-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Ng0vCwhRPjh8v2hJ+vpoTYsWYzPUBiAhYVfBwgnKrlmiJ/t83+fCi1NhuWuNnNmC 4VF4ldIfRFrl97Ev6ci9YQ== 0000950131-95-001273.txt : 19950517 0000950131-95-001273.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950131-95-001273 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19950503 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOW CHEMICAL CO /DE/ CENTRAL INDEX KEY: 0000029915 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 381285128 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03433 FILM NUMBER: 95537717 BUSINESS ADDRESS: STREET 1: 2030 WILLARD H DOW CTR CITY: MIDLAND STATE: MI ZIP: 48674-2030 BUSINESS PHONE: 5176361000 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 3,1995 THE DOW CHEMICAL COMPANY (Exact name of registrant as specified in its charter) Delaware 1-3433 38-1285128 - --------------- ------------- ------------------ (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 2030 Dow Center, Midland, Michigan 48674 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code; (517) 636-1000 --------------- Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. Other Events. ------------- I. Marion Merrell Dow Inc. ----------------------- On May 4, 1995, The Dow Chemical Company (the "Company") issued a press release, the text of which follows: May 4, 1995 HOECHST AGREES TO ACQUIRE MARION MERRELL DOW The Dow Chemical Company, Hoechst and Marion Merrell Dow today signed the agreements under which Hoechst will acquire all of Marion Merrell Dow for $25.75 per share or about $7.1 billion. As part of the agreements, Hoechst will acquire approximately 197 million Marion Merrell Dow shares held by Dow for about $5.1 billion. The closing is expected to take place within 90 days, subject to government regulatory approvals. If closed, the transaction will result in a gain for Dow in a range of 35 to 50 cents per share. "The sale of Dow's interest in Marion Merrell Dow is consistent with our long-term strategy as the fit of pharmaceuticals into Dow's portfolio has diminished," said Frank Popoff, Dow chairman and chief executive officer. "This transaction will serve our shareholders well by liberating resources for our core business." The following agreements were entered into on May 3, 1995: Agreement and Plan of Merger. On May 3, 1995, Marion Merrell Dow Inc. ("MMD"), the Company, Hoechst Corporation ("Hoechst") and H Pharma Acquisition Corp. ("Acquisition") entered into an Agreement and Plan of Merger (the "Merger Agreement") whereby Acquisition, a wholly-owned subsidiary of Hoechst, will be merged with and into MMD, with MMD to continue as the surviving corporation (the "Merger"). In the Merger, each issued and outstanding share of MMD's common stock, par value $0.10 per share, (the "Shares") will be converted into the right to receive $25.75 in cash. In addition, if the Shares held by the Company or its affiliates (the "Dow Shares") are purchased by Hoechst, Acquisition or their affiliates at least one day prior to the effective date of the Merger (the "Effective Date"), each remaining shareholder will be entitled to receive an additional 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 next preceding the Effective Date (excluding such record date but 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. Under the Merger Agreement, MMD is permitted to pay a regular quarterly dividend of up to $0.25 per share, provided that the record date 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. Consummation of the Merger is conditioned upon, among other things, (i) approval by the stockholders of MMD, (ii) the termination or expiration of any applicable waiting period under 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, and (iii) the purchase of the Dow Shares by Hoechst, Acquisition or their affiliates. The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the effective time of the Merger, among other things, (i) by the mutual consent of Hoechst, Acquisition, the Company and MMD, (ii) by Hoechst, the Company or MMD at any time after January 31, 1996, but only if Hoechst, Acquisition or their affiliates have not yet purchased the Dow Shares, or (iii) by the Company if Acquisition fails to purchase the Dow Shares in violation of Acquisition's obligations under the Stock Purchase Agreement. Stock Purchase Agreement. On May 3, 1995, Hoechst, Acquisition, the Company, and two wholly-owned subsidiaries of the Company (together with the Company, the "Sellers") entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant to which Acquisition agreed to purchase, and the Sellers agreed to sell, all of the Dow Shares at a purchase price of $25.75 per Share in cash. The closing of such purchase and sale (the "Closing") shall take place on a business day to be designated by Acquisition, but in no event later than three days after the satisfaction of all conditions to the Stock Purchase Agreement, provided, however, that the Closing may not take place during any period beginning the date after a New York Stock Exchange "ex-dividend" date and ending on the corresponding record date with respect to a regular quarterly dividend. If the Dow Shares are acquired on or before a New York Stock Exchange "ex-dividend" date in respect of any regular quarterly cash dividend on the Shares, the dividend payable on the corresponding record date will be for the account of Acquisition and not the Sellers. The Sellers have agreed to vote their respective Dow Shares in favor of adoption of the Merger Agreement and against any action or agreement that would result in a breach in any material respect of any terms of the Merger Agreement or the Stock Purchase Agreement and against any action or agreement which would impede, interfere with or discourage the transactions contemplated by the Merger Agreement. Upon receipt of the purchase price, each Seller has agreed to grant Acquisition an irrevocable proxy to vote their respective Dow Shares. The obligation of Acquisition to purchase the Dow Shares is subject to, among other things, (i) the termination or expiration of any applicable waiting period under the HSR Act, the EC Merger Regulation and the Canadian Competition Act, (ii) the Committee on Foreign Investment in the United States having determined not to investigate the transactions under Section 721 of the Defense Production Act of 1950, as amended ("Exon-Florio") or if such Committee shall have determined to investigate the transactions, such investigation shall have been completed or the President of the United States shall have determined (by action or inaction) not to take any action under Exon-Florio, (iii) the absence of any governmental action (such as the declaration of a banking moratorium or a prohibition on the export of funds) which prevents Hoechst and Acquisition from obtaining the funds necessary to pay the aggregate purchase price for the Dow Shares, (iv) the accuracy in all material respects of the representations and warranties of MMD set forth in the Merger Agreement and of the Company in both the Merger and Stock Purchase Agreements, except for such inaccuracies in the representations and warranties of the Company that would not have a Material Adverse Effect (as such term is defined in the Merger Agreement) and (v) the performance in all material respects of the covenants and agreements of MMD in the Merger Agreement and of the Company in both the Merger and Stock Purchase Agreements, except for failures to perform of such covenants and agreements by MMD that would not have a Material Adverse Effect. The Stock Purchase Agreement may be terminated at any time by mutual written consent of the parties or upon termination of the Merger Agreement. Other Agreements. In connection with the transactions contemplated by the Merger Agreement and the Stock Purchase Agreement, the following additional agreements respecting the Company were executed on May 3, 1995. Pursuant to an Indemnity Agreement, Hoechst agreed to indemnify the Company in respect of the Company's existing guaranty in favor of the investors in Carderm Capital L.P., in which subsidiaries of MMD hold a controlling interest. Pursuant to a Tax Allocation Agreement, the Company, Hoechst and MMD agreed to an allocation of certain tax liabilities. Pursuant to separate Computerized Process Control Software Agreements, affiliates of the Company and affiliates of MMD agreed to leases of certain process control software owned by affiliates of the Company. Pursuant to an Insurance Separation Agreement, Hoechst, MMD, the Company and three wholly-owned insurance subsidiaries of the Company agreed to certain matters regarding insurance, reinsurance and related topics. Pursuant to a Manufacturing Agreement Amendment between the Company, MMD and Merrell Dow Pharmaceuticals, Inc., a wholly owned subsidiary of MMD ("MDPI"), the terms of a manufacturing arrangement and ground lease relating to a manufacturing facility in Midland, Michigan were modified and the Company 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 Agreement between the Company, MMD and MDPI, certain research and development services provided by the Company were modified and the Company agreed to purchase certain physical assets owned by either MMD 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 Services Agreement between the Company, MMD and MDPI, certain services provided globally by the Company to subsidiaries of MMD were terminated and certain other services provided by the Company to specific subsidiaries of MMD were extended under similar terms to existing agreements. Pursuant to two letter agreements entered into by the Company and MMD, 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. II. Latin American Pharmaceutical Group. ------------------------------------ On May 4, 1995, the Company issued a press release, the text of which follows: May 4, 1995 DOW SIGNS AGREEMENT TO SELL ITS LATIN AMERICAN PHARMACEUTICAL BUSINESS TO ROUSSEL UCLAF The Dow Chemical Company announced today that it has signed an agreement with Roussel Uclaf to sell its pharmaceutical activities in Latin America based in three countries: Brazil, Mexico and Argentina. The purchase price will be $140 million, subject to an adjustment based on the book value of net assets at closing. Unlike what the parties initially contemplated, the transaction will exclude real estate properties which will remain with Dow. The closing is expected to take place within 90 days. If closed, the transaction will result in a gain for Dow in a range of 15 to 20 cents per share. Dow's sales in Latin America amounted to approximately $175 million in 1994 with a staff of more than 1,000 employees. Two manufacturing sites are in operation in Brazil and Mexico. # # # # On May 3, 1995, certain direct and indirect subsidiaries of the Company (the "LAPG Sellers") entered into a Purchase Agreement (the "LAPG Purchase Agreement") with Roussel Uclaf S.A. ("Roussel"), a French societe anonyme and a majority-owned subsidiary of Hoechst AG, pursuant to which the LAPG Sellers will sell and Roussel or an affiliate thereof will purchase certain assets and assume certain liabilities of the pharmaceutical business operated by the LAPG Sellers and their affiliates in Central and South America (the "Purchased Business"). The Purchased Business does not include certain real property located in Mexico and Brazil which Roussel has agreed to lease from certain of the LAPG Sellers. The purchase price for the Purchased Business is $140 million, subject to adjustment as provided in the LAPG Purchase Agreement. The consummation of the transactions contemplated by the LAPG Purchase Agreement is conditioned upon, among other things, (i) any applicable waiting periods under Brazilian, Mexican or Argentine law having expired or been terminated, (ii) Hoechst AG having acquired, directly or indirectly, shares of common stock of MMD representing at least a majority of MMD's outstanding voting power, and (iii) the absence of any material adverse change in the Purchased Business. The LAPG Purchase Agreement may be terminated, among other things, (i) at any time by mutual consent of the parties, (ii) by either Roussel or the LAPG Sellers if the closing shall not have occurred on or before January 31, 1996 or (iii) by either Roussel or the LAPG Sellers if the MMD Merger Agreement shall have been terminated in accordance with its terms. ITEM 7. Financial Statements and Exhibits. ---------------------------------- (c) Exhibits.* 2.1 Agreement and Plan of Merger dated May 3, 1995, by and among Marion Merrell Dow Inc., The Dow Chemical Company, Hoechst Corporation and H Pharma Acquisition Corp. 2.2 Stock Purchase Agreement, dated May 3, 1995, by and among Hoechst Corporation, H Pharma Acquisition Corp., The Dow Chemical Company, RH Acquisition Corp. and Dow Holdings Inc. 2.3 Indemnity Agreement, dated as of May 3, 1995, between Hoechst Corporation and The Dow Chemical Company. 2.4 Tax Allocation Agreement, dated as of May 3, 1995, among The Dow Chemical Company, Hoechst Corporation and Marion Merrell Dow Inc. 2.5 Computerized Process Control Software Agreement (Leases and Services), dated as of May 3, 1995, between Rofan Services, Inc. and Marion Merrell Pharmaceuticals, Inc. 2.6 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. 2.7 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. 2.8 Insurance Separation Agreement, dated as of May 3, 1995, among The Dow Chemical Company, Hoechst Corporation, Marion Merrell Dow Inc., Dorinco Insurance Company, Dorintal Reinsurance Ltd. and Timber Insurance Ltd. 2.9 Manufacturing Agreement Amendment, dated as of May 3, 1995, between The Dow Chemical Company and Marion Merrell Pharmaceuticals, Inc. 2.10 Second Amendment to Master Services Agreements, dated as of May 3, 1995, between Marion Merrell Dow Inc., The Dow Chemical Company and Marion Merrell Pharmaceuticals, Inc. 2.11 Third Amendment to Master Services Agreements, dated as of May 3, 1995, between Marion Merrell Dow Inc., The Dow Chemical Company and Marion Merrell Pharmaceuticals, Inc. 2.12 Letter Agreement, dated as of May 3, 1995, between The Dow Chemical Company and Marion Merrell Dow Inc. 2.13 Letter Agreement, dated as of May 3, 1995, among The Dow Chemical Company, Marion Merrell Pharmaceuticals, Inc. and Marion Merrell Dow Inc. 2.14 Purchase Agreement, dated as of May 3, 1995, between 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. - -------------------- * The schedules, exhibits and appendices described in these agreements have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of the schedules, exhibits and appendices to the Securities and Exchange Commission upon request. 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE DOW CHEMICAL COMPANY By: /s/ Enrique C. Falla --------------------------------------- Name: Enrique C. Falla Title: Executive Vice President and Date: May 12, 1995 Chief Financial Officer
Exhibit Exhibit Index* Page - ------- ------------- ---- 2.1 Agreement and Plan of Merger dated May 3, 1995, by and among Marion Merrill Dow Inc., The Dow Chemical Company, Hoechst Corporation and H Pharma Acquisition Corp. 2.2 Stock Purchase Agreement dated May 3, 1995, by and among Hoechst Corporation, H Pharma Acquisition Corp., The Dow Chemical Company, RH Acquisition Corp. and Dow Holdings Inc. 2.3 Indemnity Agreement, dated as of May 3, 1995, between Hoechst Corporation and The Dow Chemical Company. 2.4 Tax Allocation Agreement, dated as of May 3, 1995, among The Dow Chemical Company, Hoechst Corporation and Marion Merrell Dow Inc. 2.5 Computerized Process Control Software Agreement (Leases and Services), dated as of May 3, 1995, between Rofan Services, Inc. and Marion Merrell Pharmaceuticals, Inc. 2.6 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. 2.7 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. 2.8 Insurance Separation Agreement, dated as of May 3, 1995, among The Dow Chemical Company, Hoechst Corporation, Marion Merrell Dow Inc., Dorinco Insurance Company, Dorintal Reinsurance Ltd. and Timber Insurance Ltd. 2.9 Manufacturing Agreement Amendment, dated as of May 3, 1995, between The Dow Chemical Company and Marion Merrell Pharmaceuticals, Inc. 2.10 Second Amendment to Master Services Agreements, dated as of May 3, 1995, between Marion Merrell Dow Inc., The Dow Chemical Company and Marion Merrell Pharmaceuticals, Inc. 2.11 Third Amendment to Master Services Agreements, dated as of May 3, 1995, between Marion Merrell Dow Inc., The Dow Chemical Company and Marion Merrell Pharmaceuticals, Inc. 2.12 Letter Agreement, dated as of May 3, 1995, between The Dow Chemical Company and Marion Merrell Dow Inc. 2.13 Letter Agreement, dated as of May 3, 1995, among The Dow Chemical Company, Marion Merrell Pharmaceuticals, Inc. and Marion Merrell Dow Inc. 2.14 Purchase Agreement, dated as of May 3, 1995, between 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., Merrill Lepetit Farmaceutica Industrial LTDA, Laboratorios Lepetit de Mexico S.A. de C.V. and Roussel Uclaf S.A.
- ----------------- * The schedules, exhibits and appendices described in these agreements have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of the schedules, exhibits and appendices to the Securities and Exchange Commission upon request. EX-2.1 2 AGREEMENT & PLAN OF MERGER 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. 2 (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 offi- 3 cers 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 4 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: 5 (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 6 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 7 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 8 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, 9 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 10 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 11 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 12 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 accor- 13 dance 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 posi- 14 tion 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, individ- 15 ually 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 characteris- 16 tics 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 17 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 18 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 19 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"). 20 (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 21 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. 22 (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 vest- 23 ing, 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. 24 (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 25 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 26 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. (S) 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, 27 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 28 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 29 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). 30 (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 31 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 32 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. 33 (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 34 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 35 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 36 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 re- 37 quired 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): 38 (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 39 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 40 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 pursu- 41 ant 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 42 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 correspon- 43 dence 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. 44 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" 45 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' 46 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 47 (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 limita- 48 tion, 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 49 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 50 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 51 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. 52 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 53 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 54 (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. 55 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 56 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 57 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. 58 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 59 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. 60 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 EX-2.2 3 STOCK PURCHASE AGREEMENT 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 2 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 3 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 4 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, termina- 5 tions, 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 6 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 7 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 combina- 8 tion, 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 9 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 10 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 11 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 12 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 13 (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) 14 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 15 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 16 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. 17 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: 18 (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. 19 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 Benz ------------------------------ Name: Harry 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 EX-2.3 4 INDEMNITY AGREEMENT 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. 2 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. 3 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 President ----------------------------- and Chief Financial Officer ----------------------------- 4 EX-2.4 5 TAX ALLOCATION AGREEMENT - ------------------------------------------------------------------------------- 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
i 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) ii 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. 1 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 -2- 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 -3- 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 -4- 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. -5- 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. -6- 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 -7- 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; -8- 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. -9- 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) -10- 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. -11- 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. -12- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above. The Dow Chemical Company By: --------------------------------------- Title: ------------------------------------ Date: ------------------------------------- Marion Merrell Dow Inc. By: Fred W. Lynes Jr. --------------------------------------- Title: Chairman and Chief Executive Officer ------------------------------------ Date: ------------------------------------- Hoechst Corporation By: --------------------------------------- Title: ------------------------------------ Date: ------------------------------------- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above. The Dow Chemical Company By: Charlie J. Helen --------------------------------------- Title: Tax Director and Asst. Secretary ------------------------------------ Date: May 3, 1995 ------------------------------------- Marion Merrell Dow Inc. By: Charles D. Delta --------------------------------------- Title: Vice President ------------------------------------ Date: May 3, 1995 ------------------------------------- Hoechst Corporation By: --------------------------------------- Title: ------------------------------------- Date: ------------------------------------- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above. The Dow Chemical Company By: --------------------------------------- Title: ------------------------------------ Date: ------------------------------------- Marion Merrell Dow Inc. By: --------------------------------------- Title: ------------------------------------ Date: ------------------------------------- Hoechst Corporation By: Harry Benz --------------------------------------- Title: Secretary and Treasurer ------------------------------------ Date: May 3, 1995 ------------------------------------- SCHEDULE 1(h) TO THE TAX ALLOCATION AGREEMENT UNITARY STATES
DOMESTIC SUBS FOREIGN OR POSSESSIONS SUBS -------------------------------------------------------------------------- --------------------------- MARION MARION'S MARION MERRELL MERRELL ALL OTHER RC SEG. 838 CONTROLLED MERRELL DOW RUGBY CONSUMER MARISUB DOMESTIC MARION & FOREIGN STATE: DOW INC PHARMACEUTICALS GROUP INC PRODUCTS INC V SUBS COMPANY CORPORATIONS - ----------------- ------- --------------- --------- ------------ ------- --------- ----------- ------------ (1) ARIZONA X X (2) CALIFORNIA X X X (3) MAINE X X (4) MONTANA X X X (5) NEW HAMPSHIRE X X (6) UTAH X X
X - DENOTES A NEXUS PRESENCE AS HISTORICALLY DEFINED AND INTERPRETED BY NMD AND DCC. THE ABSENCE OF AN X MEANS: THERE IS NO NEXUS PRESENCE AS HISTORICALLY DEFINED AND INTERPRETED BY NMD AND DCC. EX-2.5 6 SOFTWARE AGREEMENT 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 Corporation of: State of Delaware 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 -1- 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) SERIEAL 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 -2- 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 -3- 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 -4- 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. -5- 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 -6- 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. -7- 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 -8- 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 -9- 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. -10- 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. -11- 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. -12- 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 Services, Inc. 2030 Willard H. Dow Center Midland, MI 48674 Attention: M. N. Trask, Vice President -13- 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 -14- 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: John C. Lillich By: Charles D. Dalton ------------------------ -------------------------- Name: John C. Lillich Name: Charles D. Dalton ---------------------- ------------------------ Title: President Title: Vice President --------------------- ----------------------- Date: May 3, 1995 Date: 5/3/95 ---------------------- ------------------------ -15- 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 -16- 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. -17- 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 $125.00 per hour. -18- (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. -19- 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 SERVICES INC. MERRELL DOW PHARMACEUTICALS INC. By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:_______________________ Date:_______________________ Date:________________________ 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 PAGE 1 OF 2 PAGES 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 PAGE 2 OF 2 PAGES 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 Chemical 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:_______________________ EX-2.6 7 SOFTWARE AGREEMENT 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 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 -1- 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 -2- process. The APPLICATION PROGRAM is further transformed into COMPILED DOWTRAN using 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 provide 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 -3- 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 -4- 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. -5- 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 -6- 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. -7- 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. -8- 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 -9- 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 -10- 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 -11- 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 -12- 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. -13- 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- 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. -15- 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 3rd, 1995 --------------------- -------------------------- By: /s/ Jane M. Gootee ----------------------- Name: Jane M. Gootee --------------------- Title: Attorney In Fact -------------------- Date: May 3, 1995 --------------------- -16- 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 -17- 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. -18- 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 -19- 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. -20- 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 SYSTEM DESCRIPTION: - ------------------------ NUMBER OF SYSTEMS: 1 VERSION: CPU: MOD5+ OVERHEAD SOFTWARE: REL.0643 GPI: REL.V2.00 DSS: REL.V2.00 MODSERVER HARDWARE: AS STADE STANDARD SOFTWARE: REL.V2.0e 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.V2.00 DSS: REL.V2.00 MODSERVER HARDWARE: AS STADE STANDARD SOFTWARE: REL.V2.0e
PAGE 1 OF 3 PAGES
NUMBER OF LEASE ANNUAL SITE PLANT MOD CANS CHARGES SUPPORT FEES - ---- ----- --------- ------- ------------ BRINDISI, CHEMICAL 2 U.S.$16,800.00 U.S.$2,600.00 ITALY DEVELOPMENT PILOT MOD5 SYSTEM DESCRIPTION: - ------------------------ NUMBER OF SYSTEMS: 1 VERSION: CPU: MOD5+ OVERHEAD SOFTWARE: REL.0643 GPI: REL.V2.00 DSS: REL.V2.00 MODSERVER HARDWARE: AS STADE STANDARD SOFTWARE: REL.V2.0e GARESSIO, BUILDING 1 8 + NONE U.S.$11,700.00 ITALY 1 SPARE (ANTEDATES LEASING) MOD5 SYSTEMS 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. PAGE 2 OF 3 PAGES
NUMBER OF LEASE ANNUAL SITE PLANT MOD CANS CHARGES SUPPORT FEES - ---- ----- --------- ------- ------------ GARESSIO, DISTILLERY 2 NONE U.S.$2,600.00 ITALY (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: 1 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
PAGE 3 OF 3 PAGES 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 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 Gruppo Representative: INFORMATION SYSTEMS B.V. By: - --------------------------- ---------------------------- Name: Name: ---------------------- -------------------------- Title: Title: --------------------- ------------------------- Date: Date: ---------------------- -------------------------- EX-2.7 8 SOFTWARE AGREEMENT 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 -1- 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 M0D5 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 -2- 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 -3- 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 -4- 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 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. MOD5 SYSTEMS for each PLANT are specified by the number of CANS, and the installed version of computer processing unit(s), MOD5 OVERHEADS, CPI and DOWTRAN respectively. (f) EFFECTIVE DATE is the date first set forth above. -5- 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 -6- 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. -7- 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. -8- 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 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 --------------- MOD5 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 -9- 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 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 -10- 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 -11- 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 -12- 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. -13- 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- 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. -15- 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. 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 3rd, 1995 --------------------- ------------------------ By: /s/ Jane M. Gootee ----------------------- Name: Jane M. Gootee --------------------- Title: Attorney In Fact -------------------- Date: May 3, 1995 --------------------- -16- 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 -17- 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. -18- 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 -19- 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. -20- 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 INFORMATION SYSTEMS B.V. BIOCHIMICA DEL SALENTO S.p.A. By: 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
PAGE 1 OF 1 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: ----------------------- ------------------------ EX-2.8 9 INSURANCE SEPARATION AGREEMENT 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; 2 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; 3 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], 4 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 5 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, 6 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. 7 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 8 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 9 "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 10 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 settle- 11 ments 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 12 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 13 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 14 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. 15 (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. 16 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 neces- 17 sary 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 their 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 18 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 19 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; 20 (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. 21 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. 22 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: 23 (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. 24 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 Attention: Roger S. Aaron and Franklin M. Gittes 25 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. 26 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. 27 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 President Executive Officer Hoechst Corporation Timber Insurance Ltd. By: /s/ Harry S. Benz By: /s/ Philip M. Roels -------------------------------- ------------------------------------- Harry S. Benz Philip M. Roels Secretary and Treasurer Vice President 28 EX-2.9 10 MANUFACTURING AGREEMENT AMENDMENT 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 Agree- 2 ment, 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. 3 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 4 EX-2.10 11 2ND AMENDMENT TO MASTER SERV 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 2 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 3 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. 4 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 5 EX-2.11 12 3RD AMENDMENT TO MASTER SERV 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. 2 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 3 EX-2.12 13 LETTER AGREEMENT [LETTERHEAD OF MARION MERRELL DOW INC.] 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. The Dow Chemical Company May 3, 1995 Page 2 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, The Dow Chemical Company May 3, 1995 Page 3 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 --------------------- EX-2.13 14 LETTER AGREEMENT [LETTERHEAD OF MARION MERRELL DOW INC.] 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 The Dow Chemical Company May 3, 1995 Page 2 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 The Dow Chemical Company May 3, 1995 Page 3 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 EX-2.14 15 PURCHASE AGREEMENT 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, 2 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 3 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 4 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 5 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 6 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. 7 (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 8 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 9 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 10 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. 11 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 viola- 12 tion 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 13 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 14 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. 15 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), 16 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 transac- 17 tions 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 18 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 19 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 20 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 21 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 22 (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 23 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 24 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, 25 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 poli- 26 cies (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 27 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 28 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 29 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. 30 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; 31 (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 32 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; 33 (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. 34 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 35 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 protec- 36 tive 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 under- 37 standing 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 dis- 38 tribution 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 39 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 40 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 41 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 42 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 43 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 44 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 45 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. 46 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 47 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 48 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 49 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. 50 (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 end- 51 ing 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 52 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 53 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, 54 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' ex- 55 pense; 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; 56 (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 57 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 58 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 59 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 60 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 61 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 62 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 63 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 64 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 65 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. 66 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: ______________________________ Name: Title: DOW QUIMICA ARGENTINA S.A. By: ______________________________ Name: Title: DOW QUIMICA MEXICANA S.A. By: ______________________________ Name: Title: DOW PRODUCTOS QUIMICOS LTDA By: ______________________________ Name: Title: MINERACAO E QUIMICA DE NORDESTE By: ______________________________ Name: Title: DOW QUIMICA S.A. By: ______________________________ Name: Title: 67 MERRELL LEPETIT FARMACEUTICA INDUSTRIAL LTDA By: ______________________________ Name: Title: LABORATORIOS LEPETIT DE MEXICO S.A. DE C.V. By: ______________________________ Name: Title: ROUSSEL UCLAF S.A. By: ______________________________ Name: Title: 68 -----END PRIVACY-ENHANCED MESSAGE-----