
surcharge on the cost of raw materials purchased by Dow
for MMD or MDPI.
6. Upon termination of the Research Services, MMD and
MDPI must sell to DOW and DOW must buy from MMD and MDPI
all physical assets owned by either MMD or MDPI which are
located in the Midland Facility other than the Dedicated
Facilities ("Research Facilities"). The Research
Facilities include MMD or MDPI assets that DOW, as of
April 1, 1995, directly uses to provide Research
Services. The purchase price for the Research Facilities
is to be sixty percent of the residual book value of the
Research Facilities at the time the Research Services
portion of both Master Service Agreements are terminated.
The purchase price shall be paid by DOW to MDPI. For the
purpose of making this calculation, the parties agree
that as of April 1, 1995 the book value of the Research
Facilities (assuming and including completion of projects
in progress) was $30,500,000. The parties agree that the
residual book value of the Research Facilities shall be
based on a 10 year straight line depreciation from April
1, 1995. Any capital spent by MMD or MDPI (other than
capital for the completion of projects in progress on
April 1, 1995) to maintain, improve or add to the
Research Facilities shall be either MMD's or MDPI's
responsibility, and DOW shall have no obligation to pay
additional sums of money for the Research Facilities
unless otherwise agreed in writing. Therefore, assuming
completion of projects in progress on April 1, 1995 and
assuming termination of the Research Services on June 30,
2000, then DOW will pay to MDPI $9,150,000 for the
Research Facilities. The Research Facilities will be
sold as is, where is, and with a warranty that the
facilities are free and clear of any lawful security
interests or liens but with no other warranties.
7. MMD, MDPI and DOW may decide to extend the Research
Services relationship addressed in this Amendment. To
the extent that the parties have negotiations regarding
an extension of the term of the Research Services portion
of the Master Service Agreements, DOW agrees to include
in those discussions the possibility of paying an
increased percentage of the residual book value of the
Research Facilities at the end of the extended term. DOW
and MDPI shall mutually agree upon appropriate
compensation prior to DOW being permitted by MDPI to use
the Research Facilities for DOW's own purposes (during
the term of the Research Services portion of the Master
Service Agreement between MDPI and DOW) unrelated to the
Research Services.
8. The parties agree that to the extent this Amendment
is inconsistent with the Ground Lease between MDPI and
DOW dated April 1, 1992 ("Ground Lease"), this Amendment
supersedes the Ground Lease. Upon DOW's purchase of the
Research Facilities, the parties agree that the Ground
Lease simultaneously terminates to the extent that it
applies to the Research Facilities. Notwithstanding the
foregoing, MDPI shall not be released from its
obligations under Article XIV of the Ground Lease
regarding the Research Facilities except that MDPI shall
be relieved of any responsibility under Article XIV(a) to
remove, demolish, and dispose of any Buildings and
Equipment; and DOW shall not be released from its
obligations under Article XVIII of the Ground Lease.
9. Except as modified herein, all of the other terms
and conditions of the Master Service Agreements continue
in full force and effect.
The parties have caused this Amendment to be executed by
their duly authorized representatives.
THE DOW CHEMICAL COMPANY MERRELL DOW
PHARMACEUTICALS INC.
/s/ Enrique C. Falla /s/ Charles D. Dalton
Name: Enrique C. Falla Name: Charles D. Dalton
Title: Executive Vice Title: Vice President
President and
Chief Financial
Officer
MARION MERRELL DOW INC.
/s/ Charles D. Dalton
Name: Charles D. Dalton
Title: Vice President
EXHIBIT 14
CONFORMED COPY
THIRD AMENDMENT TO MASTER SERVICE AGREEMENTS
This Third Amendment to the Master Service
Agreements ("Amendment") is effective as of the date of
purchase of shares of stock of Marion Merrell Dow Inc., a
Delaware corporation with its principal place of business
in Kansas City, Missouri ("MMD"), owned by The Dow
Chemical Company, a Delaware corporation with its
principal place of business in Midland, Michigan ("DOW"),
by H Pharma Acquisition Corp., a Delaware corporation
(the "Effective Date"). This Amendment is by and among
MMD, DOW and Merrell Dow Pharmaceuticals Inc., a Delaware
corporation with its principal place of business in
Cincinnati, Ohio and a wholly-owned subsidiary of MMD
("MDPI").
WHEREAS, MMD and MDPI each made a Master
Service Agreement dated as of December 2, 1989 with DOW,
which Master Service Agreements were amended by the
parties in amendments dated January 1, 1992 and May 3,
1995:
WHEREAS, MMD, MDPI and DOW desire to clarify
rights and obligations associated with services provided
by DOW under the Master Service Agreements.
NOW THEREFORE, the parties agree as follows:
1. It is the general intent of MMD, MDPI, DOW
and their respective subsidiaries around the world to
disengage from the various service agreements on a global
basis as soon as practical and in a reasonable manner
after DOW sells its shares of MMD's stock. The parties
intend and acknowledge that outside of the USA the
disengagement will be managed by the local DOW and MMD
subsidiaries, taking into account local needs and the
local service agreements.
2. Pursuant to Section 3 of the Amendment to
Master Service Agreement dated January 1, 1992, MMD and
MDPI hereby give DOW notice that as of the date that DOW
sells its shares in MMD (or as soon thereafter as is
practical and reasonable), MMD and MDPI are terminating
the following services on a global basis: Treasury,
Payroll, Human Resources, Tax, Legal, and Waste Disposal
(other than waste generated at the Midland Facility). By
its acknowledgment, as indicated below, DOW hereby waives
the 90 days' written notice of termination regarding the
above referenced services.
3. After the date DOW sells its shares in
MMD, DOW shall cause its subsidiaries to continue to
provide to MMD or its subsidiaries the services currently
being provided under the terms of the local services
agreements, and:
(i) Human Resources services for benefits
administration in Canada through June 30, 1996;
(ii) information systems services in Japan,
Korea, Hong Kong, New Zealand, and Australia
through 1996; and
(iii) cost accounting and purchasing
services in Europe until the PRIZM system
becomes operational or the end of 1996,
whichever occurs first.
4. DOW agrees that various principles of
operations (e.g. information systems, telecommunications
services, treasury services, accounting guidelines, and
Pharma Plant operation guidelines) shall continue in
place until the related services have been terminated.
5. For all services performed after the
Effective Date under the Master Service Agreements, MMD
and MDPI shall reimburse DOW 130 percent of the amount
calculated according to Section 4 of the Master Service
Agreement between MDPI and DOW.
6. At DOW's discretion DOW may waive the 90
day notice of termination regarding future terminations
for any service.
The parties and their subsidiaries will
continue to work together to provide a smooth transition
and disengagement from DOW provided services.
The parties have caused this Amendment to be
executed by their duly authorized representatives.
THE DOW CHEMICAL COMPANY MERRELL DOW PHARMACEUTICALS INC.
/s/ Enrique C. Falla /s/ Charles D. Dalton
Name: Enrique C. Falla Name: Charles D. Dalton
Title: Executive Vice Title: Vice President
President and
Chief Financial
Officer
MARION MERRELL DOW INC.
/s/ Charles D. Dalton
Name: Charles D. Dalton
Title: Vice President
EXHIBIT 15
May 3, 1995
The Dow Chemical Company
Attention: General Counsel
2030 Willard H. Dow Center
Midland, Michigan 48674
Re: Nonexclusive List of Agreements to be
Reached Prior to Stock Purchase
Dear Sirs:
In order to expedite the execution of the Stock
Purchase Agreement and the Agreement and Plan of Merger,
The Dow Chemical Company ("DCC"), Marion Merrell Dow Inc.
("MMD"), and Merrell Dow Pharmaceuticals Inc. ("MDPI")
agree that between the date of this letter and the
purchase of DCC's Shares pursuant to the Stock Purchase
Agreement, the parties shall use best efforts to reach
definitive agreements on, but not limited to, the matters
listed below to the extent that such agreements have not
been reached on or prior to the date hereof:
(i) DCC's assistance in transferring to
MMD or MDPI all technology owned by or licensed
to MMD or MDPI;
(ii) confirmation of ownership of
intellectual property rights of MMD, MDPI and
DCC;
(iii) the grant to MMD or MDPI by DCC of
an option for a non-exclusive, worldwide
license to certain DCC patents relating to a
fiber optic probe and related technologies;
(iv) the ownership and cross-licensing by
MMD or MDPI and DCC of future inventions and
developments relating to technology developed
in connection with the Master Service
Agreements, dated December 2, 1989, or the
Manufacturing Agreement between DCC and MDPI,
dated April 1, 1992, both as amended;
(v) MMD's ability to use DCC's
Indianapolis toxicology laboratories on a
nonexclusive basis;
(vi) Dow's acknowledgement of MMD's or
MDPI's ownership of the results of the
engineering work performed for DCC relating to
the construction of a new plant for AllerVax
(R) products;
(vii) the provision of services to Dow
Italia S.p.A. at the Garessio plant relating to
the milling of cholestyramine;
(viii) the extension of the term of the
Methocel Supply Agreement dated October 1, 1993
between MMD and DCC for three (3) years from
the end of its existing term;
(ix) to the extent required, the continuation
of non-manufacturing services currently provided by
Dow Italia S.p.A. to Gruppo Lepetit S.p.A. under the
Manufacturing Services Agreement dated December
21, 1990, as amended; and
(x) such other matters as either MMD or DCC may
desire.
If the parties are unable to reach agreement on
any of the above matters after using good faith efforts
to do so, such unresolved matters shall be referred to
Klaus Schmieder of H Pharma Acquisition Corp. and Enrique
Falla of DCC for resolution.
MARION MERRELL DOW INC. MERRELL DOW PHARMACEUTICAL INC.
By: /s/ Charles D. Dalton By: /s/ Charles D. Dalton
Name: Charles D. Dalton Name: Charles D. Dalton
Title: Vice President Title: Vice President
Acknowledged and Agreed:
THE DOW CHEMICAL COMPANY
By: /s/ Jane M. Gootee
Name: Jane M. Gootee
Title: Manager, Financial Law
EXHIBIT 16
May 3, 1995
The Dow Chemical Company
Attention: General Counsel
2030 Willard H. Dow Center
Midland, Michigan 48674
Re: Employment Matters, Certain Italian Personnel
In conjunction with the execution of the Stock
Purchase Agreement of this date (the "Agreement") among
The Dow Chemical Company ("DCC"), Hoechst Corporation
("Hoechst") and certain of their subsidiaries, this
letter is intended to set forth provisions relating to
the above referenced matters. Defined terms used in the
Agreement shall have the same meanings when used herein
as are attributable to them under the Agreement.
With respect to employment matters, DCC has no
objection to and will cause Dow Italia S.p.A. ("Dow
Italia") to agree that the following five (5) Dow Italia
employees shall be transferred to Gruppo Lepetit S.p.A.
("Gruppo Lepetit") as of the date of Hoechst's purchase
of the Dow Shares: Costantino Ambrosio, Director of
Manufacturing, Italy; Daniele Bosatra, European Bulk
Sites E&HS Manager; Flavio Caluri, Process Control/MOD
Engineer; and Luigi Grippa, Italian Engineering Manager;
and Marilena Serpico, Administrative Assistant. The
individuals shall resign and shall be hired the same day
by Gruppo Lepetit. Marion Merrell Dow Inc. has no
objection to and will cause Gruppo Lepetit to hire the
five people on the day each of them resigns from Dow
Italia. Dow Italia shall not pay any costs or
indemnities other than accrued severance allowances. FIP
Dow will be handled separately and according to
applicable regulations.
DCC further has no objection to and will cause
Dow Italia to agree that Dow Italia will not offer
employment to, or employ, any current Dow Italia
employees who, immediately preceeding the Closing Date
under the Agreement, were employed at, supporting or
operating the Gruppo Lepetit plants located in Italy for
a period of one year after the Closing Date. DCC also
has no objection to and will cause Dow Italia to agree
and to act in good faith according to regulations so that
all severance allowances, and other benefits (FIP Dow
will be handled separately and according to applicable
regulations), if any, or other accounts attributable (i)
to the foregoing five employees, (ii) to all other
employees of Dow Italia who are being transferred to
Gruppo Lepetit pursuant to the Manufacturing Services
Agreement dated December 21, 1990, as amended, on the
date of Hoechst's purchase of Dow Shares pursuant to the
Agreement and (iii) to other employees, if any, of an MMD
subsidiary participating in Italian benefit plans, shall
be transferred, if under Dow Italia's control, to the MMD
legal entity responsible for such employee as of the
Closing Date according to local regulations.
DCC also has no objection to and will cause its
relevant subsidiary to agree that all severance
allowances, and other benefits, if any, or other accounts
attributable to MMD employees who participate in benefit
plans, if any, of Dow subsidiaries in Portugal,
Switzerland and the U.K. shall be transferred, if under a
Dow subsidiary's control, to the MMD legal entity
responsible for such employee as of and after the Closing
Date according to local regulations.
DCC and MMD further agree that as of the date
of Hoechst's purchase of Dow Shares pursuant to the
Agreement, the Manufacturing Services Agreement between
Dow relevant subsidiaries on the one hand and (a) MMD
GmbH dated December 9, 1993, (b) MMD Limited dated
December 21, 1993, (c) MMD S.A. dated December 27, 1993,
(d) MMD & Cie SNC dated December 27, 1993, (e) MMD S.A.
dated January 3, 1994, and (f) Gruppo Lepetit dated
December 21, 1990, respectively, as subsequently amended,
will terminate by mutual consent without further action
of the parties.
MARION MERRELL DOW INC.
By /s/ Charles D. Dalton
THE DOW CHEMICAL COMPANY
By /s/ Jane M. Gootee
EXHIBIT 17
JOINT FILING AGREEMENT
Hoechst Corporation and H Pharma Acquisition Corp.
(hereinafter collectively referred to as the "Filing
Persons") each hereby agrees to file jointly a Statement on
Schedule 13D ("Schedule 13D") and any amendments thereto
relating to the Common Stock, par value $0.10 per share, of
Marion Merrell Dow Inc., a Delaware corporation, as permitted
by Rule 13d-1 of the Securities Exchange Act of 1934, as
amended. Each of the Filing Persons agrees that information
set forth in such Schedule 13D and any amendments thereto
with respect to such person will be true, complete and
correct as of the date of such Schedule 13D or such amendment
to the best of such Filing Person's knowledge and belief
after reasonable inquiry. Each of the Filing Persons makes
no representation as to the accuracy or adequacy of the
information set forth in such Schedule 13D and any amendments
thereto with respect to the other Filing Person. Each of the
Filing Persons shall promptly notify the other Filing Person
if any of the information set forth in such Schedule 13D
shall be or become inaccurate in any material respect or if
it learns of information which would require an amendment to
such Schedule 13D.
IN WITNESS WHEREOF, the parties hereto have set
forth their hand as of the 11th day of May, 1995.
HOECHST CORPORATION
By: /s/ Harry R. Benz
Name: Harry R. Benz
Title: Treasurer
H PHARMA ACQUISITION CORP.
By: /s/ David A. Jenkins
Name: David A. Jenkins
Title: Vice President
