-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QBS+0zf9rMbA6nI8FEiHH3oWwGB8Ksksh8CLN5+HQxAvi0oJB94uUkb/JaSZ/8RY oE0NEwxVyUnh/6kvmnvNhg== 0000310823-96-000003.txt : 19960216 0000310823-96-000003.hdr.sgml : 19960216 ACCESSION NUMBER: 0000310823-96-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960130 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960214 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARTFORD STEAM BOILER INSPECTION & INSURANCE CO CENTRAL INDEX KEY: 0000310823 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 060384680 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10527 FILM NUMBER: 96519645 BUSINESS ADDRESS: STREET 1: ONE STATE ST CITY: HARTFORD STATE: CT ZIP: 06102 BUSINESS PHONE: 2037221866 MAIL ADDRESS: STREET 1: ONE STATE STREET STREET 2: P.O. BOX 5024 CITY: HARTFORD STATE: CT ZIP: 06102-5024 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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) - January 30, 1996 THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY (Exact name of registrant as specified in its charter) Connecticut 0-13300 06-0384680 (State or other (Commission (IRS Employer jurisdiction of incorporation) File Number) Identification No.) One State Street, Hartford, Connecticut 06102 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code - (203-722-1866) Item 5. Other Events On January 30, 1996, the Registrant, together with The Dow Chemical Company, completed the formation of a new company, Radian International LLC, to provide environmental, information technology, and strategic chemical management services to industries and government worldwide. Radian International LLC is headquartered in Austin, Texas with field offices at other sites in the United States and abroad. In connection with the formation of Radian International LLC, the Registrant contributed substantially all of the assets of its wholly- owned subsidiary, Radian Corporation, to the new company. Similarly, The Dow Chemical Company contributed the assets of its wholly-owned subsidiary, Dow Environmental Inc. as well as access to certain of its technologies which are in support of the businesses expected to be conducted by the new company. Radian International LLC currently is 40 percent owned by Radian Corporation, which continues to be a wholly-owned subsidiary of the Registrant, and 60 percent owned by Dow Environmental Inc. The income of Radian International LLC will be subject to a preference return to the Registrant for the first two years. As is customary in joint ventures, the agreements executed in connection with the formation of Radian International LLC specify certain circumstances under which the business can be sold, venture assets and liabilities can be distributed or partners' interests can be sold subject to certain rights of first refusal. In 1996, the Registrant's interest in Radian International LLC will be accounted for on the consolidated financial statements under the equity method of accounting. Had the transaction occurred at the beginning of 1995, under the equity method of accounting, total revenues and total expenses would have been $470.7 and $399.7, respectively, as compared to actual 1995 revenues of $672.2 and expenses of $585.9; and consolidated assets and liabilities at December 31, 1995 would have been $954.1 and $613.0, respectively, as compared to actual amounts of $971.5 and $630.4. The foregoing description is qualified in its entirety by reference to the Contribution Agreement and the Limited Liability Company Agreement of Radian International LLC, copies of which are filed as Exhibits hereto. Item 7. Exhibits. The following exhibits are filed with this Form 8-K: 99.1 Contribution Agreement dated as of January 30, 1996.* 99.2 Limited Liability Company Agreement of Radian International LLC dated as of January 1, 1996.* * Certain exhibits, schedules and/or annexes have been omitted. A copy of any omitted exhibit, schedule or annex will be furnished supplementally to the Commission upon request. 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, thereunto duly authorized. THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY Dated: February 14, 1996 /s/ Robert C. Walker Robert C. Walker Senior Vice President and General Counsel EXHIBIT INDEX Exhibit No. - ---------- 99.1 Contribution Agreement dated as of January 30, 1996.* 99.2 Limited Liability Company Agreement of Radian International LLC dated as of January 1, 1996.* * Certain exhibits, schedules and/or annexes have been omitted. A copy of any omitted exhibit, schedule or annex will be furnished supplementally to the Commission upon request. EX-99 2 EXHIBIT 99.1 CONTRIBUTION AGREEMENT dated as of January 30, 1996 among THE DOW CHEMICAL COMPANY, THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY, DOW ENVIRONMENTAL INC. and RADIAN CORPORATION TABLE OF CONTENTS SECTION Page ARTICLE I DEFINITIONS 1.01. Definitions. . . . . . . . . . . . . . . . . . . . 1 1.02. Accounting Terms and Determinations. . . . . . . . 9 ARTICLE II ORGANIZATION; CONTRIBUTION 2.01. Organization of Newco. . . . . . . . . . . . . . . 10 2.02. Contribution . . . . . . . . . . . . . . . . . . . 10 2.03. Excluded Assets. . . . . . . . . . . . . . . . . . 12 2.04. Assumption of Liabilities. . . . . . . . . . . . . 13 2.05. Excluded Liabilities . . . . . . . . . . . . . . . 14 2.06. INTENTIONALLY OMITTED. . . . . . . . . . . . . . . 15 2.07. Assignment of Certain Contracts and Other Assets . . . . . . . . . . . . . . . . . . . . . . 15 2.08. Closing. . . . . . . . . . . . . . . . . . . . . . 17 2.09. Closing Balance Sheet. . . . . . . . . . . . . . . 18 ARTICLE III REPRESENTATIONS AND WARRANTIES OF DEI AND RADIAN 3.01. Existence and Power. . . . . . . . . . . . . . . . 19 3.02. Authorization. . . . . . . . . . . . . . . . . . . 19 3.03. Governmental Authorization . . . . . . . . . . . . 20 3.04. Non-Contravention. . . . . . . . . . . . . . . . . 20 3.05. Restricted Assets. . . . . . . . . . . . . . . . . 20 3.06. Third Quarter Financial Statements . . . . . . . . 21 3.07. Absence of Certain Changes . . . . . . . . . . . . 21 3.08. Properties . . . . . . . . . . . . . . . . . . . . 23 3.09. Sufficiency of Assets. . . . . . . . . . . . . . . 24 3.10. No Undisclosed Liabilities . . . . . . . . . . . . 25 3.11. Litigation . . . . . . . . . . . . . . . . . . . . 25 3.12. Material Contracts . . . . . . . . . . . . . . . . 25 3.13. Licenses and Permits . . . . . . . . . . . . . . . 27 3.14. Insurance Coverage . . . . . . . . . . . . . . . . 27 3.15. Compliance with Laws . . . . . . . . . . . . . . . 28 3.16. Inventories. . . . . . . . . . . . . . . . . . . . 28 3.17. Receivables; Payables. . . . . . . . . . . . . . . 28 3.18. Intellectual Property. . . . . . . . . . . . . . . 29 3.19. Finders' Fees. . . . . . . . . . . . . . . . . . . 29 3.20. Environmental Matters. . . . . . . . . . . . . . . 29 3.21. Warranties . . . . . . . . . . . . . . . . . . . . 31 3.22. Customers and Suppliers. . . . . . . . . . . . . . 31 3.23. Books and Records. . . . . . . . . . . . . . . . . 31 3.24. Taxes. . . . . . . . . . . . . . . . . . . . . . . 31 3.25. No Other Agreement . . . . . . . . . . . . . . . . 32 3.26. Derivatives. . . . . . . . . . . . . . . . . . . . 32 3.27. Material Equity Investment Entities. . . . . . . . 32 3.28. Employment Plans and Benefit Arrangements. . . . . 34 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TDCC AND HSB 4.01. Existence. . . . . . . . . . . . . . . . . . . . . 35 4.02. Authorization. . . . . . . . . . . . . . . . . . . 35 4.03. Governmental Authorization . . . . . . . . . . . . 36 4.04. Non-Contravention. . . . . . . . . . . . . . . . . 36 4.05. Required Approval. . . . . . . . . . . . . . . . . 37 4.06. Finders' Fees. . . . . . . . . . . . . . . . . . . 37 ARTICLE V COVENANTS 5.01. Conduct of the Business. . . . . . . . . . . . . . 37 5.02. Access to Information. . . . . . . . . . . . . . . 39 5.03. Notices of Certain Events. . . . . . . . . . . . . 40 5.04. Reasonable Efforts; Further Assurances . . . . . . 40 5.05. Certain Filings. . . . . . . . . . . . . . . . . . 40 5.06. Public Announcements . . . . . . . . . . . . . . . 41 5.07. Stockholder Approval . . . . . . . . . . . . . . . 41 5.08. WARN . . . . . . . . . . . . . . . . . . . . . . . 41 5.09. INTENTIONALLY OMITTED. . . . . . . . . . . . . . . 41 5.10. Impairment of Assets . . . . . . . . . . . . . . . 41 5.11. Covenant of Parent . . . . . . . . . . . . . . . . 42 5.12. Covenants Not to Compete . . . . . . . . . . . . 42 5.13. Liens on Interests in Newco. . . . . . . . . . . . 43 5.14. Covenants Not to File Involuntary Bankruptcy . . . 43 5.15. INTENTIONALLY OMITTED. . . . . . . . . . . . . . . 43 5.16. INTENTIONALLY OMITTED. . . . . . . . . . . . . . . 43 5.17. Transfers of Capital Stock of Contributing Subsidiary . . . . . . . . . . . . . . . . . . . . 43 5.18. Technology Access. . . . . . . . . . . . . . . . . 45 5.19. Certain Radian Property. . . . . . . . . . . . . . 46 ARTICLE VI EMPLOYEES AND EMPLOYEE BENEFITS 6.01. Leased Employees . . . . . . . . . . . . . . . . . 46 6.02. Employment by Newco. . . . . . . . . . . . . . . . 47 6.03. Newco Plans. . . . . . . . . . . . . . . . . . . . 47 6.04. Relocation . . . . . . . . . . . . . . . . . . . . 49 ARTICLE VII CONDITIONS TO CLOSING 7.01. Conditions to the Closing. . . . . . . . . . . . . 49 ARTICLE VIII SURVIVAL; INDEMNIFICATION 8.01. Survival . . . . . . . . . . . . . . . . . . . . . 50 8.02. Indemnification. . . . . . . . . . . . . . . . . . 50 8.03. Notice of Third Party Claims; Assumption of Defense. . . . . . . . . . . . . . . . . . . . . . 53 8.04. Settlements or Compromises . . . . . . . . . . . . 54 8.05. Failure of Indemnifying Party to Act . . . . . . . 55 ARTICLE IX TERMINATION 9.01. Grounds for Termination. . . . . . . . . . . . . . 55 9.02. Effect of Termination. . . . . . . . . . . . . . . 56 ARTICLE X MISCELLANEOUS 10.01. Notices . . . . . . . . . . . . . . . . . . . . . 56 10.02. Amendments; No Waivers. . . . . . . . . . . . . . 57 10.03. Expenses. . . . . . . . . . . . . . . . . . . . . 57 10.04. Successors and Assigns. . . . . . . . . . . . . . 58 10.05. Governing Law . . . . . . . . . . . . . . . . . . 58 10.06. Counterparts. . . . . . . . . . . . . . . . . . . 58 10.07. Entire Agreement. . . . . . . . . . . . . . . . . 58 10.08. Captions. . . . . . . . . . . . . . . . . . . . . 58 10.09. Specific Performance. . . . . . . . . . . . . . . 58 10.10. Severability. . . . . . . . . . . . . . . . . . . 58 10.11. No Third Party Beneficiaries. . . . . . . . . . . 59 Annex I Third Quarter Financial Statements of DEI Annex II Third Quarter Financial Statements of Radian Exhibit A Technology Access Schedule 1.01 Debt Schedule 2.02(a) Liens on Assets Schedule 2.02(a)(iv) Other Contracts Schedule 2.02(a)(xi) Contributed Amounts Schedule 2.02(b)(x) Liens on Contributed Assets Schedule 2.02(b) Certain Contributed Assets Schedule 2.03(x) Excluded Assets of Radian Schedule 2.03(xi) Excluded Assets of DEI Schedule 2.04(c) Certain Assumed Liabilities Schedule 2.07(f) Special Foreign Assets Schedule 3.03 Government Authorization Schedule 3.05 Restricted Assets Schedule 3.07 Absence of Certain Changes Schedule 3.08(a) Real Property Schedule 3.08(b) Personal Property Schedule 3.08(d) Liens Schedule 3.08(e) Violation of Law Schedule 3.10 No Undisclosed Liabilities Schedule 3.11 Litigation Schedule 3.12(a) Contracts Schedule 3.12(b) Defaults Schedule 3.13 Licenses and Permits Schedule 3.16 Inventories Schedule 3.17 Aging of Receivables Schedule 3.18 Intellectual Property Schedule 3.20 Environmental Matters Schedule 3.21 Warranties Schedule 3.22 Customers and Suppliers Schedule 3.24 Taxes Schedule 3.25 No Other Agreements Schedule 3.26 Derivative Financial Instruments Schedule 3.27 Material Equity Investment Entities Schedule 3.28 Employment Plans and Benefit Arrangements Schedule 4.03 Government Authorization Schedule 8.02(g) Income Tax Caps Schedule 10.03 Expenses CONTRIBUTION AGREEMENT This CONTRIBUTION AGREEMENT, dated as of January 30, 1996, is among The Dow Chemical Company, a Delaware corporation ("TDCC"), Dow Environmental Inc., a Delaware corporation and a wholly owned subsidiary of TDCC ("DEI"), The Hartford Steam Boiler Inspection and Insurance Company, a Connecticut corporation ("HSB") and Radian Corporation, a Texas corporation and a wholly owned subsidiary of HSB ("Radian"). TDCC and HSB are sometimes individually referred to as a "Parent." DEI and Radian are sometimes individually referred to in this Agreement as a "Contributing Subsidiary" and are sometimes collectively referred to in this Agreement as "Contributing Subsidiaries." RECITALS A. TDCC and HSB have caused the formation of Radian International LLC, a Delaware limited liability company ("Newco"), pursuant to a Limited Liability Company Agreement, dated as of January 1, 1996, between DEI and Radian (the "LLC Agreement"). B. Each of TDCC and HSB, on behalf of itself and its Affiliates, wishes to develop through Newco the Newco Services Business (as defined below). C. Each of TDCC, HSB, DEI and Radian wishes to contribute or cause the contribution of, as the case may be, the Contributed Assets (as defined below) to Newco and to cause Newco to perform, assume and discharge the Assumed Liabilities (as defined below). NOW, THEREFORE, the parties agree as follows: ARTICLE I DEFINITIONS 1.01. Definitions. (a) The following terms, as used in this Agreement, have the following meanings: "Affiliate" means, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with such other Person; provided that Newco shall not be an Affiliate of any party to this Agreement for purposes of this Agreement. For the purposes of this definition, "control," when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the operation or management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agreement" means, on any date, this Contribution Agreement as originally in effect on the date of this Agreement and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified and in effect on such date. "Bankruptcy" has the meaning set forth in the LLC Agreement. "Benefit Arrangement" means any retirement or deferred compensation plan, stock plan, unemployment compensation plan, vacation pay, severance pay, bonus or benefit arrangement, insurance or hospitalization program or any other fringe benefit arrangement for any current or former employee, director, consultant or agent (whether pursuant to contract, arrangement, custom or informal understanding) which does not constitute an Employee Plan, or any employment agreement (i) that is maintained, administered or contributed to by DEI or Radian or any of their respective ERISA Affiliates, or (ii) to which DEI or Radian or any of their respective ERISA Affiliates is a party or has any liability or contingent liability. "Books and Records" means, with respect to any party, copies of all books, records, files and papers, whether in hard copy or computer format, related to the business of such party (excluding minute books for its board of directors, committees or shareholder meetings, incorporation documents, and stock transfer records and tax or similar or related corporate records) including without limitation engineering information, sales and promotional literature, manuals and data, sales and purchase correspondence, lists of present and former suppliers, lists of present and former customers, personnel and employment records (excluding at the Closing personnel records relating to individual performance or evaluation records, medical histories or other such sensitive information, which shall be contributed at such time as the respective individual becomes an employee of Newco), and any information relating to any Tax imposed on the assets of such party. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "Closing Balance Sheet" means, with respect to each Contributing Subsidiary, an audited balance sheet of its Contributed Business as of 11:59 p.m. on December 31, 1995, together with the notes thereto, consistent with the accounting principles used in the preparation of the Third Quarter Balance Sheet, except as may be required by GAAP. "Code" means the Internal Revenue Code of 1986, as amended. "Company Interest" has the meaning set forth in the LLC Agreement. "Confidentiality Agreement" means that certain letter agreement, dated August 9, 1995, between TDCC and HSB. "Contributed Business" means, with respect to each Contributing Subsidiary, all of its assets and liabilities that are being contributed to or assumed by Newco, including without limitation the assets and liabilities that (i) are Restricted Assets or (ii) are listed on Schedules 2.02(b) and 2.04(c) which will be contributed to or assumed by DEI from TDCC or its Affiliates other than DEI or will be contributed to or assumed by Radian from HSB or its Affiliates other than Radian pursuant to this Agreement. For the avoidance of doubt, the assets and liabilities of TDCC and Affiliates of TDCC other than DEI, and the assets and liabilities of HSB and Affiliates of HSB other than Radian, except for the assets and liabilities that are listed on Schedules 2.02(b) and 2.04(c), are not included in the definition of Contributed Business. "Debt" means, with respect to each Contributing Subsidiary and its Subsidiaries, taken as a whole, (i) indebted- ness of such party for borrowed money, (ii) indebtedness of such party for the deferred purchase price of services or property, (iii) obligations of such party under leases which have been, or, in accordance with GAAP, should be, recorded as capitalized leases, (iv) indebtedness of such party consisting of unpaid reimbursement obligations in respect of all outstanding drawings under letters of credit issued for the account of such party, (v) debt of others guaranteed by such party and (vi) indebtedness of such party consisting of unpaid reimbursement obligations in respect of amounts incurred or expended by an Affiliate on behalf of a Contributing Subsidiary or any of its Subsidiaries for services or property provided to such party or in satisfaction of any obligation of such party; provided, however, that aggregate indebtedness pursuant to this clause (vi) shall not exceed the amounts set forth on Schedule 1.01; provided, further, however, that amounts payable under existing written intercompany service agreements shall not be covered under clause (vi) above. Debt shall not include amounts excluded from the Assumed Liabilities pursuant to Section 2.05(v) of this Agreement related to foreign, U.S. Federal and state income taxes. "Employee Plan" means any "employee benefit plan", as defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, and (ii) is maintained, administered or contributed to by DEI or Radian respectively, or any of their respective ERISA Affiliates or to which DEI or Radian or any of their respective ERISA Affiliates is a party or has any liability or contingent liability. "Employee Seconding Agreements" means the agreements, dated as of the Closing Date (i) between DEI and Newco pursuant to which DEI will lease to Newco the services of the DEI Leased Employees, (ii) between Radian and Newco pursuant to which Radian will lease to Newco the services of the Radian Leased Employees and (iii) between TDCC and Newco pursuant to which TDCC will lease to Newco the services of the TDCC Leased Employees, each for the amount described in such agreements. "Environmental Investigation or Audit" means, without limitation, any audits, studies, reports, analyses, representa- tive samples and monitoring data relating to a Regulated Environ- mental Activity, conducted internally (for purposes other than day-to-day routine monitoring and data analysis) or by outside consultants or engineers, with respect to any properties or assets of a Contributing Subsidiary, but shall not include publicly available studies or reports submitted to regulatory agencies. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regula- tions, ordinances, rules, judgments, orders, decrees, codes, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and governmental restrictions, whether now or hereafter in effect, relating to human health, to the environment or to emissions, discharges or releases of pollutants, contaminants, Hazardous Substances or wastes into the environment, including without limitation ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, Hazardous Substances or wastes or the clean-up or other remediation thereof. "Environmental Liabilities" means all liabilities (including without limitation liabilities relating to the offsite disposal of materials generated in the operation of facilities constituting Contributed Assets), whether such liabilities are vested or unvested, contingent or fixed, actual or potential, or known or unknown, which (i) arise under or relate to matters covered by Environmental Laws (including without limitation any matters disclosed or required to be disclosed on Schedule 3.20) and (ii) relate to actions occurring or conditions existing on or prior to the Closing Date. "Environmental Permits" means, with respect to each Contributing Subsidiary, all permits, licenses, authorizations, certificates and approvals of governmental authorities relating to, or required by, Environmental Laws and necessary for the operation of the Contributed Business of such party in the manner currently operated. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, and the rules and regulations promulgated thereunder. "ERISA Affiliate" of any entity means any other entity which, together with such entity, would be treated as a single employer under Section 414 of the Code. "Excluded Businesses" means (i) any businesses or activities conducted by TDCC or any of its Affiliates other than the businesses or activities conducted as of the date of this Agreement by DEI and its Subsidiaries or conducted with the assets listed on Part I of Schedule 2.02(b) and (ii) any businesses or activities conducted by HSB or any of its Affiliates other than the businesses or activities conducted as of the date of this Agreement by Radian and its Subsidiaries or conducted with the assets listed on Part II of Schedule 2.02(b). "GAAP" means 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 financial statements for the respective Contributed Subsidiary ended September 30, 1995 were prepared. "Hazardous Substances" means any toxic, radioactive, caustic or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics, including without limitation any substance regulated under Environmental Laws. "Intellectual Property Right" means, with respect to each Contributing Subsidiary, any trademark, service mark, service name, registration thereof or application for registration therefor, trade name, invention, patent, patent application, trade secret, know-how, copyright, copyright registration, application for copyright registration, technology, formulae, research and development data, computer software programs, or any other similar type of proprietary intellectual property right, in each case which is owned or licensed by such Contributing Subsidiary or any of its respective Subsidiaries. "Leased Employee" means any employee who provides services to Newco pursuant to the Employee Seconding Agreements, including "DEI Leased Employees" (those employees of DEI who perform services for Newco pursuant to an Employee Seconding Agreement), "Radian Leased Employees" (those employees of Radian who perform services for Newco pursuant to an Employee Seconding Agreement) and "TDCC Leased Employees" (those employees of TDCC who perform services for Newco pursuant to an Employee Seconding Agreement). "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, easement, right of way, or encumbrance of any kind in respect of such asset. "Loss" means, collectively, any and all damage, loss, cost, liability and expense, excluding interest and tax benefits, but net of insurance proceeds received from third party insurers and including without limitation reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any claim, action, suit, proceeding or governmental investigation. "Material Adverse Change" means, with respect to any Contributing Subsidiary, a material adverse change in the business, assets, condition (financial or otherwise), or results of operations of its Contributed Business taken as a whole. "Net Debt" means, with respect to Radian's Contributed Business, (i) Debt as of the Closing Date to HSB less (ii) the sum of the cash, cash equivalents, and investments which have terms of less than 120 days and are publicly traded equity interests. "Newco Protected Business" means solely (i) the businesses conducted by DEI and Radian, and their respective Subsidiaries, as of the date of this Agreement and (ii) the businesses conducted as of the date of this Agreement with the assets listed on Schedule 2.02(b). "Newco Services Business" means (i) the Newco Protected Business and, to the extent not covered by the Newco Protected Business, (ii) the following businesses: (a) remediation, including without limitation soil remediation, groundwater remediation, thermal treatment, bioremediation and containment, (b) consulting and engineering, including without limitation hazardous waste practice, (c) strategic chemical management, including without limitation environmental management, process optimization, pollution prevention, environmental health and safety programs, life cycle analysis, materials management and outsourcing, and (d) systems, including without limitation water systems, air systems, process systems and operations. "Permitted Lien" means, with respect to the Contributed Assets, any or all of the following: (i) Liens for property taxes and assessments not yet delinquent or being contested in good faith by appropriate proceedings and against which adequate reserves or accruals have been established in such party's Closing Balance Sheet, (ii) the rights of lessors and lessees under leases executed in the ordinary course of business, (iii) the rights of licensors and licensees under licenses executed in the ordinary course of business, (iv) Liens, and rights to Liens, of mechanics, warehousemen, carriers, repairmen and others arising by operation of law and incurred in the ordinary course of business, securing obligations not yet delinquent or being contested in good faith by appropriate proceedings and against which adequate reserves or accruals have been established in such party's Closing Balance Sheet, (v) other Liens (other than Liens securing Debt) which do not, individually or in the aggregate, materially detract from the value of, or materially interfere with the current or currently intended use of, the Contributed Assets of such party subject thereto, or materially impair the conduct of the business currently conducted, or currently intended to be conducted, with such Contributed Assets, and (vi) Liens disclosed on Schedule 3.08(d). "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Pre-Contribution Tax Period" means any Tax period ending on or before 12:01 a.m. on January 1, 1996 or, in the case of any Tax period which includes, but does not end on, January 1, 1996, the portion of such period up to but not including January 1, 1996. "Regulated Environmental Activity" means any generation, treatment, storage, recycling, transportation or disposal of any Hazardous Substance. "Release" means any discharge, emission or release, including a Release as defined in CERCLA at 42 U.S.C. Sec. 9601(22). The term "Released" has a corresponding meaning. "Subsidiary" or "Subsidiaries" of any Person means any corporation, partnership, limited liability company, association, trust, joint venture or other entity or organization of which such Person, either alone or through or together with any other Subsidiary, owns, directly or indirectly, more than 50% 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, limited liability company, association, trust, joint venture or other entity or organization. "Tax" and "Taxes" mean any and all foreign, federal, state, local or other tax assessments or other governmental charges, including without limitation any income, franchise, sales, use, withholding, employment, payroll, social security, property, VAT, transfer, trade, net worth, business, occupation taxes and any customs duties, other duties or governmental charges, including without limitation any installment payment for any of the foregoing, that are from time to time, imposed by, or required to be paid to any governmental authority (including penalties, additions, and interest on or with respect to any of the foregoing). "Third Quarter Balance Sheet" means, with respect to each Contributing Subsidiary, the balance sheet of its Contributed Business as of September 30, 1995. "Third Quarter Financial Statements" means, with respect to each Contributing Subsidiary, its Third Quarter Balance Sheet and the unaudited statement of income for its Contributed Business for the nine-month period then ended, in the case of DEI, attached as Annex I and, in the case of Radian, attached as Annex II. "Transaction Documents" means collectively, this Agreement, the LLC Agreement, the Confidentiality Agreement, and any other documents, instruments and agreements related to or contemplated under such agreements or to be executed at the Closing. (b) Each of the following terms is defined in the Section set forth opposite such term: Term Section Acquiror 5.17(b) Acquiror Proposal 5.17(b) Anti-Competitive Contract 3.27(c) Assumed Contracts 2.02(a) Assumed Liabilities 2.04 BSL 5.12 Claims 8.02(h) Closing 2.08(a) Closing Date 2.08(a) Contracts 2.02(a) Contributed Amounts 2.02(a) Contributed Assets 2.02(a) Contributing Subsidiary Preamble Conveyance Documents 2.08(b) DEI Preamble DEI Plans 3.28 DEI 401(k) Plan 6.03 Derivative Financial Instrument 3.26 Ecobilan Consent 2.07(e) Employment Transfer Date 6.01 Excluded Assets 2.03 Excluded Liabilities 2.05 HSB Preamble HSB ESOP 3.28 HSB Stock 6.03 Impaired Asset 5.10 Indemnified Party 8.02 Indemnified Parties 8.02 Indemnifying Party 8.02 IRS 3.28 LLC Agreement Recitals Material Equity Investment Entity 3.27(a) Material Lease 3.12 Newco Recitals Newco Plans 6.03 Newco 401(k) Plan 6.03 Offeror 5.17(b) Offeree 5.17(b) Parent Preamble Permit 3.13 Personal Property 2.02(a) Radian Preamble Radian Plans 3.28 Real Property 3.08 Required Consent 3.04 Restricted Assets 2.07(a) Shares 5.17(b) Special Foreign Assets 2.07(f) Subsidiary Contracts 3.12(b) TDCC Preamble TDCC 401(k) Plan 6.03 1.02. Accounting Terms and Determinations. Unless otherwise specified, all accounting terms used in this Agreement shall be interpreted, all accounting determinations shall be made, and all financial statements required to be delivered by any Person under this Agreement shall be prepared in accordance with GAAP applied on a basis consistent (except for changes concurred in by such Person's independent public accountants) with the Third Quarter Balance Sheet of such Person. ARTICLE II ORGANIZATION; CONTRIBUTION 2.01. Organization of Newco. Upon the terms and subject to the conditions of this Agreement, prior to the Closing, DEI and Radian shall enter into and execute the LLC Agreement and shall cause Newco to be formed under the laws of the State of Delaware (or shall not undo these actions if they have already occurred). The LLC Agreement shall terminate if this Agreement terminates and the Closing has not occurred. Newco shall conduct no business, other than preparations for the Closing, prior to the Closing. 2.02. Contribution. (a) Upon the terms and subject to the conditions of this Agreement, each of Radian and DEI agrees and each of HSB and TDCC agrees to cause Radian and DEI, respectively, to transfer, assign and deliver, or cause to be transferred, assigned and delivered to Newco at Closing or, in the case of Restricted Assets, at such time or times as permitted pursuant to Section 2.07 of this Agreement, as a contribution, free and clear of all Liens, other than Permitted Liens or Liens set forth on Schedule 2.02(a), all of its right, title and interest in, to and under the assets, properties and business (other than Excluded Assets) of Radian and DEI, respectively, of every kind and description, wherever located, real, personal or mixed, tangible or intangible, of such party as the same shall exist on the Closing Date or, in the case of Restricted Assets, at such time or times as permitted pursuant to Section 2.07 of this Agreement, including all assets (other than Excluded Assets) shown on its Third Quarter Balance Sheet and not disposed of in the ordinary course of business, and all assets (other than Excluded Assets) thereafter acquired until the Closing Date by such party and not disposed of in the ordinary course of business (collectively, with respect to each such party, the "Contributed Assets"). Without in any way limiting the generality of the foregoing, the Contributed Assets shall include (other than Excluded Assets) all right, title and interest of such party in, to and under: (i) all real property and leases of, and other interests in, real property (including leases, lands, options and other such interests), in each case together with all buildings, fixtures and improvements erected thereon and all easements, rights of way and all of such party's rights in any public or private thoroughfare abutting such real property including without limitation, the items listed on Schedule 3.08(a); (ii) all personal property and interests therein, including machinery, pipes, tools, equipment, furniture, office equipment, communications equipment, vehicles, storage tanks, spare and replacement parts, fuel and other trade fixtures, fixed assets and tangible property ("Personal Property"), including without limitation the items listed on Schedule 3.08(b); (iii) all raw materials, work-in-process, supplies and other inventories; (iv) all rights under all contracts, agreements, leases, licenses, commitments, sales and purchase orders and other instruments (collectively, "Contracts") to which the Contributing Subsidiary is a party, including, but not limited to, Contracts listed on Schedule 2.02(a)(iv) or Schedule 3.12(a) and all Contracts entered into by each Contributing Subsidiary between the date of this Agreement and the Closing (collectively, the "Assumed Contracts") (provided, however, that the Assumed Contracts shall not include Contracts entered into in breach of this Agreement); (v) all accounts receivable, notes receivable and other receivables; (vi) all prepaid expenses, including, but not limited to, real estate and ad valorem taxes, leases and rentals; (vii) all petty cash located at operating facilities of such party; (viii) all rights, claims, credits, causes of action or rights of set-off of such party or its Subsidiaries against third parties, including without limitation unliquidated rights under manufacturers' and vendors' warranties (but excluding counterclaims, cross claims, warranty claims and indemnity claims and other rights, whether or not yet asserted, relating to litigation or other claims against such party that are not Assumed Liabilities); (ix) all licenses, permits or other governmental authorizations, including without limitation the items listed on Schedule 3.13; (x) Books and Records; (xi) with respect to DEI, all funds on deposit in the bank accounts set forth on Part I of Schedule 2.02(a)(xi) and, with respect to Radian, all funds on deposit in the bank accounts set forth on Part II of Schedule 2.02(a)(xi) (the "Contributed Amounts"); (xii) all capital stock and other securities or other ownership interests of the Material Equity Investment Entities listed on Schedule 3.27; (xiii) all of the Contributing Subsidiary's Intellectual Property Rights; (xiv) all goodwill attributable to the Contributing Subsidiary; and (xv) with respect to DEI, the assets and properties set forth on Part I of Schedule 2.02(b) and with respect to Radian, the assets and properties set forth on Part II of Schedule 2.02(b). (b) Upon the terms and subject to the conditions of this Agreement, TDCC agrees to transfer, assign and deliver, or cause to be transferred, assigned and delivered, to DEI prior to the Closing, as a contribution, free and clear of all Liens, other than Permitted Liens or Liens set forth on Schedule 2.02(b)(x), all of the right, title and interest in, to and under the assets and properties set forth on Part I of Schedule 2.02(b) (except for Restricted Assets). Upon the terms and subject to the conditions of this Agreement, HSB agrees to transfer, assign and deliver, or cause to be transferred, assigned and delivered, to Radian prior to the Closing, as a contribution, free and clear of all Liens, other than Permitted Liens or Liens set forth on Schedule 2.02(b)(x), all of the right, title and interest in, to and under the assets and properties set forth on Part II of Schedule 2.02(b) (in each case, except for Restricted Assets). 2.03. Excluded Assets. Each party expressly understands and agrees that, notwithstanding any provision of this Agreement to the contrary, the following assets and properties of the Contributing Subsidiaries (the "Excluded Assets") shall be excluded from the Contributed Assets: (i) all assets sold or otherwise disposed of in the ordinary course of the operation of its business and not in violation of any provisions of this Agreement during the period from the date of this Agreement until the Closing Date; (ii) counterclaims, cross claims, warranty claims and indemnity claims and other rights, whether or not yet asserted, relating to litigation or other claims against such party that are not Assumed Liabilities; (iii) all rights pursuant to any loan agreement between DEI and TDCC or Radian and HSB, other than the loan agreement dated as of the Closing Date between HSB and Newco; (iv) minute books for the board of directors, committees or shareholder meetings, incorporation documents, and stock transfer records and tax or similar or related corporate records; (v) all licenses provided by TDCC to DEI and its Subsidiaries to use "DOW" in any company name and the DOW Diamond trademark; (vi) all assets (including refunds and credits) related to foreign, U.S. Federal and state income taxes, both current and deferred; (vii) all insurance policies and proceeds therefrom; (viii) with respect to DEI, the bank accounts (but not the funds in those accounts) set forth on Part I of Schedule 2.02(a)(xi) and, with respect to Radian, the bank accounts (but not the funds in those accounts) set forth on Part II of Schedule 2.02(a)(xi); (ix) all licenses, permits or other governmental authorizations, listed on Schedule 3.13, which are not transferable as a matter of law; (x) with respect to Radian, the assets and properties set forth on Schedule 2.03(x); and (xi) with respect to DEI, the assets and properties set forth on Schedule 2.03(xi). 2.04. Assumption of Liabilities. Upon the terms and subject to the conditions of this Agreement, DEI and Radian shall cause Newco, effective at the time of Closing (except for liabilities and obligations related to Restricted Assets, which shall be assumed by Newco when the related Restricted Asset is contributed to Newco), to assume the following liabilities and obligations of the Contributing Subsidiaries as the same shall exist on the Closing Date (collectively, the "Assumed Liabilities"): (a) except to the extent that a liability or obligation referred to in this subparagraph (a) is an Excluded Liability, all liabilities and obligations reflected on the Third Quarter Balance Sheet of each party (other than any such liabilities paid or discharged prior to the Closing Date) and all liabilities and obligations of the type included in the line item categories set forth on such Third Quarter Balance Sheet incurred after the date of the Third Quarter Balance Sheet until the Closing Date to the extent such liabilities and obligations are incurred in the ordinary course of business and are not incurred in violation of any provision of this Agreement (and other than any such liabilities paid or discharged prior to the Closing Date); (b) all liabilities and obligations of the Contributing Subsidiaries arising under the Assumed Contracts, including without limitation the Contracts listed on Schedule 2.02(a)(iv) or Schedule 3.12(a), other than (x) liabilities or obligations arising under Contracts that are Excluded Assets, (y) liabilities or obligations attributable to any failure by any such party or its Affiliates to comply with the terms of Contracts that are Excluded Assets or (z) liabilities or obligations arising under Contracts that are entered into in breach of this Agreement; and (c) all liabilities and obligations set forth in Part I of Schedule 2.04(c) (which shall be certain liabilities and obligations of TDCC assumed by DEI) and in Part II of Schedule 2.04(c) (which shall be certain liabilities and obligations of HSB assumed by Radian) except, in each case, for liabilities related to Restricted Assets. 2.05. Excluded Liabilities. Notwithstanding any provision in this Agreement, Newco is assuming only the Assumed Liabilities and is not assuming any other liability or obligation of whatever nature, whether presently in existence or arising after the date of this Agreement (all such liabilities and obligations not being assumed being referred to as the "Excluded Liabilities"). Without in any way limiting the generality of the foregoing, the following are Excluded Liabilities for purposes of this Agreement: (i) any liability or obligation arising from, or with respect to, the Contributed Assets or the operations of the Contributed Business which is incurred in, or attributable to, any period ending on or prior to September 30, 1995, except (x), to the extent not excluded pursuant to clause (ii), (iii), (iv), (v) or (vi) below, liabilities and obligations reflected on the Third Quarter Balance Sheet of each party or (y) any liability or obligation pursuant to the Assumed Contracts which, pursuant to Section 2.04(b) of this Agreement, is an Assumed Liability; (ii) with respect to Radian, liability for Debt to HSB to the extent that Radian's Net Debt exceeds $18,672,594; (iii) with respect to DEI, liability for Debt to TDCC; provided, however, that (a) Debt owed by Dow Umweltservice GmbH to Dow Deutschland Inc. as reflected on Schedule 1.01 and (b) accounts payable under existing written intercompany service agreements not to exceed $3.256 million shall be Assumed Liabilities and not Excluded Liabilities; (iv) any liability or obligation relating to an Excluded Asset; (v) all liabilities related to foreign, U.S. Federal and state income taxes, both current and deferred; and (vi) all Environmental Liabilities. 2.06. Intentionally Omitted. 2.07. Assignment of Certain Contracts and Other Assets. (a) Anything in this Agreement to the contrary notwith- standing, this Agreement shall not constitute an agreement to assign any asset listed on Schedule 3.05 or any asset (including without limitation securities or other ownership interests) or any Contract or Permit or instrument beneficially owned by either Contributing Subsidiary or listed on Schedule 2.02(b), or any claim or right or any benefit arising thereunder or resulting therefrom if, in any such case, an attempted assignment thereof, without the consent of a third party thereto, would constitute a breach or other contravention thereof or in any way adversely affect the rights of any party thereunder unless or until such time as the consent of such third party has been obtained (collectively, the "Restricted Assets"). (b) Both before and after the Closing, each party shall use all commercially reasonable efforts to obtain any required consent of third parties for the assignment of any of its Restricted Assets or any claim or right or any benefit arising thereunder to Newco. The parties shall cause Newco to accept assignment of, and in the case of Contracts, assume the liabilities relating to, any Restricted Asset as soon as such consent is obtained and shall treat such assignment or assumption as being effective on the Closing Date. If such consent to assignment is not obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of such party thereunder so that Newco would not in fact receive all such rights, the parties will use all commercially reasonable efforts to obtain for Newco the benefits that Newco would have obtained if such Restricted Asset could have been assigned to Newco. Those efforts shall include, if such actions will not cause, on a collective basis, material adverse consequences for Newco or the parties to this Agreement or if the relevant third party consents to such action, (i) subcontracting, sub-licensing or sub-leasing to Newco the rights and obligations under the Restricted Asset, or (ii) making an arrangement under which such party would enforce for the benefit of Newco, with Newco assuming such party's obligations or providing the personnel, equipment or facilities (at Newco's expense) to such party to perform those obligations, any and all rights of such party against a third party. Except as provided in Section 2.07(e), each party will promptly pay to Newco, when received, all monies (net of reasonable out-of-pocket expenses) received by such party in respect of any Restricted Asset or any claim or right or any benefit arising thereunder, regardless of whether a consent for the assignment of such Restricted Asset has been or can be obtained. (c) Notwithstanding the foregoing, if efforts to obtain any required consent of third parties for the assignment of any of its Restricted Assets or any claim or right or any benefit arising thereunder to Newco would require Newco to (i) assume any additional obligation (including, but not limited to, an agreement from Newco which restricts the business activity of Newco or any of its Affiliates or contains any form of non- competition clause) or (ii) incur any additional out-of-pocket expense not reasonably related to the value of the Restricted Asset, then such obligation or expense shall not be assumed or incurred without the prior written approval of both TDCC and HSB. If such approval is not obtained, and if all other commercially reasonable efforts to obtain such consent have failed, then TDCC, HSB or such Contributing Subsidiary, as the case may be, shall dispose of such Restricted Asset. Such party will promptly pay to Newco, when received, all monies (net of reasonable out-of- pocket expenses) received by such party in respect of any disposition of any Restricted Asset. (d) If, and to the extent that in respect of any Restricted Asset, (i) consent from a third party cannot be obtained, (ii) any of the arrangements contemplated in Section 2.07(b) cannot be made or (iii) approval from TDCC or HSB to incur any expense or assume any obligation cannot be obtained and disposition as contemplated in Section 2.07(c) cannot be made, none of the parties to this Agreement shall have any further obligation to the other under this Section 2.07 with respect to such Restricted Asset; provided, however, that the provisions set forth in Sections 5.12 and 8.02 shall survive with respect to such Restricted Asset. (e) DEI's shares of common stock of Ecobilan, S.A. shall be treated as a Restricted Asset until consents can be obtained from third parties such that it would not be prejudicial to Newco for these shares to be transferred to Newco (the "Ecobilan Consent"). The earnings of Ecobilan, S.A. prior to the date that the Ecobilan Consent is effective shall not, notwithstanding anything to the contrary in this Agreement, inure to the benefit of Newco. (f) The capital stock and other securities or other ownership interests of each of the Material Equity Investment Entities (as defined in Section 3.27) owned by Radian and listed on Schedule 2.07(f) (the "Special Foreign Assets") shall be treated as a Restricted Asset; provided, however, that Radian shall not be required to attempt to assign any of the Special Foreign Assets or any claim or right or any benefit arising thereunder to Newco. Notwithstanding anything to the contrary in this Agreement, Radian agrees to transfer, assign and deliver, or cause to be transferred, assigned and delivered to Newco as a contribution, free and clear of all Liens, other than Permitted Liens or Liens set forth on Schedule 2.02(b)(x), all proceeds (net of reasonable out-of-pocket expenses), if any, with respect to the dissolution, sale or disposition of any of the Special Foreign Assets as soon as practicable after such dissolution, sale or disposition. Radian, at the direction, with the assistance, and in collaboration with Newco, will use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations and any applicable contractual obligations to cause the dissolution, sale or disposition, on the best terms practicable, of the Special Foreign Assets as soon as practicable after the Closing Date. 2.08. Closing. (a) The closing (the "Closing") of the contribution of the Contributed Assets and the assumption by Newco of the Assumed Liabilities under this Agreement shall take place at the offices of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois 60603 as soon as possible, but in no event later than two (2) business days, after satisfaction of the conditions set forth in Article VII, or at such other time or place as the parties may agree (the "Closing Date"). It is understood and agreed that notwithstanding the Closing Date for the transactions described herein, the Contributed Business of each Contributing Subsidiary shall be deemed to have been operated for the benefit of Newco from and after January 1, 1996. TDCC agrees to reimburse Newco for any dividends declared or paid by DEI to TDCC or any of its Affiliates during between January 1, 1996 and the Closing Date. HSB agrees to reimburse Newco for any dividends declared or paid by Radian to HSB or any of its Affiliates during the period between January 1, 1996 and the Closing Date. (b) At the Closing, Newco shall enter into an Assignment and Assumption Agreement with each of TDCC, HSB, DEI and Radian reasonably satisfactory in form and substance to TDCC and HSB and their respective counsel, and each of TDCC, HSB, DEI and Radian shall deliver to Newco such special warranty deeds, bills of sale, stock powers, endorsements, consents and assignments reasonably satisfactory in form and substance to TDCC and HSB and their respective counsel, and other good and sufficient instruments of conveyance and assignment (the "Conveyance Documents") as TDCC and HSB and their respective counsel shall deem reasonably necessary or appropriate to vest in Newco all right, title and interest in, to and under the Contributed Assets and to effect the assumption by Newco of the Assumed Liabilities. 2.09. Closing Balance Sheet. (a) As promptly as practicable after the Closing Date, each of HSB and TDCC will prepare, or cause its respective Contributing Subsidiary to prepare, a Closing Balance Sheet. TDCC will cause Deloitte & Touche LLP and HSB will cause Coopers & Lybrand LLP to conduct an audit for the purpose of rendering its unqualified report on its Closing Balance Sheet. As promptly as practicable, but no later than February 29, 1996, each of DEI or Radian will cause its Closing Balance Sheet, together with the report thereon of Deloitte & Touche LLP or Coopers & Lybrand LLP, as the case may be, to be delivered to the other party. Each Closing Balance Sheet shall (x) fairly present the consolidated financial position of the Contributed Business as of 11:59 p.m. on December 31, 1995 on a basis consistent with the accounting principles used in the preparation of the Third Quarter Balance Sheet of such Contributing Subsidiary and (y) be prepared in accordance with GAAP on a basis consistent with those used in the preparation of such Third Quarter Balance Sheet, except, in the case of DEI, with respect to the treatment of goodwill and except, in the case of Radian, with respect to the treatment of salary continuation agreements. (b) The parties agree that they will, and DEI and Radian agree to cause Newco and their respective independent accountants to, cooperate and assist in the preparation of the Closing Balance Sheets. ARTICLE III REPRESENTATIONS AND WARRANTIES OF DEI AND RADIAN EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY PROVIDED FOR IN THIS AGREEMENT, ALL OF THE CONTRIBUTED ASSETS ARE CONTRIBUTED TO NEWCO "AS IS" AND "WHERE IS" WITHOUT IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR INTENDED USE OR PARTICULAR PURPOSE OR OTHERWISE. Each Contributing Subsidiary hereby represents and warrants to each other party and Newco as of the date of this Agreement that: 3.01. Existence and Power. Such Contributing Subsidiary is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has all powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. Such Contributing Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities make such qualification necessary, except for those jurisdictions where failure to be so qualified would not, individually or in the aggregate, result in a Material Adverse Change. Such Contributing Subsidiary has delivered or made available to the other parties true and complete copies of the certificate of incorporation and bylaws of such party as currently in effect. 3.02. Authorization. The execution, delivery and performance by such Contributing Subsidiary of this Agreement, the other Transaction Documents to which it is a party and all other documents, instruments and certificates executed and delivered by such Contributing Subsidiary in connection with this Agreement or with such other documents, and the consummation by such Contributing Subsidiary of the transactions contemplated by this Agreement or by such other documents are within such Contributing Subsidiary's powers and have been duly authorized by all necessary action on the part of such Contributing Subsidiary. This Agreement and each of the other Transaction Documents have been duly and validly executed and delivered by such Contributing Subsidiary and each constitutes a valid and binding agreement of such Contributing Subsidiary, enforceable in accordance with its terms, except as (i) the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent transfer, moratorium or similar laws from time to time in effect affecting creditors' rights generally and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability. 3.03. Governmental Authorization. Except as set forth on Schedules 3.03 and 3.05, the execution, delivery and performance by such Contributing Subsidiary of this Agreement, the other Transaction Documents to which it is a party and all other documents, instruments and certificates executed and delivered by such Contributing Subsidiary in connection with this Agreement or with such other documents, require no action by or in respect of, or filing with, any governmental body, agency, official or authority other than any actions or filings necessary to transfer or obtain any Permit. 3.04. Non-Contravention. The execution, delivery and performance by such Contributing Subsidiary of this Agreement, the other Transaction Documents to which it is a party and all other documents, instruments and certificates executed and delivered by such Contributing Subsidiary in connection with this Agreement or with such other documents do not and will not (i) contravene or conflict with the certificate of incorporation or bylaws of such Contributing Subsidiary; (ii) assuming compliance with the matters referred to in Section 3.03, 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 Contributing Subsidiary or its Contributed Business; (iii) assuming the obtaining of all consents necessary for the assignment of that party's Restricted Assets (each such consent, a "Required Consent" and collectively, the "Required Consents"), constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation or to a loss of any benefit relating to the Contributed Business of such Contributing Subsidiary or its Affiliates to which such Contributing Subsidiary is entitled, or cause or require the creation of any encumbrance on any Contributed Asset or the assumption of any debt, other than Assumed Liabilities, by Newco under any provision of any note, bond, mortgage, indenture, lease, license, franchise, permit, agreement, contract or other instrument or obligation binding upon such Contributing Subsidiary or its Subsidiaries, or any Person controlling such Contributing Subsidiary or by which any of the Contributed Assets is or may be bound for which a written waiver has not been obtained as of the date of this Agreement, or any Permit; (iv) result in the creation or imposition of any Lien on any Asset, other than Permitted Liens; or (v) contravene or conflict with any collective bargaining agreement binding upon such Contributing Subsidiary. 3.05. Restricted Assets. Schedule 3.05 sets forth, as to such Contributing Subsidiary, all of that Contributing Subsidiary's Restricted Assets (other than Assumed Contracts that are Restricted Assets). 3.06. Third Quarter Financial Statements. The Third Quarter Financial Statements of such Contributing Subsidiary fairly present, in all material respects in conformity with GAAP applied on a consistent basis (except, in the case of DEI with respect to the treatment of goodwill and, except, in the case of Radian, with respect to the treatment of salary continuation agreements), the financial position of such Contributing Subsidiary and its respective Subsidiaries, taken as a whole, as of the dates thereof and their results of operations for the periods then ended. The Third Quarter Financial Statements reflect all adjustments which are, in the opinion of the management of such Contributing Subsidiary, necessary for a fair statement of the results for the period. All such adjustments are, in the opinion of the management of such Contributing Subsidiary, of a normal recurring nature. 3.07. Absence of Certain Changes. Since September 30, 1995, the Contributed Business of such Contributing Subsidiary or its Affiliates has been conducted in the ordinary course consistent with past practice, and except as set forth on Schedule 3.07 or as otherwise required or contemplated by this Agreement, there has not been, with respect to the Contributed Business of such Contributing Subsidiary or its Affiliates: (a) any Material Adverse Change; (b) any creation or other incurrence of any Lien (other than Permitted Liens or Liens described on Schedule 2.02(a)) on any material Contributed Asset other than in the ordinary course of business consistent with past practice; (c) any creation of any obligation or liability (whether fixed, contingent, unliquidated, absolute or otherwise) with respect to any of the Contributed Assets to be contributed by it or its Affiliates or with respect to its Contributed Business that would be an Assumed Liability, except trade or business obligations incurred in the ordinary course of business consistent with past practice; (d) any damage, destruction or other casualty loss (whether or not covered by insurance) affecting its Contributed Business or any Contributed Asset which, individually or in the aggregate, has had, or could reasonably be expected to result in, a Material Adverse Change; (e) any transaction, contract, agreement or other instrument entered into, or commitment made, by such Contributing Subsidiary relating to its Contributed Business or any Contributed Asset (including the acquisition or disposition of any assets) or any relinquishment by such Contributing Subsidiary of any contract or other right, in either case, material to its Contributed Business taken as a whole, other than transactions and commitments in the ordinary course of business consistent with past practices and those required or contemplated by this Agreement or the other Transaction Documents or any material amendment, modification or waiver of any Contract; (f) any change in any method of accounting or accounting practice by such Contributing Subsidiary with respect to its Contributed Business, except for any such change after the date of this Agreement required by reason of a concurrent change in GAAP; (g) any (i) grant of any severance or termination pay to any employee of its Contributed Business, (ii) entering into any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any employee of its Contributed Business, (iii) increase in benefits payable under any existing severance or termination pay policies or employment agreements or (iv) increase in compensation, bonus or other benefits payable to employees of its Contributed Business, other than, in the case of clauses (i) through (iv) above, in the ordinary course of business consistent with past practice; (h) any labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of its Contributed Business, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to such employees; (i) any commitment for a capital expenditure or for additions or improvements to property, buildings and equipment, in each case that is anticipated to have an outstanding balance in excess of $500,000 on the Closing Date; (j) any transaction, contract, agreement or other instrument entered into, or commitment made, by such Contributing Subsidiary with an Affiliate of such Contributing Subsidiary, and which relates to the Contributed Business of such Contributing Subsidiary or its Affiliates; or (k) 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. 3.08. Properties. (a) Schedule 3.08(a) correctly describes all owned, leased or subleased real property included in the Contributed Assets (collectively, the "Real Property" of such Contributing Subsidiary), specifying in the case of leases or subleases, the name of the lessor or sublessor, the lease term and basic annual rent. (b) Schedule 3.08(b) correctly describes all owned, leased or subleased tangible Personal Property of such Contributing Subsidiary with a book value in excess of $100,000, and, in the case of owned personal property, any Liens thereon other than Permitted Liens or Liens set forth on Schedule 2.02(a), specifying in the case of leases or subleases, the name of the lessor or sublessor, the lease term and basic annual rent. (c) (i) Such Contributing Subsidiary or its Affiliates have good title (subject only to Permitted Liens or Liens set forth on Schedule 2.02(a)) to all Contributed Assets (whether personal, tangible or intangible) reflected on its Third Quarter Balance Sheet or acquired after the date of this Agreement, except for properties and assets sold since the date of this Agreement in the ordinary course of business consistent with past practice. Upon consummation of the transactions contemplated by this Agreement, Newco will have acquired good title in and to, or a valid leasehold with respect to, each of the Contributed Assets of such Contributing Subsidiary or its Affiliates free and clear of all Liens, except for Permitted Liens or Liens set forth on Schedule 2.02(a). (ii) All Material Leases (as defined in Section 3.12(a)(i)) are in good standing and are valid, binding and enforceable against such Contributing Subsidiary or its respective Subsidiaries (and, to the knowledge of such Contributing Subsidiary, each other party thereto) in accordance with their respective terms, and there does not exist, under any lease of real property or personal property, any material default or any event which, with notice or lapse of time or both, would constitute a material default by such Contributing Subsidiary or its Affiliates or, to the knowledge of such Contributing Subsidiary, by any other party thereto. (iii) The buildings, facilities, structures and equipment currently used in the Contributed Business of such Contributing Subsidiary or its Affiliates are in reasonable operating condition and repair and have been reasonably maintained consistent with standards generally followed in the industry (giving due account to the age and length of use of same, ordinary wear and tear excepted), are substantially suitable for their present uses and, to the knowledge of such Contributing Subsidiary, have no material defects. (iv) The buildings, facilities, structures and equipment included in the Contributed Assets of such Contributing Subsidiary or its Affiliates currently have access to (1) public roads or valid easements over private streets or private property for such ingress to and egress from all such plants, buildings and structures and (2) water supply, storm and sanitary sewer facilities, telephone, gas and electrical connections, fire protection, drainage and other public utilities, as is necessary for the conduct of the Contributed Business of such Contributing Subsidiary or its Affiliates as currently or heretofore conducted. (d) Schedule 3.08(d) sets forth all Liens securing obligations for Debt that encumber any of the Contributed Assets. (e) Except as set forth on Schedule 3.08(e), no violation of any law, regulation, ordinance or Permit (including without limitation laws, regulations, ordinances or Permits relating to zoning, city planning or similar matters) relating to the Contributed Business of such Contributing Subsidiary or its Affiliates currently exists or has existed at any time since January 1, 1995, except for (i) violations which have not had and would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change, and (ii) matters relating to Environmental Laws which are the subject of Section 3.20. To the knowledge of such Contributing Subsidiary, there are no developments affecting any of the Contributed Assets of such Contributing Subsidiary or its Affiliates pending or threatened which could reasonably be expected to detract materially from the value of such Contributed Assets, materially interfere with any present or intended use of any such Contributed Assets or materially adversely affect the marketability of such Contributed Assets; (f) Such Contributing Subsidiary has delivered or made available to the other Contributing Subsidiary, true and complete copies of all records, title policies and reports, leases, contracts and other materials referred to in this Section 3.08 or described in Schedules 3.08(a) or (b). 3.09. Sufficiency of Assets. The Contributed Assets contributed by such Contributing Subsidiary constitute all of the assets (other than Excluded Assets) used or held for use by the Contributing Subsidiary and its respective Subsidiaries in their business, and no other assets (other than the Excluded Assets) are required to operate the Contributed Business of such Contributing Subsidiary or its Affiliates substantially as currently or heretofore conducted. 3.10. No Undisclosed Liabilities. Except as set forth on Schedule 3.10, there are no liabilities of the Contributed Business of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than: (i) liabilities disclosed or provided for in its Third Quarter Balance Sheet; or (ii) liabilities incurred in the ordinary course of business consistent with past practice. 3.11. Litigation. Except as set forth on Schedules 3.05, 3.11 or 3.18, there is no action, suit, or proceeding (or, to the knowledge of such Contributing Subsidiary, investigation) pending against, or to the knowledge of such Contributing Subsidiary, threatened against or affecting, its Contributed Business or any of its Contributed Assets before any court or arbitrator or any governmental body, agency or official (nor, to the knowledge of such Contributing Subsidiary, is there any basis therefor) which, if determined or resolved adversely in accordance with the plaintiff's demands, would reasonably be expected to result in a Material Adverse Change or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement. 3.12. Material Contracts. (a) Except for the Contracts disclosed in Schedule 3.12(a), with respect to its Contributed Business, such Contributing Subsidiary and its respective Subsidiaries are not a party to or subject to: (i) any lease providing for annual rentals or an aggregate rental of $100,000 or more (each a "Material Lease"); (ii) any Contract for the purchase of materials, supplies, goods, services, equipment or other assets (including the Contributed Assets) which either provides payments by such Contributing Subsidiary of $100,000 or more annually or extends for a term of greater than one year; (iii) any Contract providing for annual payments of $1,000,000 or more or extending beyond two years; (iv) any sales, distribution or other similar agreement providing for the sale by such Contributing Subsidiary of materials, supplies, goods, services, equipment or other assets that, for the period subsequent to January 1, 1995, provided any revenue to such Contributing Subsidiary or its respective Subsidiaries or any other such agreements to be performed subsequent to the date of this Agreement; (v) any partnership, joint venture or other similar contract arrangement or agreement; (vi) any option agreement, license agreement, franchise agreement or other agreement in respect of similar rights granted to or held by such Contributing Subsidiary; (vii) any agency, dealer, sales representative or other similar agreement; (viii) any agreement, contract or commitment that substantially limits the freedom of such Contributing Subsidiary or its respective Subsidiaries to compete in any line of business or with any Person or in any area or to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any of its Contributed Assets or which would so limit the freedom of Newco after the Closing Date; (ix) any agreement, contract or commitment which is or relates to an agreement with or for the benefit of any Affiliate of such Contributing Subsidiary; (x) any labor union contract; (xi) any agreement, contract or commitment with any executive, director or officer of such Contributing Subsidiary (other than those set forth on Schedule 3.28); (xii) any agreement or commitment pursuant to which such Contributing Subsidiary will make loans or advances, or has or will have incurred debts or become a guarantor or surety or pledged its credit on or otherwise become responsible with respect to any undertaking of another (except for the negotiation or collection of negotiable instruments in the ordinary course of business); (xiii) any indentures, credit agreements, loan agreements, notes, mortgages, security agreements or other agreements for financing; or (xiv) Except as set forth on Schedule 3.28, any other agreement, contract or commitment not made in the ordinary course of business which is material to its Contributed Business taken as a whole. (b) Each of the Assumed Contracts of such Contributing Subsidiary and each of the Contracts listed on Schedule 3.12(a) relating to any of its respective Subsidiaries (the "Subsidiary Contracts") is a valid and binding agreement of such Contributing Subsidiary or its respective Subsidiaries and is in full force and effect and, except as set forth on Schedule 3.12(b), none of such Contributing Subsidiary, its respective Subsidiary or, to the knowledge of such Contributing Subsidiary, any other party to such Assumed Contract or Subsidiary Contract is in default in any material respect under the terms of any such Contract, nor, to the knowledge of such Contributing Subsidiary, has any event or circumstance occurred that, with notice or lapse of time or both, would constitute an event of default thereunder. True and complete copies of each such Assumed Contract and Subsidiary Contract have been delivered or made available to the other Contributing Subsidiary. 3.13. Licenses and Permits. Schedule 3.13 correctly describes each material license, franchise, permit or other similar authorization affecting, or relating in any way to, such Contributing Subsidiary's Contributed Business (which description shall include whether such license, franchise, permit or authorization can be transferred to Newco), together with the name of the government agency or entity issuing such license or permit (each a "Permit," and together the "Permits"). Except as set forth in Schedule 3.13, such Permits are valid and in full force and effect and, assuming the related Required Consents are obtained, are transferable and none of the Permits (other than Permits that are Excluded Assets) will, assuming the related Required Consents have been obtained, be terminated or impaired or become terminable as a result of the transactions contemplated by this Agreement. Neither Contributing Subsidiary has any reason to believe that any such Required Consent will not be obtained within a reasonable time following the Closing Date. Except as set forth on Schedule 3.13, upon obtaining all related Required Consents and upon transfer of the appropriate Permits, Newco will have all of the right, title and interest in all the Permits. To the knowledge of such Contributing Subsidiary, no license, franchise, permit or other similar authorization other than those described on Schedule 3.13 is currently necessary for the lawful operation of its Contributed Business in all material respects as currently or heretofore conducted or the transfer of its Contributed Business to Newco. 3.14. Insurance Coverage. Such Contributing Subsidiary has furnished or made available to the other Contributing Subsidiary a list of, and copies of, all insurance policies covering its Contributed Business and its employees. There is no claim relating to the Contributed Business by such Contributing Subsidiary or its Affiliates pending under any of such policies as to which coverage has been denied or disputed by the underwriters of such policies. All premiums billed under all such policies have been paid and such Contributing Subsidiary or its Affiliates are otherwise in full compliance with the terms and conditions of all such policies. Such policies of insurance (or other policies providing substantially similar insurance coverage) were in full force and effect for the period prior to the Closing Date. 3.15. Compliance with Laws. Such Contributing Subsidiary is not in violation of, has not since January 1, 1995 violated and/or, to such Contributing Subsidiary's knowledge is not under investigation with respect to, and has not been threatened to be charged with or given notice of any violation of, any law, rule, ordinance or regulation, or judgment, order or decree entered by any court, arbitrator or governmental authority, domestic or foreign, applicable to the Contributed Assets of such Contributing Subsidiary or its Affiliates or the conduct of the Contributed Business of such Contributing Subsidiary or its Affiliates, except for (i) violations that have not had and would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Change and (ii) matters relating to Environmental Laws, which are the subject of Section 3.20. 3.16. Inventories. The inventories set forth in such Contributing Subsidiary's Third Quarter Balance Sheet have been properly stated at the lower of cost or fair market value determined in accordance with GAAP consistently applied by such Contributing Subsidiary. Since the date of such Third Quarter Balance Sheet, the inventories related to the Contributed Business of such Contributing Subsidiary or its Affiliates have been maintained in the ordinary course of business. All of the inventory recorded on its Third Quarter Balance Sheet consists of items of a quality usable or saleable in the normal course of its Contributed Business consistent with past practices and are and will be in quantities sufficient for the normal operation of its Contributed Business in accordance with past practice. Except as set forth on Schedule 3.16, such Contributing Subsidiary has good title to each item of inventory which is part of its Contributed Business, free and clear of all Liens. 3.17. Receivables; Payables. All accounts, notes receivable and other receivables reflected on the Third Quarter Balance Sheet of such Contributing Subsidiary are, and all accounts and notes receivable of such Contributing Subsidiary arising from or otherwise relating to its Contributed Business will be at the Closing Date, genuine and arise from bona fide transactions. Since the date of its Third Quarter Balance Sheet, such Contributing Subsidiary has not made any change in its normal practices regarding the collection of accounts receivable or the payment of accounts payable (including without limitation, the acceleration of collections or the deferral of payments). The aging of all accounts receivable for each Contributing Subsidiary, held by such Contributing Subsidiary as of the date of its Third Quarter Balance Sheet, is set forth in Schedule 3.17. 3.18. Intellectual Property. Schedule 3.18 sets forth a complete and correct list from each Contributing Subsidiary of (i) all patent applications (including provisional applications) and patents, and all continuation, divisional, continuation-in- part, reissue and reexamination applications and patents based on any of such patent applications and patents and all foreign equivalents of any of such patent, applications and patents held by such Contributing Subsidiary; (ii) all disclosures or descriptions of any invention, whether active or not, that have not been converted to a patent application; (iii) all registered copyrights, trademarks, service marks, service names, trade names used by such Contributing Subsidiary together with any applications filed by such Contributing Subsidiary for registration of any of them; and (iv) all license agreements relating to any of subsections (i) through (iii) to which such Contributing Subsidiary is a party, irrespective of whether a particular license agreement pertains to rights granted by the Contributing Subsidiary, received by the Contributing Subsidiary or both. Schedule 3.18 also lists all pending and threatened litigation relating to any one or more of subsections (i) through (iv) and all actual litigation that has been finally settled within three (3) years prior to the date of this Agreement. Schedule 3.18 further identifies any Intellectual Property Rights within subsections (i) through (iv) that is subject to any court order, consent decree, agreement or other instrument that restricts the use or licensing of such Intellectual Property Rights by such Contributing Subsidiary or its Subsidiaries. 3.19. Finders' Fees. Except as set forth in Section 4.06, there is no investment banker, broker, finder or other intermediary which has been retained by, or is authorized to act on behalf of, such Contributing Subsidiary who might be entitled to any fee or commission from the other parties or any of their respective Subsidiaries or Newco upon consummation of the transactions contemplated by this Agreement. 3.20. Environmental Matters. (a) Except as disclosed on Schedule 3.20, and to the knowledge of such Contributing Subsidiary, with respect to the Contributed Business of such Contributing Subsidiary or its Affiliates: (i) within the preceding five years, no written notice, notification, demand, request for information, citation, summons, complaint or order has been issued, no written complaint has been filed, no penalty has been assessed and no investigation or review is pending or threatened by any governmental entity or other Person with respect to any (A) alleged violation by such Contributing Subsidiary or its Affiliates of any Environmental Law or liability thereunder, (B) alleged failure by such Contributing Subsidiary to have any Environmental Permit, (C) Regulated Environmental Activity or (D) Release of Hazardous Substances; (ii) the properties of such Contributing Subsidiary or its Affiliates included as part of the Contributed Assets are in compliance, in all material respects, with all Environmental Laws and all Environmental Permits required for operations have been obtained; (iii) other than in material compliance with Environ- mental Laws or Environmental Permits, no polychlorinated biphenyls, radioactive material, urea formaldehyde, lead, dioxins, furans, asbestos, asbestos-containing material or underground storage tank (active or abandoned) is or has been present within the past five years at any property included as part of the Contributed Assets of such Contributing Subsidiary or its Affiliates; (iv) other than Releases in volumes immaterial to, and in the normal course of the operations of, the Contributed Business, no unpermitted Hazardous Substance has been Released within the past five years (and no notification of such Release has been filed or made within the past five years) at, on or under any property included as part of the Contributed Assets of such Contributing Subsidiary or its Affiliates; (v) no property included as part of the Contributed Assets of such Contributing Subsidiary or its Affiliates or any property to which such Contributing Subsidiary has, directly or indirectly, transported, or arranged for the transportation of, any Hazardous Substances is listed or proposed for listing, on the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal, state or foreign list of sites requiring investigation or clean-up; (vi) there are no liens under Environmental Laws on any of the Contributed Assets of such Contributing Subsidiary or its Affiliates, no government actions have been taken or are in process which could subject any of such Contributed Assets to such liens and such Contributing Subsidiary is not required to place any notice or restriction relating to Hazardous Substances at any property included as part of the Contributed Assets owned by it or its Affiliates in any deed to such property; and (vii) there are no Environmental Permits of such Contributing Subsidiary that are nontransferable or require consent, notification or other action to remain in full force and effect following the Closing Date in which all reasonable efforts will not have been made as soon as practicable after the date of this Agreement to provide notification to the appropriate government regulatory authority or to provide, without limitation, any requested applications, documents or correspondence to such regulatory authority. (b) With respect to the Contributed Business of such Contributing Subsidiary or its Affiliates, there has been no Environmental Investigation or Audit of which such Contributing Subsidiary has knowledge in relation to any property included as part of the Contributed Assets of such Contributing Subsidiary or its Affiliates which has not been delivered to the other parties prior to the date of this Agreement. 3.21. Warranties. Except as set forth in Schedule 3.21, no material warranty or similar claims are currently pending against such Contributing Subsidiary in connection with its Contributed Business. 3.22. Customers and Suppliers. Except as set forth on Schedule 3.22, such Contributing Subsidiary is not engaged in any material disputes with any customers or suppliers, and to its knowledge, no customer or supplier representing revenues or expenses in excess of $250,000 per year to such Contributing Subsidiary has indicated that it intends to terminate, not renew any agreement which provides for automatic renewal or adversely modify its arrangements with such Contributing Subsidiary or its Contributed Business. 3.23. Books and Records. The Books and Records of such Contributing Subsidiary with respect to its Contributed Business (true and complete copies of which have been made available to the other Contributing Subsidiary) are accurate and complete in all material respects. 3.24. Taxes. Except as set forth in Schedule 3.24 or reflected or accrued for in the Third Quarter Balance Sheet of either Contributing Subsidiary or accrued by either Contributing Subsidiary in the ordinary course of business after September 30, 1995, such Contributing Subsidiary and its Affiliates have timely paid, or made provisions for the payment of, all Taxes (including all interest and penalties thereon) which have accrued during the Pre-Contribution Tax Period. 3.25. No Other Agreement. Except for sales or other dispositions of assets in the ordinary course of business and except as set forth in this Agreement or in Schedule 3.25, neither Contributing Subsidiary has any contract, agreement, arrangement or understanding with respect to the sale or other disposition of any assets (including the Contributed Assets) of such Contributing Subsidiary or its Affiliates. 3.26. Derivatives. Schedule 3.26 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 December 31, 1995 to which such Contributing Subsidiary or any of its Subsidiaries is a party or by which such Contributing Subsidiary or any of its Subsidiaries is bound or any of their respective Contributed Assets are subject or bound (including without limitation funds of such Contributing Subsidiary or any of its Subsidiaries invested by any other Person). For purposes of this Agreement, "Derivative Financial Instrument" means any futures, forward, swap, option or swaption contract, or any other financial instrument with similar characteristics and/or generally characterized by the financial community as a "derivative" security. The definition of Derivative Financial Instrument shall not include options or rights of first refusal that relate to any Affiliate or any Material Equity Investment Entity of such Contributing Subsidiary included in any agreement to which any such Contributing Subsidiary is a party or by which such Contributing Subsidiary is bound. 3.27. Material Equity Investment Entities. (a) Schedule 3.27 sets forth a complete and correct list of all Material Equity Investment Entities (as defined below) of such Contributing Subsidiary, which list sets forth the amount of capital stock of or other equity interests in such Material Equity Investment Entities owned by the Contributing Subsidiary, directly or indirectly. In addition, each Contributing Subsidiary has furnished or made available to the other parties copies of each such Material Equity Investment Entity's certificate of incorporation and by-laws or equivalent organizational documents. "Material Equity Investment Entity" or "Material Equity Investment Entities" means any corporation, partnership, limited liability company, association, trust, joint venture or other entity or organization of which such Contributing Subsidiary (either alone or through or together with any other subsidiary), owns, directly or indirectly, more than 10% 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, limited liability company, association, trust, joint venture or other entity or organization. (b) Except, in the case of Radian, for Contracts or instruments with respect to (i) Amoco Environmental Services Company, Corporacion Radian, S.A. De C.V., Tecnologias Y Servicios Ambientales Tesam S.A., ATOS S.A.R.L., Environment, Transport and Planning, S.L., R.S.K. Environmental Limited, Radian D-Tech Inc., or Cera Dynamics Limited or (ii) Subsidiaries wholly owned by Radian (whether beneficially or of record), neither Contributing Subsidiary nor, to the knowledge of such Contributing Subsidiary, any of its Material Equity Investment Entities has entered into any Contract or instrument which would prohibit or impede the transfer of any of the capital stock and other securities or other ownership interests of the Material Equity Investment Entities included in the Contributed Assets of such Contributing Subsidiary. (c) Except, in the case of Radian, for (i) Contracts or instruments with respect to ATOS S.A.R.L., Environment, Transport and Planning, S.L., and R.S.K. Environmental Limited, (ii) the Asset Transfer Agreement dated March 15, 1994 by and among Schlumberger Technology Corporation, Schlumberger Holdings Limited, Radian and Radian Limited, (iii) the Asset Transfer Agreement dated December 21, 1992 between Automated Compliance Systems, Inc. and Radian, and (iv) the following Contracts: (a) Basic Order Agreement effective January 1, 1994 with Archer Daniels Midland (Radian Project No. 635046); (b) Technical Support for Regulatory Development for the Metal Products & Machinery Manufacturing Industry, Phase I effective October 1, 1994 with the Environmental Protection Agency ("EPA") (Radian Project No. 630046); (c) Technical Support for Regulatory Development for the Metal Products & Machinery Manufacturing Industry Phase 2 effective June 5, 1995 with the EPA (Radian Project No. 630128); (d) Technical Support for Regulatory Development for the Pulp & Paper Industry effective June 13, 1995 with the EPA (Radian Project No. 630134); (e) Technical Support for Regulatory Development for the Pesticide Industry effective May 31, 1995 with the EPA (Radian Project No. 630131); (f) Technical Support for Regulatory Development for the Pharmaceutical Industry effective May 23, 1995 with the EPA (Radian Project No. 630127); (g) Technical Support for Regulatory Development for the Industrial Laundry Industry effective June 22, 1995 with the EPA (Radian Project No. 630135); (h) Technical Support for Regulatory Development for the Transportation Equipment Cleaning Industry effective June 19, 1995 with the EPA (Radian Project No. 630136); and (i) Technical Support for RCRA Hazardous Waste Control Programs effective December 1, 1992 with the EPA (Radian Project No. 285017), neither Contributing Subsidiary nor, to the knowledge of such Contributing Subsidiary, any of its Material Equity Investment Entities has entered into any Contract or instrument which would restrict the business activity of Newco, TDCC, HSB or any of their Affiliates or contains any form of non-competition clause (an "Anti-Competitive Contract"). 3.28. Employment Plans and Benefit Arrangements. Schedule 3.28 sets forth each Employee Plan and each Benefit Arrangement that is maintained by, administered by or contributed to by each Contributing Subsidiary for the benefit of employees in the Contributed Business. With respect to each such Employee Plan and Benefit Arrangement (except as disclosed on Schedule 3.28): (i) DEI shall provide or make available to Radian true and correct copies of each Employee Plan and Benefit Arrangement listed on Schedule 3.28 with respect to which DEI has any liability (the "DEI Plans"). Radian shall provide or make available to DEI true and correct copies of each Employee Plan and Benefit Arrangement listed on Schedule 3.28 with respect to which Radian has any liability (the "Radian Plans"). DEI has supplied or made available to Radian, to the extent applicable, a true and correct copy of the most recent annual report, actuarial report, accountant's opinion of the plan's financial statements, summary plan description and Internal Revenue Service ("IRS") determination letter with respect to each DEI Plan. Radian has supplied or made available to DEI, to the extent applicable, a true and correct copy of the most recent annual report, actuarial report, accountant's opinion of the plan's financial statements, summary plan description and IRS determination letter with respect to each Radian Plan. (ii) Each DEI Plan and each Radian Plan complies and has been administered in form and in operation in all material respects with all applicable requirements of law, and no event has occurred which will or could cause any such plan to fail to comply with such requirements and no notice has been issued by any governmental authority questioning or challenging such compliance. (iii) Each DEI Plan and each Radian Plan which is an employee pension benefit plan (as defined in section 3(2) of ERISA) and which is intended to be tax-qualified under section 401(a) of the Code has received a favorable determination letter from the IRS and there have been no amendments to such plans which are not the subject of a favorable determination letter issued with respect thereto by the IRS and no event has occurred which will or could give rise to disqualification of any such plan. (iv) Except for The Hartford Steam Boiler Inspection and Insurance Company Leveraged Employee Stock Ownership Plan (the "HSB ESOP"), none of the assets of any DEI Plan or Radian Plan is invested in employer securities or employer real property. (v) There have been no "prohibited transactions" (as described in section 406 of ERISA or section 4975 of the Code) with respect to any DEI Plan or any Radian Plan. (vi) There are no actions, suits or claims (other than routine claims for benefits) pending or threatened involving any DEI Plan or any Radian Plan or the assets thereof. (vii) None of the DEI Plans or the Radian Plans are subject to Title IV of ERISA or are multiemployer plans (as defined in section 3(37) of ERISA). (viii) Except as set forth on Schedule 3.28, neither DEI nor Radian has any liability or contingent liability for providing, under any DEI Plan or Radian Plan or otherwise, any post-retirement medical or life insurance benefits, other than statutory liability for providing group health plan continuation coverage under Part 6 of Title I of ERISA and section 4980B of the Code. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TDCC AND HSB EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY PROVIDED FOR IN THIS AGREEMENT, ALL OF THE CONTRIBUTED ASSETS ARE CONTRIBUTED TO NEWCO "AS IS" AND "WHERE IS" WITHOUT IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR INTENDED USE OR PARTICULAR PURPOSE OR OTHERWISE. Each of TDCC and HSB hereby represents and warrants to each other party and Newco as of the date of this Agreement that: 4.01. Existence. Such party is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. 4.02. Authorization. The execution, delivery and performance by such party of this Agreement, the other Transaction Documents to which it is a party and all other documents, instruments and certificates executed and delivered by such party in connection with this Agreement or with such other documents, and the consummation by such party of the transactions contemplated by this Agreement and by such other documents are within such party's powers and have been duly authorized by all necessary action on the part of such party. This Agreement and each of the other Transaction Documents have been duly and validly executed and delivered by such party and each constitutes a valid and binding agreement of such party, enforceable in accordance with its terms, except as (i) the enforceability of this Agreement may be limited by applicable bankruptcy, insolvency, fraudulent transfer, moratorium or similar laws from time to time in effect affecting creditors' rights generally and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability. 4.03. Governmental Authorization. Except as set forth on Schedule 4.03, the execution, delivery and performance by such party of this Agreement, the other Transaction Documents to which it is a party and all other documents, instruments and certificates executed and delivered by such party in connection with this Agreement or with such other documents, require no action by or in respect of, or filing with, any governmental body, agency, official or authority other than any filings necessary to transfer or obtain any Permit. 4.04. Non-Contravention. The execution, delivery and performance by such party of this Agreement, the other Transaction Documents to which it is a party and all other documents, instruments and certificates executed and delivered by such party in connection with this Agreement or with such other documents do not and will not (i) contravene or conflict with the certificate of incorporation or bylaws of such party; (ii) assuming compliance with the matters referred to in Section 4.03, 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 party or its Contributed Business; (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 acceleration of any right or obligation or to a loss of any benefit to which such party is entitled under any provision of any material agreement, contract, license or other instrument binding upon such party or any of its properties, or allow the acceleration of the performance of any obligation of such party under any note, bond, mortgage, indenture, lease, license, franchise, permit, agreement, contract or other instrument or obligation binding upon such party or any of its properties for which a written waiver has not been obtained as of the date of this Agreement; (iv) result in the creation or imposition of any Lien on any asset of such party, 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 such party from performing its obligations under this Agreement. 4.05. Required Approval. The execution, delivery and performance by such party of this Agreement, the Transaction Documents to which it is a party and all other documents, instruments and certificates executed and delivered by such party in connection with this Agreement or with such other documents, do not require the approval of such party's stockholders. 4.06. Finders' Fees. Except, in the case of TDCC, for Donaldson, Lufkin & Jenrette Securities Corporation, whose fees will be paid by TDCC, and, in the case of HSB, Morgan Stanley & Co. Incorporated, whose fees will be paid by HSB, there is no investment banker, broker, finder or other intermediary which has been retained by, or is authorized to act on behalf of, such party who might be entitled to any fee or commission from the other parties or any of their respective Affiliates or Newco upon consummation of the transactions contemplated by this Agreement. ARTICLE V COVENANTS 5.01. Conduct of the Business. (a) From the date of this Agreement until the earlier of the Closing Date and the termination of this Agreement (except as otherwise provided in this Agreement or as TDCC or HSB, as the case may be, may consent in writing), TDCC and DEI shall cause the Contributed Business of DEI, and HSB and Radian shall cause the Contributed Business of Radian, to be conducted in the ordinary course of business consistent with past practice and shall use their commercially reasonable efforts to: (i) preserve intact the business organizations and relationships with third parties relating to such Contributed Business; (ii) keep available the services of the present employees connected with such Contributed Business; (iii) continue making marketing, advertising, promotional, and other similar expenditures relating to such Contributed Business in the ordinary course of business consistent with past practice; (iv) duly comply in all material respects with all laws, regulations or ordinances, including without limitation all Environmental Laws, applicable to such Contributed Business; (v) maintain all of its Books and Records relating to such Contributed Business in the ordinary course of business consistent with past practice; (vi) continue the maintenance and repair of the Contributed Assets relating to such Contributed Business (including the making of scheduled capital expenditures) in the ordinary course of business consistent with past practice; (vii) maintain in effect insurance with respect to the Contributed Assets related to such Contributed Business in the ordinary course of business and against risks, with carriers and in amounts (including deductibles) consistent with past practice; (viii) maintain inventory and equipment related to such Contributed Business at levels consistent with past practice; and (ix) comply in all material respects with all material contracts relating to such Contributed Business. (b) Without limiting the generality of the foregoing, without the prior written consent of TDCC, in the case of Radian, or HSB, in the case of DEI, from the date of this Agreement until the Closing Date or the earlier termination of this Agreement, no Contributing Subsidiary will: (i) merge or consolidate with any other Person; (ii) acquire from any other Person, other than in the ordinary course of business, assets relating to its Contributed Business having a fair market value in excess of an aggregate of $1,000,000; (iii) sell, lease, license, pledge or otherwise dispose of any Contributed Assets except (i) pursuant to existing contracts or commitments and (ii) in the ordinary course of business consistent with past practice; or (iv) defer the payment of any amounts, or accelerate the collection of any receivables, except in the ordinary course of business consistent with past practice; (v) create or suffer to exist any new Lien or encumbrance on any of its Contributed Assets, other than Permitted Liens; (vi) enter into any material contract or agreement (or, except for technical amendments to substitute the name of Newco for the name of such party, any amendment, modification or waiver of any existing contract or agreement), that would be an Assumed Liability except in the ordinary course of business consistent with past practice; (vii) except in the ordinary course of business consistent with past practice, accept, receive or allow any customer to make any prepayment related to its Contributed Business or its Assets; (viii) except in the ordinary course of business consistent with past practice, waive or release any right of value relating to its Contributed Assets or its Contributed Business; (ix) declare, set aside or pay any dividend or other distribution (whether in cash or stock, or property or any combination thereof) in respect of its capital stock; (x) purchase any Derivative Financial Instrument; or (xi) agree or commit to do any of the foregoing. 5.02. Access to Information. From the date of this Agreement until the Closing Date or the earlier termination of this Agreement, and subject to each party's security and safety practices, each party will (a) give each other party and its counsel, financial advisors, auditors and other authorized representatives such access to the offices, properties, books and records of such party relating to the Contributed Business of such Contributing Subsidiary, upon reasonable notice and during normal business hours, as such other party may reasonably request, (b) furnish to the counsel, financial advisors, auditors and other authorized representatives of the other party such financial and operating data and other information relating to its Contributed Business as such Persons may reasonably request and (c) instruct the employees, counsel and financial advisors of such Contributing Subsidiary to cooperate with the other party in its investigation of its Contributed Business; provided that no investigation pursuant to this Section shall affect any represen- tation or warranty given by such party under this Agreement; and provided further that any investigation pursuant to this Section shall be conducted in such manner as not to interfere unreason- ably with the conduct of the Contributed Business of such Contributing Subsidiary. Notwithstanding the foregoing, no party shall have access to personnel records of the other party relating to individual performance or evaluation records, medical histories or other information which, in such party's good faith opinion, is sensitive or the disclosure of which could subject such party to risk of liability. All information, documents and other materials provided pursuant to this Section shall be held and dealt with by the Persons receiving the same in accordance with the Confidentiality Agreement. 5.03. Notices of Certain Events. From the date of this Agreement until the Closing Date (or the earlier termination of this Agreement) each of TDCC or HSB shall promptly notify the other party of: (i) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement or any other Transaction Document; (ii) any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement or any other Transaction Document; and (iii) any actions, suits, claims, investigations or proceedings commenced or, to the best of its knowledge threatened against, relating to or involving or otherwise affecting such Contributing Subsidiary or its Contributed Business that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.11 or Section 3.20(a) or that relate to the consummation of the transactions contemplated by this Agreement or any other Transaction Document. 5.04. Reasonable Efforts; Further Assurances. Subject to the terms and conditions of this Agreement, each party will use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations and any applicable contractual obligations to consummate the transactions contemplated by this Agreement and the other Transaction Documents. Each party agrees to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement and the other Transaction Documents and to vest in Newco good title to the Contributed Assets of such party (including without limitation in accordance with Section 2.07, the Restricted Assets), subject only to Permitted Liens or Liens set forth on Schedule 2.02(a). 5.05. Certain Filings. From the date of this Agreement until the Closing Date, or such later date as is reasonably required to obtain all material Permits and to transfer all Restricted Assets necessary for the operation of the Contributed Business (or the earlier termination of this Agreement), the parties shall cooperate with one another (a) in determining whether any action by or in respect of, or filing with, any governmental body, agency, official or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement or any Transaction Document and (b) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers. 5.06. Public Announcements. From the date of this Agreement until the Closing Date (or the earlier termination of this Agreement), except as may be required by applicable law or any listing agreement with any national securities exchange, any press release or any public statement with respect to this Agreement, any Transaction Document or the transactions contemplated by this Agreement or by such other documents will require the prior written consent of TDCC and HSB. 5.07. Stockholder Approval. Each of TDCC and HSB, as sole stockholders of DEI and Radian, respectively, agrees to execute and deliver its written consent as may be required to approve the transactions contemplated by this Agreement, to authorize the execution and delivery by DEI or Radian, as the case may be, of this Agreement and the other Transaction Documents and the performance by DEI or Radian, as the case may be, of its obligations under this Agreement and under the other Transaction Documents. 5.08. WARN. Each party agrees to comply with all applicable provisions of the Worker Adjustment, Retraining and Notification Act and any similar state law applicable to the transactions contemplated by this Agreement. 5.09. Intentionally Omitted. 5.10. Impairment of Assets. In the event that after the date of this Agreement, but prior to the Closing Date, a fire, explosion, flood, confiscation, earthquake or other similar or dissimilar event impairs any of the Contributed Assets (each such Contributed Asset is an "Impaired Asset") to be contributed to Newco, the parties agree to negotiate in good faith to ensure that, to the extent commercially reasonable, assets (such as insurance proceeds) which, when taken together with any remaining value of the Impaired Asset, have a value equal to the value of the Contributed Asset without the impairment, shall be trans- ferred to Newco. This provision shall in no way limit either party's rights under Section 7.01. 5.11. Covenant of Parent. (a) Each of TDCC and HSB, as the case may be, will cause its respective Contributing Subsidiary to perform and will be responsible for and guarantee the timely performance of all of the respective Contributing Subsidiary's obligations under this Agreement and the LLC Agreement. (b) If a dissolution of Newco is caused by the Bankruptcy of DEI pursuant to Section 9.1 of the LLC Agreement, Radian shall have the right to require TDCC to purchase all, but not less than all, of Radian's Company Interest at the price and upon the terms set forth in Section 8.3 of the LLC Agreement; provided, however, that such price shall be discounted at a rate of 4% per year or portion thereof if such purchase shall occur prior to December 31, 1997. (c) If DEI shall fail to purchase Radian's Company Interest at the price and upon the terms and subject to the conditions set forth in Section 8.3 of the LLC Agreement then, upon notice of such failure, TDCC shall, within two (2) business days of such notice, purchase Radian's Company Interest at the price and upon the terms set forth in Section 8.3 of the LLC Agreement. 5.12. Covenants Not to Compete. Subject to the provisions of this Section 5.12, each of TDCC and HSB agrees that, from the Closing until one year after it has ceased to have a direct or indirect ownership interest in Newco, neither it nor its Affiliates (other than DEI with respect to its ownership interest in Newco or any Restricted Asset in the case of TDCC and Radian with respect to its ownership interest in Newco or any Restricted Asset in the case of HSB) will engage in businesses anywhere in the world that are in direct competition with the Newco Protected Business, it being understood that these covenants not to compete shall not at any time prevent each of TDCC and HSB, and each of their Affiliates, from engaging in (i) Excluded Businesses, even if such Excluded Businesses compete with the Newco Protected Business, (ii) in any other businesses (including without limitation businesses that neither TDCC and its Affiliates nor HSB and its Affiliates were engaged in as of the date of this Agreement) that are not directly in competition with the Newco Protected Business or (iii) maintaining passive investments of less than 5% of the aggregate equity interests of any Person that is in direct competition with the Newco Protected Business. Without limiting the generality of the foregoing, nothing in this Agreement shall at any time prevent (w) TDCC or any of its Affiliates from providing systems or services to any of their Affiliates or to TDCC (including without limitation the transfer to Buna Sow Leuna Olefinerbund GmbH in Germany ("BSL") of environmental technology and environmental services as a result of TDCC's acquisition of a controlling interest in BSL), (x) HSB or any of its Affiliates from providing systems or services to any of their Affiliates or to HSB, (y) each of TDCC and its Affiliates and each of HSB and its Affiliates from providing services or systems in conjunction with the sale of a product, or (z) each of TDCC and its Affiliates and each of HSB and its Affiliates from providing services or systems in connection with a contract manufacturing relationship or from entering into a technology license for or relating to the manufacture, distribution and/or sale of chemical products. 5.13. Liens on Interests in Newco. Each of TDCC and HSB agrees that it will not create or permit to exist, directly or indirectly, any Lien on its interest in Newco or any portion thereof (except (i) Liens for Taxes being contested in good faith and by appropriate proceedings, (ii) Liens arising in the ordinary course of business for sums not due or sums being contested in good faith and by appropriate proceedings and (iii) Liens pursuant to bona fide credit arrangements provided that a Person providing credit pursuant to such arrangements shall acknowledge that, if such Person acquires ownership of any such interest, such interest shall nevertheless be subject to all the terms of this Agreement and the LLC Agreement). Any attempt by either party to create or permit to exist, directly or indirectly, any Lien (other than the Liens described in the parenthetical in the immediately preceding sentence) on its interest in Newco or any portion thereof shall be null, void ab initio and of no force and effect. 5.14 Covenants Not to File Involuntary Bankruptcy. Each of TDCC and HSB agrees, to the fullest extent permitted by law, not to file, or cause any other Person or entity (including without limitation, any of such Person's shareholders, subsidiaries or Affiliates) to file, an involuntary bankruptcy petition against Newco under any state or federal insolvency law, including without limitation the Federal Bankruptcy Code, or any amended or successor version thereof. 5.15 Intentionally Omitted. 5.16 Intentionally Omitted. 5.17 Transfers of Capital Stock of Contributing Subsidiary. (a) Each of TDCC and HSB agrees that it will not sell any of the capital stock of its Contributing Subsidiary unless such transfer is (i) pursuant to a written agreement pursuant to which the transferee agrees to be bound by all of the terms of this Agreement and the other Transaction Documents as if it were originally a party to those Agreements and to such other documents and (ii) in compliance with Section 5.17(b). In addition to the requirements set forth in the first sentence of this Section 5.17, HSB agrees that it shall not make such transfer to any company engaged in a significant way in the manufacture or sale of primary chemical products without the consent of TDCC (which consent shall not be unreasonably withheld). (b) Neither TDCC nor HSB will, without the consent of the other, sell the capital stock of its respective Contributing Subsidiary prior to the third anniversary of the Closing Date. If, subsequent to the third anniversary of the Closing Date, a third party with sufficient financial resources (an "Acquiror") which is not an Affiliate of either TDCC or HSB makes a written proposal to purchase, at a defined price and pursuant to defined terms and conditions, from either TDCC or HSB all of the capital stock of its Contributing Subsidiary, in a bona fide, arm's- length transaction (a "Acquiror Proposal"), and if such party desires to enter into negotiations with respect to such Acquiror Proposal, such party (the "Offeror") shall give written notice to the other party (the "Offeree") of a desire to so dispose of the capital stock of the Offeror's Contributing Subsidiary (with respect to such Offeror, the "Shares"), which proposed disposition is subject to the following provisions: (i) The Offeror shall first offer to the Offeree the right to buy the Offeror's Shares from the Offeror at the same price and upon the same terms and conditions as (or, if any such terms and conditions cannot be duplicated, on terms and conditions financially equivalent to) those the Offeror has been offered by, and is willing to accept from, the Acquiror; (ii) The offer by the Offeror to the Offeree shall (x) provide written disclosure of all of the details pertaining to any such Acquiror Proposal, including the price, terms and conditions and the name and address of the Acquiror to whom the Offeror is prepared to sell the Offeror's Shares (such disclosure shall be deemed sufficient pursuant to this Section 5.17(b) if such disclosure includes all terms and conditions known to such Offeror), and (y) provide to the Offeree a written statement of the Acquiror which sets forth the agreement of the Acquiror, upon the closing of a purchase pursuant to this Section 5.17(b), to be bound by all of the terms of this Agreement and the other Transaction Documents as if it were originally a party to this Agreement and other Transaction Documents. If the Offeree elects to exercise its right to purchase the Offeror's Shares, it shall give written notice thereof to the Offeror within thirty (30) days after receipt of such offer from the Offeror (with all required information) and the purchase of such Shares shall be closed at the offices of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois 60603 (or at any other mutually agreeable place) within ninety (90) days after the Offeree's notice of such election to the Offeror and any necessary governmental reviews, consents or approvals have occurred (or at any other mutually agreeable time); (iii) If, within thirty (30) days after giving the notice to the Offeree required in this Section 5.17(b), the Offeree shall not have elected to exercise its right to purchase the Offeror's Shares, then negotiations may proceed as if the Offeree shall have approved the sale to the Acquiror; (iv) If the Offeree shall approve the sale to the Acquiror, then the sale of the Shares of the Offeror may be consummated; provided, however, that such sale must be closed within one-hundred twenty (120) days after the expiration of the thirty (30) day period referred to in subsection (iii) above, at a price and upon terms and conditions not more favorable, in any material respect, to the Acquiror than those which were first disclosed to the Offeree; (v) At or prior to the consummation of any such sale to the Acquiror, the Offeror shall furnish to the Offeree and to Newco (A) an agreement of the Acquiror agreeing to be bound by the terms of this Agreement and any other Transaction Documents to which the Offeror is a party and acknowledging that the Acquiror shall be bound by, and entitled to the benefits of, those documents, and (B) an affidavit of the Offeror setting forth: the name and address of the Acquiror to whom any Shares were sold; the price and terms and conditions upon which such Shares were sold; and a statement that the Acquiror is not an Affiliate of the Offeror; and (vi) Notwithstanding the foregoing, no party shall be permitted to present an Acquiror Proposal regarding the exercise of its right to dispose of the capital stock of its Contributing Subsidiary pursuant to this Section 5.17(b) in excess of six times during the previous 60 month period. 5.18 Technology Access. TDCC will provide to Newco, upon Newco's request, access to, and licenses under, any technology that (a) is either owned by or licensed to TDCC, (b) TDCC is authorized to either sublicense or permit the use of by Newco, and (c) that is reasonably useable in the Newco Services Business, including without limitation the technology described in Exhibit A; provided, however, that (i) TDCC shall not be required to provide access to (x) technology predominantly applicable to the production or manufacture of chemical products or (y) MOD series process control technology, including without limitation software and hardware and (ii) TDCC shall not be required to incur any costs to develop or obtain technology for Newco's use. The provision of access to, and licenses under, technology to Newco pursuant to this Section 5.18 shall be without cost to Newco, except that Newco shall reimburse TDCC (i) for any payments TDCC must make to a third party in order to provide such access and/or license and (ii) for any Taxes borne by TDCC as a result of the provision of such access and/or license. Such licenses and, where permitted, such sublicenses shall be of sufficient scope so as to permit Newco to conduct the Newco Services Business and shall permit Newco to grant site licenses to use TDCC technology that is relevant to the Newco Services Business. If site licenses are not appropriate for a certain portion of TDCC technology, TDCC and Newco will attempt to develop an alternate licensing procedure. During the term of the LLC Agreement, there will be an agreement in place which provides the mechanism for Newco's access to the technology granted above. 5.19 Certain Radian Property. If TDCC or DEI determines that, pursuant to an environmental assessment to be completed within thirty (30) days from the Closing Date, the property owned by Radian located in (i) El Dorado County California and (ii) City of Durham, Durham County, North Carolina, each as more specifically described in Radian's Schedule 3.08(a), may subject Newco to any Environmental Liability or that such property is in breach of the representations and warranties set forth in Section 3.20, then, upon notice to Radian and HSB and without any further action by either TDCC or DEI, such property shall be treated for all purposes of this Agreement as if it had been an Excluded Asset as of the Closing Date. ARTICLE VI EMPLOYEES AND EMPLOYEE BENEFITS 6.01. Leased Employees. Immediately following the Closing Date and until such time as provided under and in accordance with the terms of the Employee Seconding Agreements (the "Employment Transfer Date"), the Leased Employees will continue to be employed by the Contributing Subsidiaries or TDCC, as applicable, and will be leased from the Contributing Subsidiaries or TDCC, as applicable, to Newco. For the period following the Closing Date until the Employment Transfer Date, the DEI Leased Employees shall continue to be treated for purposes of all of DEI Plans as employees of DEI and the Radian Leased Employees shall continue to be treated for purposes of the Radian Plans as employees of Radian. Nothing in this Article VI shall require TDCC or any Contributing Subsidiary to continue to employ any person. 6.02. Employment by Newco. Effective as of the Employment Transfer Date, the DEI Leased Employees and Radian Leased Employees shall be transferred from employment with the Contributing Subsidiaries to employment with Newco and Newco agrees to employ all such Leased Employees as employees-at-will, except to the extent provided in any employment agreement. Except as otherwise specifically provided in this Article VI, for periods after the Employment Transfer Date, the Leased Employees shall not be eligible to participate in employee benefit plans and arrangements maintained by the Contributing Subsidiaries. Nothing in this Article VI shall require Newco to continue to employ any employee after the Employment Transfer Date. 6.03. Newco Plans. Newco and the Contributing Subsidiaries shall take the following actions: (i) On or prior to the Closing Date, each Contributing Subsidiary shall make all contributions to, in the case of DEI, the DEI Plans, and, in the case of Radian, the Radian Plans which are required under the terms thereof or by applicable law for periods prior to the Closing Date or which relate to periods prior to the Closing Date. (ii) Effective as of the Employment Transfer Date, Newco shall establish and adopt such employee benefit plans, arrangements, policies and programs (the "Newco Plans") as DEI and Radian shall mutually agree. The Newco Plans may be, but shall not be required to be, substantially similar to the DEI Plans, the Radian Plans or a combination thereof. (iii) All Leased Employees who become employed by Newco on the Employment Transfer Date, to the extent applicable, shall be given credit for all purposes under each of the Newco Plans for their service with DEI or Radian, as applicable, including but not limited to the following purposes: eligibility for participation, vesting, satisfying any waiting periods, evidence of insurability requirements, or the application of any pre-existing condition limitations and determining benefits based on length of service (such as vacation and severance), and to the extent applicable, shall be given credit under each of the Newco Plans which is an employee welfare benefit plan (as that term is defined in section 3(1) of ERISA) for amounts paid under a corresponding DEI Plan or Radian Plan, as applicable, during the same period for purposes of applying deductibles, copayments and out-of-pocket maximums as though such amounts had been paid in accordance with the terms and conditions of Newco Plans. (iv) On or as soon as practicable after the Employment Transfer Date, the Dow Environmental Inc. Retirement Savings Plan (the "DEI 401(k) Plan") and the Radian Corporation 401(k) Thrift Plan shall be merged with and into a new defined contribution plan established by Newco (the "Newco 401(k) Plan"). Prior to such merger, DEI and Radian, as applicable, shall provide Newco with copies of a favorable determination letter issued by the IRS that the DEI 401(k) Plan and the Radian 401(k) Plan, as applicable, meet the requirements of section 401(a) of the Code and Newco shall provide DEI and Radian with a copy of a favorable determination letter issued by the IRS that the Newco 401(k) Plan meets the requirements of section 401(a) of the Code. The merger of the DEI 401(k) Plan and the Radian 401(k) Plan with and into the Newco 401(k) Plan shall comply in all respects with sections 411(d)(6) and 414(l) of the Code. Newco, Radian and DEI shall use their reasonable best efforts to accomplish the mergers described above, including adoption of plan amendments (including, if necessary, amendments to the Newco 401(k) Plan to provide for continuation of outstanding loans that will be transferred to the Newco 401(k) Plan in connection with the merger of the DEI 401(k) Plan with and into the Newco 401(k) Plan) and completion of any required filings with any governmental agency. (v) In the event any TDCC Leased Employee becomes an employee of Newco after the Closing Date, the account balance of such TDCC Leased Employee (including, to the extent applicable, any promissory note evidencing a loan to any such TDCC Leased Employee) shall be transferred to the Newco 401(k) Plan from The Dow Chemical Company Salaried Employees' Savings Plan (the "TDCC 401(k) Plan"). Such transfer shall comply in all respects with section 411(d)(6) and 414(l) of the Code. Prior to such transfer, TDCC shall provide Newco with a copy of a favorable determination letter issued by the IRS that the TDCC 401(k) Plan meets the requirements of section 401(a) of the Code and Newco shall provide TDCC with a copy of a favorable determination letter issued by the IRS that the Newco 401(k) Plan meets the requirements of section 401(a) of the Code. Newco and TDCC shall use their reasonable best efforts to accomplish the transfer described above, including adoption of plan amendments and completion of any required filings with any governmental agency. (vi) On or as soon as practicable after the Employment Transfer Date, the shares of HSB common stock ("HSB Stock") and any cash balance allocated under the HSB ESOP to the account of any Radian Leased Employee who becomes an employee of Newco on the Employment Transfer Date shall be transferred to the Newco 401(k) Plan from the HSB ESOP. Such transfer shall comply in all respects with section 411(d)96) and 414(l) of the Code. Prior to such transfer, HSB shall provide Newco with a copy of a favorable determination letter issued by the IRS that the HSB ESOP meets the requirements of section 401(a) of the Code and Newco shall provide HSB with a copy of a favorable determination letter issued by the IRS that the Newco 401(k) Plan meets the requirements of section 401(a) of the Code. Newco and HSB shall use their reasonable best efforts to accomplish the transfer described above, including adoption of plan amendments and completion of any required filings with any governmental agency and including, in the case of Newco, the inclusion in the Newco 401(k) Plan of such restrictions on the ability of a participant to sell or dispose of HSB Stock credited to such participant's account as HSB may reasonably require. 6.04. Relocation. DEI, Radian and Newco acknowledge that certain Leased Employees who become employees of Newco may need to relocate physically in order to perform their employment responsibilities for Newco. Newco agrees to develop as one of the Newco Plans a policy to cover reasonable relocation costs of such employees. ARTICLE VII CONDITIONS TO CLOSING 7.01. Conditions to the Closing. The obligations of TDCC and DEI, on the one hand, and HSB and Radian, on the other hand, to consummate the Closing are subject to the satisfaction or waiver, at or prior to the Closing, of the following conditions: (a) No provision of any applicable law or regulation and no judgment, injunction, or other similar order or decree shall prohibit the consummation of the Closing. (b) (i) The other parties shall have performed in all material respects all of their obligations under this Agreement required to be performed by them at or prior to the Closing Date and (ii) the representations and warranties of the other parties contained in this Agreement and in any certificate or other writing delivered by the other parties pursuant to this Agreement which are qualified as to materiality shall be true and correct and the representations and warranties of the other parties contained in this Agreement and in any certificate or other writing delivered by the other parties pursuant to this Agreement 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 specified date) as of the Closing Date, as if made at and as of such date. (c) Each of the Transaction Documents shall have been duly executed by each of the parties to such agreements, and shall be in full force and effect. (d) Each Contributing Subsidiary and Newco shall have provided or executed all certificates, notices or other documents and taken all other actions reasonably required to minimize the applicability of transfer taxes on the transfer of Assets to Newco as contemplated by this Agreement. (e) Each Contributing Subsidiary shall have been provided and approved the preliminary business plan of Newco with respect to the first year of operations of Newco after the Closing Date. ARTICLE VIII SURVIVAL; INDEMNIFICATION 8.01. Survival. The representations and warranties of the parties contained in this Agreement shall not be limited or affected by any investigation undertaken by any party, and shall survive the Closing until the second anniversary of the Closing Date or (i) in the case of Sections 3.01 and 3.02, indefinitely, or (ii) in the case of the representations and warranties relating to Taxes, until expiration of the applicable statutory period of limitations (giving effect to any waiver, mitigation or extension thereof), if later, and shall thereafter terminate, together with any associated right of indemnification pursuant to Section 8.02. Notwithstanding the preceding sentence, any representation or warranty in respect of which indemnity may be sought under Section 8.02, and the associated right of indemnification under Section 8.02, shall survive the time at which it would otherwise terminate pursuant to the preceding sentence, with respect to any matter identified in a notice (which notice shall identify the representation or warranty claimed to have been breached or to have been inaccurate, and shall state with reasonable particularity the nature of the asserted breach or inaccuracy) given prior to such time to the party against whom such indemnity may be sought. 8.02. Indemnification. (a) Each of TDCC and DEI, on the one hand, and HSB and Radian, on the other hand, (each pair, an "Indemnifying Party") hereby indemnifies each other (the indemnified pair, an "Indemnified Party") and their Affiliates, and their respective directors, officers, employees and agents (collectively, the "Indemnified Parties") against and agrees to hold each of them harmless from and to defend each of them from and against any and all Loss incurred or suffered by them, arising out of or resulting from: (i) any breach of any representation or warranty in this Agreement by such Indemnifying Party; or (ii) any failure by the Indemnifying Party or any of its Affiliates to perform any of its covenants or agreements contained in this Agreement (other than those in Sections 8.02(b) through (k), which are covered in those sections) or the other Transaction Documents; provided that such Indemnifying Party shall not be liable under Section 8.02(a) unless the aggregate amount of Loss with respect to all matters referred to in Section 8.02(a) exceeds $500,000 (provided, that if such loss does exceed $500,000, the Indemnifying Party shall only be responsible for the amount of such loss that exceeds $500,000). (b) TDCC hereby agrees to indemnify HSB, Radian and Newco against and to hold HSB, Radian and Newco harmless from any breach, default or non-performance by TDCC or any of its Affiliates relating to any or all of the Assumed Contracts contributed by TDCC or any of its Affiliates where the act, omission, event or cause of action giving rise to the same arose, occurred or accrued prior to September 30, 1995. HSB hereby agrees to indemnify TDCC, DEI and Newco against and to hold TDCC, DEI and Newco harmless from any breach, default or non- performance by HSB or any of its Affiliates relating to any or all of the Assumed Contracts contributed by HSB or any of its Affiliates where the act, omission, event or cause of action giving rise to the same arose, occurred or accrued prior to September 30, 1995. (c) TDCC and HSB hereby agree to cause Newco to indemnify each party and its Affiliates against and to cause Newco to hold each of them harmless from all Assumed Liabilities and any and all Loss incurred or suffered by such party or any of its Affiliates arising out of or in connection with any Assumed Liability. (d) TDCC hereby agrees to indemnify HSB, Radian and Newco against and to hold HSB, Radian and Newco harmless from (i) Excluded Liabilities retained by TDCC or any of its Affiliates and (ii) any and all Loss incurred or suffered by HSB, Radian or Newco arising out of or in connection with any such Excluded Liabilities. HSB hereby agrees to indemnify TDCC, DEI and Newco against and to hold TDCC, DEI and Newco harmless from (i) Excluded Liabilities retained by HSB or any of its Affiliates and (ii) any and all Loss incurred or suffered by TDCC, DEI or Newco arising out of or in connection with any such Excluded Liabilities. (e) TDCC and HSB hereby agree to cause Newco to indemnify each party and its Affiliates against and to cause Newco to hold each of them harmless from out-of-pocket losses any of them incurs because (i) a Restricted Asset cannot be transferred or by virtue of their efforts to transfer any Restricted Asset to Newco or (ii), in the case of any Restricted Asset that is a Special Foreign Asset, by virtue of their efforts to dissolve, sell or dispose of any such Special Foreign Asset, including without limitation, in each such case, out-of-pocket losses paid for a breach of contract claim made by a third party asserting that TDCC, DEI, HSB or Radian, as the case may be, cannot perform its obligations under a Contract that is a Restricted Asset in light of the formation of Newco; provided, however, that the indemnity in this Section 8.02(e) shall not cover lost revenues that any of TDCC, DEI, HSB or Radian do not receive because a third party cancels or refuses to perform under a Contract that is a Restricted Asset; provided further, however, that the indemnity in this Section 8.02(e) shall not cover any and all Loss incurred or suffered with respect to an Anti- Competitive Contract that was not set forth in Section 3.27(c) of this Agreement. (f) TDCC and HSB hereby agree to cause Newco to indemnify each party to this Agreement and its Affiliates against and to cause Newco to hold each party to this Agreement and its Affiliates harmless from any liability for actions by Newco subsequent to the Closing that result in a final judgment of (i) infringement of any right relating to intellectual property owned by an entity that is not a party to this Agreement or an Affiliate of a party to this Agreement, (ii) misuse of any of the Intellectual Property listed in Schedule 3.18 or (iii) an antitrust violation involving any of the Intellectual Property listed in Schedule 3.18 or a settlement in lieu of any such final judgment. (g) TDCC and HSB hereby agree to cause Newco to indemnify TDCC, HSB and their Affiliates against and to cause Newco to hold TDCC, HSB and their Affiliates harmless from all liabilities related to foreign, U.S. Federal and state income taxes incurred by DEI and Radian during the 1995 fiscal year; provided, however, that Newco shall not be liable under this Section 8.02(g) for aggregate amounts exceeding the amount set forth in Schedule 8.02(g) relating to foreign, U.S. Federal and state income taxes incurred by DEI and Radian during the 1995 fiscal year. (h) TDCC and HSB hereby agree to cause Newco to indemnify against and to cause Newco to hold DEI and its Affiliates harmless from all costs, expenses, liabilities, obligations, losses, damages, penalties, proceedings, actions, suits, or claims of whatever kind or nature ("Claims") which may be imposed upon, incurred by or asserted against DEI or its Affiliates after the Closing Date with respect to, relating to, or arising under or in connection with any DEI Plan and for all Claims which may be imposed upon, incurred by or asserted against DEI or its Affiliates with respect to, relating to, or arising under or in connection with any Newco Plan. (i) TDCC and HSB hereby agree to cause Newco to indemnify and to cause Newco to hold Radian and its Affiliates harmless from all Claims which may be imposed upon, incurred by or asserted against Radian or its Affiliates after the Closing Date with respect to, relating to, or arising under or in connection with any Radian Plan and for all Claims which may be imposed upon, incurred by or asserted against Radian or its Affiliates with respect to, relating to or arising under or in connection with any Newco Plan. (j) DEI and Radian hereby agree to cause Newco to indemnify TDCC and its Affiliates against and to cause Newco to hold TDCC and its Affiliates harmless for all Claims which may be imposed upon, incurred by or asserted against TDCC or its Affiliates relating to or arising under or in connection with any Newco Plan. (k) DEI and Radian hereby agree to cause Newco to indemnify HSB and its Affiliates against and to cause Newco to hold HSB and its Affiliates harmless for all Claims which may be imposed upon, incurred by or asserted against HSB or its Affiliates relating to or arising under or in connection with any Newco Plan. 8.03. Notice of Third Party Claims; Assumption of Defense. For purposes of this Section 8.03, the term "Indemnifying Party" shall mean any party responsible for indemnifying another party pursuant to this Article VIII and "Indemnified Party" shall mean any party entitled to indemnifica- tion pursuant to this Article VIII. The Indemnified Party shall give prompt notice to the Indemnifying Party against whom indemnity is sought, in accordance with the terms of Section 10.01, of the assertion of any claim, or the commencement of any suit, action or proceeding by any third party in respect of which indemnity may be sought under this Agreement and of any Losses which the Indemnified Party deems to be within the ambit of this Article VIII, specifying with reasonable particularity the basis therefor, and shall give the Indemnifying Party such information with respect thereto as the Indemnifying Party may reasonably request (but the prompt giving of such notice shall not be a condition precedent to indemnification under this Agreement except to the extent that the Indemnifying Party is materially prejudiced by any delay in receiving such notice). The Indemnifying Party may, at its own expense, (a) participate in and, (b) upon notice to the Indemnified Party and the Indemnifying Party's written agreement that the Indemnified Party is entitled to indemnification pursuant to Section 8.02 for Loss arising out of such claim, suit, action or proceeding, at any time during the course of any such claim, suit, action or proceeding, assume the defense thereof; provided that (x) the Indemnifying Party's counsel is reasonably satisfactory to the Indemnified Party; and (y) the Indemnifying Party shall there- after consult with the Indemnified Party upon the Indemnified Party's reasonable request for such consultation from time to time with respect to such claim, suit, action or proceeding. If the Indemnifying Party assumes such defense, the Indemnified Party shall have the right (but not the duty) to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party. If, however, the Indemnified Party reasonably determines in its judgment that representation by the Indemnifying Party's counsel of both the Indemnifying Party and the Indemnified Party would present such counsel with a conflict of interest, then such Indemnified Party may employ separate counsel to represent or defend it in any such claim, action, suit or proceeding and the Indemnifying Party shall pay, as incurred, the reasonable fees and other charges of such separate counsel. Whether or not the Indemnifying Party chooses to defend or prosecute any such claim, suit, action or proceeding, the parties to this Agreement shall cooperate in the defense or prosecution of such claim, suit, action or proceeding. 8.04. Settlements or Compromises. Any settlement or compromise made or caused to be made by the Indemnified Party or the Indemnifying Party, as the case may be, of any such claim, suit, action or proceeding of the kind referred to in Section 8.03 shall also be binding upon, and be for the benefit of, the Indemnifying Party or the Indemnified Party, as the case may be, in the same manner as if a final judgment or decree had been entered by a court of competent jurisdiction in the amount of such settlement or compromise; provided that: (x) no settlement or compromise shall be entered into by the Indemnifying Party without the Indemnified Party's express written consent (which consent shall not be unreasonably withheld) unless (i) contained in this Agreement is an unconditional release by the claimant or the plaintiff of all liability of the Indemnified Party with respect to such claim or demand, and (ii) the Indemnifying Party has agreed in writing that such claim is the subject of indemnity under Section 8.02; and (y) no settlement or compromise shall be entered into by the Indemnified Party without the Indemnifying Party's express written consent unless the Indemnified Party shall have given the Indemnifying Party at least 10 days' notice of any such proposed settlement or compromise, during which time the Indemnifying Party may assume the defense of such claim, suit, action or proceeding (but only if it provides for security for or payment of any indemnification obligations in a manner reasonably satisfactory to the Indemnified Party); provided, however, that if the Indemnifying Party assumes the defense of a claim, suit, action or proceeding, the Indemnified Party may not settle or compromise such claim, suit, action or proceeding. 8.05. Failure of Indemnifying Party to Act. If the Indemnifying Party does not elect to assume the defense of any claim, suit, action or proceeding, then any failure of the Indemnified Party to defend or to participate in the defense of any such claim, suit, action or proceeding or to cause the same to be done, shall not relieve the Indemnifying Party of its obligations under this Agreement; provided that the Indemnified Party gives the Indemnifying Party at least 10 days' notice of its proposed failure to defend or participate and affords the Indemnifying Party the opportunity to assume the defense thereof. ARTICLE IX TERMINATION 9.01. Grounds for Termination. This Agreement may be terminated prior to the Closing as follows: (i) by mutual written agreement of TDCC and HSB; (ii) by either TDCC or HSB if there shall be any law or regulation that makes the consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or if consummation of the transactions contemplated by this Agreement would violate any nonappealable final order, decree or judgment of any court or governmental body having competent jurisdiction; or (iii) by either TDCC or HSB if the Closing shall not have been consummated on or before the date ninety days after the date of this Agreement; provided that the right to terminate this Agreement under this Section 9.01(iii) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to have been consummated on or before such date. 9.02. Effect of Termination. If this Agreement is terminated as permitted by Section 9.01, such termination shall be without liability of either TDCC, HSB, DEI or Radian (or any shareholder, director, officer, partner, employee, agent, consultant or representative of such party) to any other party, and following such termination no party shall have any liability to any other party; provided that no such termination shall relieve any party that has breached any provision of this Agreement from liability for such breach, and any such breaching party shall remain fully liable for any and all Loss incurred or suffered by another party to this Agreement as a result of such breach. The provisions of Section 10.03 and the Confidentiality Agreement shall survive any termination of this Agreement pursuant to Section 9.01. ARTICLE X MISCELLANEOUS 10.01. Notices. All notices, requests and other communications under this Agreement shall be in writing and deemed to have been duly given (i) when sent by telecopy or facsimile transmission during normal business hours at the location of receipt, (ii) upon actual receipt if deposited with a nationally recognized overnight courier service, all charges prepaid, for delivery to the addressee, or (iii) three days following deposit with the United States mail by certified first class mail, postage prepaid, return receipt requested, to such party at the following addresses: if to HSB or Radian, to: The Hartford Steam Boiler Inspection and Insurance Company One State Street P.O. Box 5024 Hartford, Connecticut 06102-5024 Telecopy: (203)722-5710 Attention: General Counsel with a copy to: Thomas H. Kennedy, Esq. Skadden, Arps, Slate, Meagher & Flom 919 Third Avenue New York, New York 10022 Telecopy: (212)735-3637 if to TDCC or DEI, to: The Dow Chemical Company 2030 Dow Center Midland, Michigan 48674 Telecopy: (517) 636-0861 Attention: Jane M. Gootee with a copy to: Scott J. Davis, Esq. Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603 Telecopy: (312) 701-7711 or to such other address as either TDCC or HSB shall furnish to the other by notice given in accordance with this Section. 10.02. Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the parties, or in the case of a waiver, by the party against whom the waiver is to be effective. (b) No failure or delay by either party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement shall be cumulative and not exclusive of any rights or remedies provided by law. 10.03. Expenses. Except as otherwise provided in this Agreement, if this Agreement is terminated pursuant to Section 9.01, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. If this Agreement is not terminated pursuant to Section 9.01, the costs set forth on Schedule 10.03 shall be shared equally between the parties, and each party will bear all other costs and expenses incurred by it, including without limitation the cost of its legal, accounting and investment banking fees and out-of-pocket expenses incurred in connection with Agreement. 10.04. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties. 10.05. Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of Delaware without regard to the conflicts of law rules of such State. 10.06. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 10.07. Entire Agreement. This Agreement and the other Transaction Documents constitute the entire agreement among the parties with respect to the subject matter of this Agreement and supersede all prior agreements, understandings and negotiations, both written and oral, among the parties with respect to the subject matter of this Agreement. No representation, inducement, promise, understanding, condition or warranty not set forth in this Agreement or in the other documents described above has been made or relied upon by any of the party to this Agreement. 10.08. Captions. The captions in this Agreement are included for convenience of reference only and shall be ignored in the construction or interpretation of this Agreement. 10.09. Specific Performance. Each party to this Agreement acknowledges that the other parties will be irreparably harmed and will have no adequate remedy at law if such party fails to perform any of its obligations under this Agreement. It is accordingly agreed that, in addition to any other remedies which may be available, the parties have the right to obtain injunctive relief to restrain a breach or threatened breach of, or otherwise obtain specific performance of, the covenants and other agreements of the parties contained in this Agreement and the Confidentiality Agreement. 10.10. Severability. Any term or provision of this Agreement which is invalid or unenforceable shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement. 10.11. No Third Party Beneficiaries. The parties agree that, except as expressly provided in Section 8.02, there are no third party beneficiaries of this Agreement (other than, as provided in this Agreement, Newco) for and none of the provisions of this Agreement shall be deemed to inure to the benefit of any Person, including any employee or former employee of DEI or Radian (including any beneficiary or dependent thereof) not a party to this Agreement. The parties have caused this Agreement to be duly executed. THE DOW CHEMICAL COMPANY By:/s/ William S. Stavropoulos Name: William S. Stavropoulos Title: President and CEO DOW ENVIRONMENTAL INC. By:/s/ L.R. Edmonson Name: L.R. Edmonson Title: Senior Vice President THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY By:/s/ Robert C. Walker Name:Robert C. Walker Title: Senior Vice President and General Counsel RADIAN CORPORATION By:/s/ P.E. Hudson Name: P.E. Hudson Title: Senior Vice President EXHIBIT A 1. Water Effluents - technologies to monitor, reduce, and treat wastewater and treatment residues, such as: A. separation of suspended solids by methods such as coagulation, clarification, flotation, centrifugation and filtration; B. separation/conversion of inorganics by methods such as precipitation, ion exchange and reverse osmosis; C. separation of organics by methods such as adsorption, membranes, stripping, and extraction; D. biological treatment via aerobic, anaerobic, and anozic methods; E. conversion/destruction of organics via wet air oxidation, hydrolysis, ozonation, and chlorination methods; F. auxiliary unit operations for pH adjustment and nutrient addition; and G. sludge dewatering, reduction, and treatment. 2. Thermal Treatment - various forms of thermal treatment for solids, liquids, and vapors including but not limited to rotary kilns, fluid-bed incinerators, process rotary kilns, halogenated acid furnaces, process boilers/furnaces, ground flares, catalytic combustion, recuperative combustion, burner management, characterization and feeds to combustion units, small solid waste incinerators, multiple-hearth incinerators, molten-bath incinerators, retorting liquid- injection incinerators, flares, fume incinerators regenerative combustion, electric heated combustion, feed atomization, and PICs formation and control. 3. Soil/groundwater - investigation, characterization, protection, management, and remediation technologies including: A. assessment and monitoring of soil/groundwater; B. geophysical testing; C. modeling; D. containment and/or recovery of contaminated groundwater; E. remediation of contaminated soil/groundwater; F. design and operation of landfills and surface impoundments; G. landfarming and composting; H. spill containment; I. leak detection methods; J. sewers, sumps, foundations, and other civil engineering structures; K. concrete quality; and L. solidification/fixation of sludges and other wastes. 4. Air Quality - technologies to monitor, prevent, capture, and/or treat emissions, as well as regulatory compliance, including: A. monitoring combustion products; B. sampling and analysis; C. modeling; D. emission calculation methods; E. quenching/absorption; F. wet and dry scrubbing; G. adsorption (carbon and other); H. particulate removal systems; I. fugitive emissions management including work on pumps, valves, gaskets, etc. to reduce emissions; J. chemical oxidation; K. VOC monitoring; L. biological vent treatment; M. pressure swing adsorption; N. gas/vapor containment; O. NOx control; P. filtering; and Q. condensation. EX-99 3 EXHIBIT 99.2 LIMITED LIABILITY COMPANY AGREEMENT OF RADIAN INTERNATIONAL LLC Dated as of January 1, 1996 TABLE OF CONTENTS / Article Title Page ARTICLE I DEFINITIONS 1.1 Definitions 1 ARTICLE II FORMATION 2.1 Formation of the Company 1 2.2 Name 1 2.3 Purposes 1 2.4 Powers of the Company 2 2.5 Member's Authority 2 2.6 Company Property 2 2.7 Principal Place of Business; Registered Office and Agent 2 2.8 Office of and Agent for Service of Process 2 ARTICLE III CAPITAL CONTRIBUTIONS 3.1 Initial Contributions 3 3.2 Return of Capital Contribution 3 3.3 Interest 4 3.4 Liability of Members 4 3.5 Additional Contributions 4 3.6 Failure to Contribute 6 ARTICLE IV INTERESTS OF MEMBERS 4.1 Company Interests of Members 8 4.2 Capital Accounts 8 4.3 Interest on Capital Accounts 8 4.4 Loans from Members 8 4.5 Transferred Capital Accounts 8 ARTICLE V DISTRIBUTIONS, EXPENSES AND ALLOCATIONS OF PROFITS AND LOSSES 5.1 Allocations of Net Profits and Net Losses from Operations 9 5.2 Special Allocations 10 5.3 Expenses of the Company 14 5.4 Distributions 15 5.5 Limitation Upon Distributions 16 5.6 Distributions to Cover Taxes 16 ARTICLE VI MANAGEMENT RIGHTS, DUTIES AND POWERS OF THE REPRESENTATIVES 6.1 Management 18 6.2 No Management by Members 19 6.3 Number, Qualification and Tenure of Representatives 19 6.4 Meetings 20 6.5 Quorum and Voting 21 6.6 Committees 21 6.7 Action Without Meeting 21 6.8 Compensation 22 6.9 Rules of Procedure 22 6.10 Certain Transactions 22 6.11 Right to Rely on Authority of the Representatives 23 6.12 Responsibility of Members and Representatives 24 6.13 Indemnification 24 6.14 Designation of Tax Matters Partner; Expenses Regarding Tax Matters; Filing of Tax Returns 26 ARTICLE VII BOOKS AND RECORDS; REPORTS TO MEMBERS; CAPITAL ACCOUNT MAINTENANCE 7.1 Books; Reports 27 7.2 Accounting and Fiscal Year 28 7.3 Maintenance of Capital Accounts 28 7.4 Bank Accounts 28 7.5 Insurance 28 ARTICLE VIII TRANSFER OF COMPANY INTEREST; RADIAN OPTION TO SELL; LIENS 8.1 Transfer of Company Interest Generally 28 8.2 Transfers of Company Interests 29 8.3 Radian Option to Sell 29 8.4 Liens 30 ARTICLE IX DISSOLUTION AND WINDING UP 9.1 Dissolution 30 9.2 Winding-Up 32 9.3 Accounting on Dissolution 32 9.4 Accounting; Allocations of Residual Net Profits and Residual Net Loss After Dissolutions 32 9.5 Conversion of Assets to Cash 33 9.6 Distributions in Liquidation 34 9.7 Compliance with Treasury Regulations 34 9.8 Section 708 Termination 35 9.9 Continuation of the Company 35 9.10 Waiver of Certain Rights 35 ARTICLE X MISCELLANEOUS PROVISIONS 10.1 Assignment 36 10.2 Notices 36 10.3 Governing Law 37 10.4 Choice of Forum 37 10.5 Consent to Jurisdiction 37 10.6 Waiver of Jury Trial 37 10.7 Entire Agreement; Amendments 37 10.8 Execution in Counterparts 37 10.9 Remedies and Waiver 37 10.10 Headings 38 10.11 Third Party Beneficiaries 38 10.12 Further Assurances 38 10.13 Public Announcements 38 10.14 Termination 38 Exhibit A Definitions Schedule 2.3 Chemical Products Manufactured By Radian Schedule 6.1 Initial Officers and Duties Schedule 6.10(a)(v) Accounting Policies or Procedures LIMITED LIABILITY COMPANY AGREEMENT This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of Radian International LLC (the "Company"), dated as of January 1, 1996, is between Dow Environmental Inc., a Delaware corporation ("DEI") and Radian Corporation, a Texas corporation ("Radian"). DEI and Radian are sometimes individually referred to in this Agreement as a "Member" and collectively as "Members". NOW, THEREFORE, the parties agree as follows: ARTICLE I DEFINITIONS I.1 Definitions. Capitalized terms used in this Agreement which are not otherwise defined in this Agreement shall have the meanings given to such terms in Exhibit A. ARTICLE II FORMATION II.1 Formation of the Company. The Members hereby form a limited liability company pursuant to the Act on the terms and for the purposes set forth in this Agreement. The rights and duties of the Members and the administration and termination of the Company shall be as provided in the Act, except as modified by this Agreement. II.2 Name. The name of the Company shall be "Radian International LLC" or such other name as is designated from time to time by the Members and, if such other name is to contain "DOW", as approved by The Dow Chemical Company ("TDCC"). The Members Committee is hereby directed to file, or cause to be filed, with the Secretary of State of the State of Delaware a Certificate of Formation reflecting the name of the Company. II.3 Purposes. The purposes of the Company shall be to engage for profit in the Newco Services Business and to engage for profit in any and all other activities reasonably related to or incidental to the Newco Services Business, and to engage for profit in any other business, whether or not related or incidental thereto, as determined by the Members from time to time; provided, however, that the Company shall not engage in the production or manufacture of chemical products, other than the chemical products manufactured by Radian as of the Closing Date and listed on Schedule 2.3, or disclose technology received from TDCC to any third party if such technology is to be used by, or on behalf of, the third party to optimize its production or manufacture of chemical products that are being, or will be, manufactured or produced by TDCC. Notwithstanding the foregoing, the Company may engage in the production or manufacture of analytical reference standard materials for end uses such as environmental, pharmaceutical and forensic drug analyses, such materials typically being manufactured and sold in microgram and gram quantities, but with potential sales up to ten (10) kilograms per material or product to a given purchaser in a twelve month period; provided, however, that potential sales in quantities that exceed the ten (10) kilogram limit will be referred to the Members Committee for approval. II.4 Powers of the Company. Subject to the restrictions set forth in this Agreement, the Company shall have the power to exercise all the powers and privileges granted by this Agreement and by law, together with any powers incidental thereto, so far as such powers and privileges are necessary or appropriate for the conduct, promotion or attainment of the purposes of the Company. II.5 Member's Authority. Except as otherwise provided in this Agreement, no Member shall have any authority to act for, or to assume any obligations or responsibilities on behalf of, any other Member or the Company. II.6 Company Property. All real and personal property, whether tangible or intangible (including, without limitation, all permits and licenses), owned by or granted to or held by the Company shall be deemed to be owned by or granted to or held by the Company as an entity, and no Member shall have any ownership or right to use any such property, except as may be otherwise agreed by the Company and the Members. II.7 Principal Place of Business; Registered Office and Agent. The principal place of business of the Company shall be located at Austin, Texas or at such other place or places as the Members Committee may from time to time determine. The business of the Company may also be conducted at such additional place or places as the Members Committee may designate; provided, however, that the Company shall not maintain an office or a principal place of business in any jurisdiction that would jeopardize the limitation on liability afforded to the Members under the Act or this Agreement and; provided, further, that the Members Committee shall take, or cause to be taken, all steps necessary to preserve the limited liability of the Members in connection with any such additional places of business. II.8 Office of and Agent for Service of Process. The registered office of the Company in Delaware shall be Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The Company's agent for service of process on the Company in Delaware shall be The Corporation Trust Company. The Members Committee may change, at any time and from time to time, the location of such registered office and/or such registered agent upon written notice of the change to the Members. ARTICLE III CAPITAL CONTRIBUTIONS III.1 Initial Contributions. On the Closing Date (or in the case of Restricted Assets and liabilities associated thereto, after the Closing Date), certain contributions will be made to the Company by or on behalf of, and the Company will assume certain liabilities of, the Members and their Affiliates, all as provided in the Contribution Agreement (the "Capital Contribution"). The Members agree that immediately after such contributions and assumptions, the sum of the cash and the Gross Asset Value of assets other than cash contributed by each Member, reduced by liabilities of such Member assumed by the Company, to be contributed to the Capital Account of each of DEI and Radian, respectively, will be as follows: DEI $225,000,000 Radian $150,000,000 III.2 Return of Capital Contribution. (a) Except as otherwise provided in this Agreement, no return shall be paid by the Company to any Member on account of any Capital Contribution. No Member shall have liability to any other Member for the return of any Capital Contribution and any such return shall be made only to the extent of available Company assets in accordance with the terms of this Agreement. (b) Except as otherwise provided in this Agreement, no Member shall have priority over the other Member as to the return of its Capital Contribution or as to distributions of cash made by the Company. (c) Except as otherwise provided in this Agreement, a Member shall not be entitled to withdraw any part of its capital or to (i) receive any distributions from the Company, (ii) demand or receive property other than cash in return for its Capital Contribution or (iii) receive any funds or property of the Company. III.3 Interest. No interest shall be paid on any capital contributed to the Company, notwithstanding any disproportion between the Capital Contribution of each of the Members. III.4 Liability of Members. Except as otherwise provided in the Act and except with respect to their several respective obligations under this Agreement to contribute their respective Capital Contributions, the Members shall not have any personal liability to contribute money or other property to, or in respect of, the Company or any of its liabilities or obligations. III.5 Additional Contributions. (a) No Company Interest or other ownership interest in the Company or its assets other than those of the Members shall be issued by the Company without the consent of each Member and, except as provided in Section 3.1 and this Section 3.5, no Member shall be obligated to make any additional contributions to the capital of the Company. (b) Subject to Section 3.5(e), the Members Committee shall, if it reasonably determines that the Company needs additional funds, use its commercially reasonable efforts to obtain a credit facility (a "Credit Facility") from one or more commercial lenders in form and substance reasonably satisfactory to the Members Committee. (c) If the Members Committee reasonably determines, in its sole discretion, that it is desirable for the Company to obtain a guarantee of such Credit Facility, each Member shall cause its respective Parent to provide such a guarantee, in form and substance reasonably satisfactory to the Parents and such commercial lenders, of the amount of such Credit Facility multiplied by each Member's Company Interest; provided, however, that if a guarantee is required subsequent to December 31, 1998, then, for purposes of this Section 3.5(c), each Member's Company Interest shall be its respective Company Interest as of January 1, 2000. (d) Subject to Sections 3.5(e) and (g), if, after using commercially reasonable efforts to obtain a Credit Facility pursuant to Sections 3.5(b) and (c), the Members Committee reasonably determines, in its sole discretion, that such Credit Facility cannot be obtained on commercially reasonable terms pursuant to Sections 3.5(b) and (c) or if the Credit Facility obtained by the Company is insufficient for the needs of the Company, then each of DEI and Radian hereby agrees to make loans to the Company (the "Ordinary Loans") in order to support the needs of the Company in form and substance reasonably satis- factory to Radian and DEI. The Company's authorized officer shall notify DEI and Radian in writing at least three (3) business days in advance of the time each such loan is required to be made to the Company. Upon such a written request from the Company's authorized officer, each Member shall make a cash loan to the Company in an amount equal to (i) the amount of the Company's loan determined to be needed by the Members Committee multiplied by (ii) such Member's Company Interest; provided, however, that if an Ordinary Loan is required subsequent to December 31, 1998, then, for purposes of this Section 3.5(d), each Member's Company Interest shall be its respective Company Interest as of January 1, 2000. An Ordinary Loan shall bear interest at the rate equal to the lower of (i) the maximum rate allowed by law or (ii) two (2) percentage points over the Prime Rate. (e) Notwithstanding the foregoing, the aggregate amount borrowed under the Credit Facility or any Ordinary Loans shall not result in a Debt Ratio in excess of 0.40. (f) Prior to January 1, 1999, no additional cash contributions may be required without the prior written consent of each of the Members. If, on or after January 1, 1999, the Members Committee determines that the Company requires funds and that borrowings under a Credit Facility or an Ordinary Loan in response to such requirement would cause the Debt Ratio to exceed 0.40, each of DEI and Radian hereby agrees that it shall make cash contributions to the Company in an amount equal to (i) the amount of the Company's cash requirement in excess of the amount that would cause the Debt Ratio to equal 0.40 as determined by the Members Committee multiplied by (ii) such Member's Company Interest; provided, however, that if an additional cash contribution is required on or prior to December 31, 1999, then, for purposes of this Section 3.5(f), each Member's Company Interest shall be its respective Company Interest as of January 1, 2000. Once the Members Committee approves an additional cash contribution, the Company's officers shall have, subject to any terms or conditions specified by the Members Committee at the time it so approves such additional cash contribution, the reasonable discretion to determine the timing of such cash contribution giving due consideration to the Company's cash needs as determined by the Members Committee. The Company's authorized officer shall notify DEI and Radian at least ten (10) days in advance of the time each such cash contribution is required to be made to the Company. (g) Notwithstanding the foregoing (and regardless of whether the Debt Ratio is less than or equal to 0.40), no Member shall be required to make any cash contribution, to guarantee the Credit Facility or to make Ordinary Loans if to do so would cause such Member or its respective Affiliates to violate any Federal, state or local law or regulation applicable to such Member or its respective Affiliates or would, by operation of any such law or regulation, significantly restrict the Member's or its respective Affiliates' ability to conduct its business as such business was conducted prior to the Closing. Each Member shall use, and shall cause its respective Affiliates to use, all reasonable efforts to maintain its ability to make the cash contributions, guarantees and loans contemplated by this Section 3.5. III.6 Failure to Contribute. If either DEI or Radian (in either such case, the "Non-Contributing Member") (x) fails (including a failure because of legal requirements as permitted by Section 3.5(g)), in whole or in part, to make any cash contribution, to guarantee the Credit Facility or to make Ordinary Loans or (y) defaults, in whole or in part, on any other obligation to pay money under this Agreement within five (5) business days of giving of notice by the other Member to the Non- Contributing Member that such cash contribution, guarantee or Ordinary Loan is due or that the Non-Contributing Member has defaulted in any other such obligation under this Agreement, DEI (with respect to circumstances in which Radian is the Non- Contributing Member) or Radian (with respect to circumstances in which DEI is the Non-Contributing Member), as the case may be (in either such case, the "Contributing Member"), shall have the right to: (i) advance directly to the Company such additional cash contribution or provide such guarantee or Ordinary Loan, or portion thereof, or such other payment of money, or portion thereof, as the Non-Contributing Member has failed to make or defaulted on (the "Non-Contributing Member's Share"), and such advance, together with a proportionate amount of the corresponding cash contribution or other payment, if any, made by such Contributing Member, shall be deemed a loan by the Contributing Member to the Company (a "Member Loan"). A Member Loan shall bear interest at the rate equal to the lower of: (A) the maximum rate allowed by law; or (B) four (4) percentage points over the Prime Rate. A Member Loan shall be recouped and repaid from all funds which would have been available to make distributions which the Members would otherwise be entitled to receive from the Company but for this Section 3.6, all of which shall instead be paid by the Company to the Contributing Member and applied to the payment of the Member Loan and all interest thereon, until the same shall have been paid in full. It is understood, however, that to the extent the principal and interest of a Member Loan are not repaid in full by the Company from all funds which would otherwise have been available to make distributions (including any distributions pursuant to Section 9.6(b)) to the Members, the Non- Contributing Member shall be obligated to repay an amount equal to the Non-Contributing Member's Share of the outstanding balance of the principal and interest of such Member Loan upon commencement of the winding up of the Company in accordance with Section 9.2. Any amount which would otherwise have been available to make distributions from the Company that is applied to any Member Loan shall be credited first to any interest then due on such Member Loan, and the balance of the distribution shall be credited against the outstanding principal balance of such Member Loan; or (ii) upon notice to the Non-Contributing Member, purchase all, but not less than all, of the Non-Contributing Member's Company Interest, (A) if on or prior to December 31, 1998, at the price equal to the amount set forth in Section 8.3 of this Agreement as if Radian had exercised its option to sell; provided, however, that such price shall be discounted at a rate of 10% per year or portion thereof if such purchase shall occur prior to December 31, 1997, and (B) thereafter, at the fair market value therefor. Notwithstanding the foregoing, if the enforceability of such Contributing Member's right to purchase the Non-Contributing Member's Company Interest as set forth in this subsection (ii) is in any way limited by general equitable principles, Bankruptcy, moratorium, or other laws affecting creditors' rights generally then, upon notice to the Non-Contributing Member and the Company, the Contributing Member or any of its Affiliates shall have the right to purchase all, but not less than all of the assets and liabilities of the Company at the fair market value therefor. In either case, if DEI and Radian cannot agree upon such fair market value within sixty (60) days after the notice to purchase the Non-Contributing Member's Interest or all the assets and liabilities of the Company, as the case may be, is delivered, either DEI or Radian may, by notice to the other, invoke the Appraisal Procedure. If the Appraisal Procedure is required to determine the fair market value of the Non-Contributing Member's Interest or all the assets and liabilities of the Company, as the case may be, the fees and expenses of such Appraisal Procedure shall be paid by the Non-Contributing Member. The closing of either such sale shall take place upon the date that is within thirty (30) days after such fair market value is determined in accordance with this Section 3.6 and all legal requirements relating to such sale have been satisfied; provided, however, that if such sale is not in compliance with any such legal requirements, then DEI and Radian shall equitably adjust the arrangements set forth in this Section 3.6(ii) in light of what is legally possible and in compliance with any such legal requirements in order to effectuate the intent of the parties. Notwithstanding the foregoing, if the Non-Contributing Member fails, in whole or in part, to make any cash contribution, to guarantee the Credit Facility or to make Ordinary Loans because of legal requirements as permitted by Section 3.5(g), then the Contributing Member shall only have the rights set forth in subsection (i) above; provided, however, that any Member Loan caused by legal requirements as permitted by Section 3.5(g) shall bear interest equal to the interest rate paid on an Ordinary Loan. Except as set forth above, the exercise of the right to make a Member Loan or purchase the Non-Contributing Member's Company Interest shall be in addition to any other rights or remedies that the Contributing Member may have under this Agreement or at law or in equity arising from the Non-Contributing Member's (i) failure to make the required cash contribution, (ii) failure to provide its portion of the required guarantee, (iii) failure to make its required loan or (iv) default in any other obligation to pay money. ARTICLE IV INTERESTS OF MEMBERS IV.1 Company Interests of Members. The "Company Interests" of the Members shall be as follows: For the period: DEI Radian through December 31, 1999 60% 40% after December 31, 1999 65% 35% IV.2 Capital Accounts. A separate Capital Account shall be established and maintained with respect to each Member. IV.3 Interest on Capital Accounts. Except as specifically provided in this Agreement, no Member shall be entitled to any interest on its Capital Account or its contributions to the capital of the Company, nor shall any Member have the right to demand or receive the return of all or any part of its Capital Account or its contributions to the capital of the Company. IV.4 Loans from Members. Loans by a Member to the Company (including, without limitation, any Ordinary Loan or Member Loan) shall not be considered capital contributions. IV.5 Transferred Capital Accounts. In the event that any Member transfers all or a portion of its Company Interest in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor Member to the extent such Capital Account relates to the transferred Company Interest or portion thereof. ARTICLE V DISTRIBUTIONS, EXPENSES AND ALLOCATIONS OF PROFITS AND LOSSES V.1 Allocations of Net Profits and Net Losses from Operations. (a) Allocation of Net Profits. Subject to Section 5.2 and Section 9.4, the Net Profits of the Company for each Fiscal Year will be allocated as follows: (i) Net Profits will first be allocated to the Members to offset prior allocations of Net Losses pursuant to Section 5.1(b)(ii) to the extent such allocations have not been so offset; (ii) next, Net Profits will be allocated to the Members in proportion to their Company Interests as of the last day of the Fiscal Year to which such Net Profits are attributable. (b) Allocation of Net Losses. Subject to Section 5.2 and Section 9.4, the Net Losses of the Company for each Fiscal Year will be allocated as follows: (i) First, Net Losses shall be allocated to the Members in proportion to their Company Interests as of the last day of the Fiscal Year to which such Net Losses are attributable; (ii) Except as otherwise required by the last sentence of this Section 5.1(b)(ii), no allocation of loss, deduction, and/or expenditures described in Code Section 705(a)(2)(B) shall be charged to the Capital Accounts of any Member if such allocation would cause such Member to have an Adjusted Deficit Capital Account. The amount of the loss, deduction, and/or Code Section 705(a)(2)(B) expenditure which would have caused a Member to have an Adjusted Deficit Capital Account shall instead be charged to the Capital Account of any Members which would not have an Adjusted Deficit Capital Account as a result of the allocation, in proportion to their positive Capital Accounts (after giving effect to the adjustments described in the definition of Adjusted Deficit Capital Account), or, if no such Members exist, then to the Members in accordance with their Company Interest. (c) Proportionate Share of Items. All allocations of Net Profits and Net Losses shall be deemed to be comprised of a proportionate share of all items comprising such Net Profits and Net Losses. V.2 Special Allocations. (a) If any Member unexpectedly receives any adjustments, allocations, or distributions described in Treas. Regs. Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), which create or increase an Adjusted Deficit Capital Account of the Member, then items of Company income and gain (consisting of a pro rata portion of each item of Company income, including gross income, and gain for such year) shall be specially allocated to the Capital Account of the Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Deficit Capital Account so created as quickly as possible; provided, however, that an allocation pursuant to this Section 5.2(a) shall be made only if and to the extent that such Member would have an Adjusted Deficit Capital Account after all other allocations provided for in this Section 5.2 have been tentatively made as if this Section 5.2(a) were not in this Agreement. It is intended that this Section 5.2(a) be interpreted to comply with the alternate test for economic effect set forth in Treas. Regs. Section 1.704-1(b)(2)(ii)(d). (b) If any Member would have a deficit Capital Account at the end of any Company taxable year which is in excess of the sum of (i) the amount that the Member is obligated to restore to the Company under Treas. Regs. Section 1.704-1(b)(2)(ii)(c) and (ii) the amount such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Treas. Regs. Sections 1.704-2(g)(1) and 1.704-2(i)(5), such Member shall be specially allocated items of Company income (including gross income) and gain in the amount of the excess as quickly as possible; provided, however, that an allocation pursuant to this Section 5.2(b) shall be made only if and to the extent that such Member would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Section 5.2 have been made as if Section 5.2(a) and this Section 5.2(b) were not in this Agreement. (c) Except as otherwise provided in Treas. Regs. Section 1.704-2(f), notwithstanding any other provision of this Section 5.2, if there is a net decrease in Partnership Minimum Gain during any Fiscal Year, each Member shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member's share of the net decrease in Partnership Minimum Gain, determined in accordance with Treas. Regs. Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treas. Regs. Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 5.2(c) is intended to comply with the minimum gain chargeback requirement in Treas. Regs. Section 1.704-2(f) and shall be interpreted consistently therewith. (d) Except as otherwise provided in Treas. Regs. Section 1.704-2(i)(4), notwithstanding any other provision of this Section 5.2, if there is a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt during any Fiscal Year, each Member who has a share of the Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Treas. Regs. Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member's share of the net decrease in Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Treas. Regs. Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treas. Regs. Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 5.2(d) is intended to comply with the minimum gain chargeback requirement in Treas. Regs. Section 1.704-2(i)(4) and shall be interpreted consistently therewith. (e) Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Members in the proportions they share Net Profits pursuant to Section 5.1(a)(ii). (f) Any Partner Nonrecourse Deductions for any Fiscal Year shall be specially allocated to each Member who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in accordance with Treas. Regs. Section 1.704-2(i)(1). (g) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Treas. Regs. Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of its interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Member in accordance with its interests in the Company in the event that Treas. Regs. Section 1.704- 1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made in the event that Treas. Regs. Section 1.704-1(b)(2)(iv)(m)(4) applies. (h) The allocations set forth in Sections 5.1(b)(ii), 5.2(a), 5.2(b), 5.2(c), 5.2(d), 5.2(e), 5.2(f), and 5.2(g) (the "Regulatory Allocations") are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss or deduction pursuant to this Section 5.2(h). Therefore, notwithstanding any other provision of this Article V (other than the Regulatory Allocations), the Members Committee shall make such offsetting special allocations of Company income, gain, loss or deduction in whatever manner they determine appropriate so that, after such offsetting allocations are made, each Member's Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of the Agreement and all Company items were allocated pursuant to Sections 5.1(a) and 5.1(b). In exercising their discretion under this Section 5.2(h), the Members Committee shall take into account future Regulatory Allocations under Sections 5.2(c) and 5.2(d) that, although not yet made, are likely to offset other Regulatory Allocations previously made under Sections 5.2(e) and 5.2(f). (i) For purposes of determining the Net Profits, Net Losses, or any other items allocable to any period, Net Profits, Net Losses, and any such other items shall be determined on a daily, monthly, or other basis, as determined by the Members Committee using any permissible method under Code Section 706 and the Treasury Regulations thereunder. (j) The Members are aware of the income tax consequences of the allocations made by this Article V and hereby agree to be bound by the provisions of this Article V in reporting their shares of Company income and loss for income tax purposes. (k) Solely for purposes of determining a Member's proportionate share of the "excess nonrecourse liabilities" of the Company within the meaning of the Treas. Regs. Section 1.752-3(a)(3), each Member's interest in the Company's profits shall be such Member's Company Interest. (l) To the extent permitted by Treas. Regs. Section 1.704-2(h)(3), the Members shall endeavor to treat distributions as having been made from the proceeds of a Nonrecourse Liability or a Partner Nonrecourse Debt only to the extent that such distributions would cause or increase an Adjusted Deficit Capital Account for any Member. (m) In accordance with Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for Federal income tax purposes and its initial Gross Asset Value, using the method described in Treas. Reg. Sec. 1.704-3(c). The Gross Asset Value of property other than goodwill initially contributed to capital of the Company shall equal such property's adjusted tax basis for Federal income tax purposes as of January 1, 1996. The Gross Asset Value of goodwill contributed to the capital of the Company by each Member shall equal the excess of the value attributed to such Member's initial Capital Contribution in Section 3.1 of this Agreement (increased by liabilities of the Member assumed by the Company) over the Gross Asset Value of property other than goodwill contributed by the Member. Goodwill shall be recovered by the Company over 10 years using the straight-line method. The tax departments of HSB and TDCC shall integrate the property systems of Radian and DEI and shall calculate the Gross Asset Value of goodwill contributed by the Members within sixty (60) days of the Closing Date. In the event the Gross Asset Value of any Company asset is adjusted pursuant to paragraph (ii) of the definition thereof, subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for Federal income tax purposes and its Gross Asset Value in the manner provided in Treas. Regs. Section 1.704-3(a)(6). Any elections or other decisions relating to such allocations shall be made by the Tax Matters Partner in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 5.2(m) are solely for purposes of Federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member's Capital Account or share of Net Profits, Net Losses, other items, or distributions pursuant to any provision of this Agreement. (n) Gross income attributable to corporations in which the Company owns an interest shall be allocated in the following priority: (i) gross income attributable to dividends received by the Company from its subsidiaries after December 31, 1999 shall be allocated to the Members in proportion to their Company Interests as of December 31, 1999, until the amount of gross income allocated with respect to such dividends from each such subsidiary pursuant to this clause (i) equals the net increase, if any, in the retained earnings and profits (for U.S. tax purposes) of the distributing subsidiary for the four-year period ending December 31, 1999 to the extent such earnings and profits were not included in the Net Profits of the Company for such four-year period; and (ii) all other gross income resulting from any dividends or resulting from the application of Code Section 951 shall be included in Net Profits and allocated pursuant to Section 5.1. (o) For each of the years 1996 and 1997 respectively, if the Net Profits allocated to Radian pursuant to Section 5.1(a) for such year are less than the lesser of Preferred Accounting Earnings for such year or Accounting Earnings for such year, then Radian shall be allocated an amount of gross income so that the net amount of Net Profits, Net Losses and gross income allocated to Radian at least equals the lesser of Preferred Accounting Earnings for such year or Accounting Earnings for such year. (p) DEI shall be allocated an aggregate amount of gross income pursuant to this Section 5.2(p) such that the net amount of Net Profits, Net Losses and gross income allocable to DEI exceeds the amount that would be allocated to it without taking this Section 5.2(p) into account by an amount equal to 40% of the amount by which the Net Profits, Net Losses and gross income allocated to Radian was increased pursuant to Section 5.2(o). The amount allocated pursuant to this Section 5.2(p) shall not exceed 40% of the sum of the following amount calculated for 1996 plus the following amount calculated for 1997: the excess, if any, of (i) the lesser of Preferred Accounting Earnings or Accounting Earnings over (ii) 100% of Net Profits. Such amount shall be allocated to DEI ratably over a five-year period beginning in 1998. V.3 Expenses of the Company. All of the Company expenses shall be billed directly to and paid by the Company. The Company is specifically authorized to make reimbursements to any Member that provides goods, materials or services used for or by the Company provided such are authorized in advance in writing and are in accordance with the Company's annual budget. In no event shall any amount charged to the Company as a reimbursable expense by any Member exceed the amount that the Company would be required to pay to independent parties for comparable goods, materials or services. Reimbursement for expenses shall be made to any Member entitled to such reimbursement regardless of whether any distributions are made to the Members under the provisions of this Article V. V.4 Distributions. (a) Except as provided in Sections 5.6 and 9.6, (i) and except as provided in clauses (ii) and (iii) below, all distributions of cash and/or other Property shall be made to the Members pro rata in proportion to the respective Company Interest of the Members on the record date of the distribution, (ii) and except as provided in clause (iii) below, distributions of cash or other Property, the record date of which is after December 31, 1999, shall continue to be distributed to the Members pro rata in proportion to the respective Company Interest of the Members as of December 31, 1999, until an aggregate amount of cash or other Property has been distributed pursuant to Section 5.4(a)(i), this Section 5.4(a)(ii) and Section 5.6 equal to 80% of the sum of (A) the excess of the Net Profits allocated pursuant to Section 5.1 over the Net Losses allocated pursuant to Section 5.1 and (B) the excess of any items in the nature of income or gain which were specially allocated pursuant to Section 5.2 over any items in the nature of deduction or loss that were allocated pursuant to Section 5.2 (other than allocations solely for tax purposes pursuant to Section 5.2(m)), in the case of (A) and (B), with respect to periods ending before January 1, 2000, and (iii) distributions of cash or other Property, the record date of which is after December 31, 1999, shall be distributed to the Members pro rata in proportion to the respective Company Interest of the Members as of December 31, 1999, until the aggregate amount of cash or other Property distributed pursuant to this clause (iii) equals 80% of the aggregate amount of gross income allocated pursuant to Section 5.2(n)(i) of this Agreement after December 31, 1999 (net of deemed taxes treated as a dividend received under Code Section 78). (b) Except as provided below and in Section 5.5, distributions of Net Cash Flow and Property shall be made whenever such distributions are permitted under the Company's strategic business plan. The Members presently intend to operate the Company to maximize distributions by the Company to the Members, to the extent consistent with prudent operation of the Company, while permitting the Company to retain sufficient capital resources for the rapid growth of the Company in accordance with its strategic business plan; provided, however, that no distribution shall be made if in the sole discretion of the Members Committee such proposed distribution would materially impair the ability of the Company to comply with its strategic business plan or the amount of such distribution is needed for the operations of the Company. (c) All amounts withheld pursuant to the Code or any provisions of state or local tax law from any payment or distribution to the Members from the Company shall be treated as amounts distributed to the relevant Member or Members pursuant to this Section 5.4. (d) Notwithstanding anything to the contrary in this Agreement, no distribution shall be made to a Member if such Member has an Adjusted Deficit Capital Account, or if such distribution would cause such Member to have an Adjusted Deficit Capital Account, but such undistributed amounts shall be distributed to such Members as soon as and to the extent that such distributions can be made without causing such Member to have an Adjusted Deficit Capital Account. V.5 Limitation Upon Distributions. Distributions shall be declared or paid only if, after giving effect to the distribution, the assets of the Company are in excess of all liabilities of the Company, except liabilities to Members on account of their contributions and liabilities for which the recourse of creditors is limited to specified Property of the Company. The fair value of Property that is subject to a liability for which the recourse of creditors is limited shall be included in the assets of the Company only to the extent the fair value of that Property exceeds that liability. Notwithstanding the foregoing, except as provided in Section 5.6, it is the current expectation of the Members that no distribution shall be declared or paid prior to January 1, 1999, and then only if such distribution is in compliance with this Section 5.5. V.6 Distributions to Cover Taxes. The Company shall make the following distributions of cash: (a) by April 15th of each year, the Company shall distribute to each Member cash pursuant to this Section 5.6(a) so that the total amount of cash and/or other Property distributed to such Member pursuant to any provision of this Article 5 other than Section 5.6(e) since January 1 of such year at least equals the product of (i) such Member's Company Interest for such year, multiplied by (ii) the highest marginal federal income tax rate effective for corporations as of January 1 of such year, multiplied by (iii) the total projected federal taxable income to be reported by the Company with respect to such year, multiplied by (iv) 25%; provided, that this Section 5.6(a) shall not apply to DEI for the years 1996 or 1997. (b) by June 15th of each year, the Company shall distribute to each Member cash pursuant to this Section 5.6(b) so that the total amount of cash and/or other Property distributed to such Member pursuant to any provision of this Article 5 other than Section 5.6(e) since January 1 of such year at least equals the product of (i) such Member's Company Interest for such year, multiplied by (ii) the highest marginal federal income tax rate effective for corporations as of January 1 of such year, multiplied by (iii) the total projected federal taxable income to be reported by the Company with respect to such year, multiplied by (iv) 50%; provided, that this Section 5.6(b) shall not apply to DEI for the years 1996 or 1997. (c) by September 15th of each year, the Company shall distribute to each Member cash pursuant to this Section 5.6(c) so that the total amount of cash and/or other Property distributed to such Member pursuant to any provision of this Article 5 other than Section 5.6(e) since January 1 of such year at least equals the product of (i) such Member's Company Interest for such year, multiplied by (ii) the highest marginal federal income tax rate effective for corporations as of January 1 of such year, multiplied by (iii) the total projected federal taxable income to be reported by the Company with respect to such year, multiplied by (iv) 75%; provided, that this Section 5.6(c) shall not apply to DEI for the years 1996 or 1997. (d) by December 15th of each year, the Company shall distribute to each Member cash pursuant to this Section 5.6(d) so that the total amount of cash and/or other Property distributed to such Member pursuant to any provision of this Article 5 other than Section 5.6(e) since January 1 of such year at least equals the product of (i) such Member's Company Interest for such year, multiplied by (ii) the highest marginal federal income tax rate effective for corporations as of January 1 of such year, multiplied by (iii) the total projected federal income tax to be reported by the Company with respect to such year; provided, that this Section 5.6(d) shall not apply to DEI for the years 1996 or 1997. (e) Each year, within ten (10) days after the time the Internal Revenue Service Form 1065 Schedule K-1 is delivered to the Members, the Company shall distribute cash to each Member pursuant to this Section 5.6(e) in an amount equal to any excess of (i) the product of (A) the taxable income allocated to such Member as shown on the Internal Revenue Service Form 1065 Schedule K-1 delivered to such Member with respect to the previous year, multiplied by (B) the highest marginal federal income tax rate effective for corporations on income earned in the previous year (blended if necessary to reflect any change in the highest marginal rate), over (ii) the total amount of cash and/or other Property distributed to such Member pursuant to any provision of this Article 5 other than Section 5.6(e) during the previous year. ARTICLE VI MANAGEMENT RIGHTS, DUTIES AND POWERS OF THE REPRESENTATIVES VI.1 Management. (a) It shall be the duty and responsibility of the Members Committee solely and exclusively to manage and control the business and affairs of the Company, and, subject to Section 6.10, all decisions regarding the business and affairs of the Company shall be made by the Members Committee. Except as provided in this Agreement, each Representative shall have all the rights and powers of a Representative as provided in the Act and as otherwise provided by law, and any action taken by a Representative in the manner provided for in this Agreement shall constitute the act of and serve to bind the Company. The Members Committee may delegate its authorities and responsibi- lities for management of the business affairs of the Company to third parties, but such delegation shall not relieve the Members Committee of any of its obligations under this Agreement. In furtherance of this right of delegation, the Members Committee may appoint and authorize officers of the Company to act on behalf of the Company with such power and authority as the Members Committee may delegate in writing to such Member. The initial officers of the Company, and their duties, are set forth on Schedule 6.1 to this Agreement. Subject to Section 6.10, the Members Committee is hereby granted (i) the right, power and authority to do on behalf of the Company all things which, in its judgment, are necessary, proper or desirable to carry out the aforementioned duties and responsibilities, including but not limited to the right, power and authority from time to time to incur Company expenses; to employ and dismiss from employment any and all employees, agents, independent contractors, attorneys and accountants; to establish employee benefits plans; to enter into leases for real or personal property; to purchase equipment; and to manage all other aspects of running the business of the Company all in accordance with any authorization policy adopted by the Members Committee; and (ii) such other rights, powers and authorities of a manager as provided in the Act and as otherwise provided by law. (a) Except as set forth in Section 6.10, the Members Committee shall retain the decision-making authority for the Company. Notwithstanding the foregoing, it is the express intention of the Members that the Members Committee manage the affairs of the Company so as to achieve, to the extent consistent with prudent operation of the Company, the Preferred Accounting Earnings for each of Fiscal Years 1996 and 1997. VI.2 No Management by Members. Except as otherwise provided in this Agreement, no Member shall take part in the day- to-day management, or the operation or control of the business and affairs of the Company. Except as expressly delegated by the Members Committee, no Member shall be an agent of the Company or have any right, power or authority to transact any business in the name of the Company or to act for or on behalf of the Company. VI.3 Number, Qualification and Tenure of Representatives. The Members Committee shall have as few as three and as many as eleven members, as established from time to time by resolution of the Members Committee. Initially the Members Committee shall consist of seven (7) members, four (4) of whom shall be DEI Representatives and three (3) of whom shall be Radian Representatives. If the Members Committee shall increase or decrease the number of members on the Members Committee, then the composition of the Members Committee of DEI and Radian Representatives shall as closely as possible reflect the Member's respective Company Interest at that time; provided, however, that, at all times, there shall be a majority of DEI Representatives on the Members Committee. All DEI Representatives on the Members Committee shall be employees of DEI or one or more of its Affiliates, and all Radian Representatives on the Members Committee shall be employees of Radian or its Affiliates. A DEI Representative shall serve as Chair of the Members Committee. DEI and Radian shall, within ten (10) days of the date of this Agreement, notify each other in writing of the identity of the DEI Representatives and the Radian Representatives, respectively. DEI, within ten (10) days of the date of this Agreement, shall notify Radian in writing as to which of its DEI Representatives is to initially serve as Chair of the Members Committee. Any Representative shall continue to serve in such capacity until such Member shall have notified the other Members in writing of his or her replacement. DEI and Radian may, by written notice to the other, designate a person to serve as an alternate for each DEI Representative and each Radian Representative, respectively (each alternate to a DEI Representa- tive being referred to in this Agreement as a "DEI Alternate" and, collectively, as the "DEI Alternates"; each alternate to a Radian Representative being referred to in this Agreement as a "Radian Alternate" and, collectively, as the "Radian Alternates"; and the DEI Alternates and the Radian Alternates being collectively referred to in this Agreement as the "Alternates"), and such DEI Alternate or Radian Alternate, as the case may be, shall be entitled, in the absence of such DEI Representative or Radian Representative, to attend meetings, to have such Alternate's presence counted for purposes of establishing a quorum and to vote on behalf of such DEI Representative or Radian Representative at any meeting of the Members Committee. Each Member, in dealing with DEI Representatives or Alternates or the Radian Representatives or Alternates, as the case may be, shall be entitled to rely conclusively upon the power and authority of such Representatives or Alternates to bind DEI or Radian, as the case may be, with respect to all matters unless and until it receives notice to the contrary in writing from DEI or Radian, as the case may be. To the fullest extent permitted by law, each Representative and Alternate shall be deemed the agent of the Member which appointed such Person a Representative or Alternate, and such Representative or Alternate shall not be deemed an agent or a sub-agent of the Company or the other Members and shall have no duty (fiduciary or otherwise) to the Company or the other Members. Each Member, by execution of this Agreement, agrees to, consents to, and acknowledges the delegation of powers and authority to such Representatives and Alternates, and the actions and decisions of such Representatives and Alternates within the scope of their respective authority as provided in this Agreement. VI.4 Meetings. The Members Committee shall hold regular meetings at least once during each Fiscal Year on such date or dates as specified by the Members Committee. Other regular meetings shall be held at such time and at such place as shall from time to time be determined by the Members Committee. Meetings of the Members Committee may be held by conference telephone or other means of communication by means of which all participants can hear each other. Participation in such meeting in such manner shall constitute attendance and presence in person at the meeting of the person or persons so participating. No notice of the regular annual meeting need be given. Special meetings of the Members Committee may be called by the Chairman of the Members Committee or by any Member on at least two (2) business days' notice to the other Member. Attendance by any DEI Representative or Radian Representative or any DEI Alternate or Radian Alternate at any meeting of the Members Committee shall constitute an effective waiver of any required prior notice to DEI or Radian, as the case may be, of such meeting, unless such attendee declares at the onset of such meeting that such attendee's attendance at such meeting is solely for the purpose of contesting the deficiency of any required notice for the meeting. The Chairman of the Members Committee shall, (i) with reasonable advance notice (which in the case of regular meetings shall not be less than five (5) days), prepare and distribute an agenda for each meeting of the Members Committee, (ii) organize and conduct such meeting and (iii) prepare and distribute minutes of such meeting. Any Member may propose in advance topics for the agenda or, subject to Section 6.5, raise topics which are not on the agenda for such meeting. Each Representative or Alternate of each of DEI and Radian may bring one or more other advisors to any meeting; provided, that such advisors shall not have the right to vote on any matter brought before the Members Committee; and provided further, that the Representatives or Alternates of either of DEI or Radian shall have the right to call executive sessions of the Members Committee and to exclude any Person not a Representative or Alternate from such executive session. VI.5 Quorum and Voting. Meetings of the Members Committee may only be held when a quorum is present (whether present in person or by telephone or other means of telecommunication). A quorum of the Members Committee shall be comprised of a majority of Representatives or Alternates (or any combination thereof in accordance with Section 6.4) of the full Members Committee as constituted pursuant to Section 6.3 of this Agreement of which at least a majority of such majority must be DEI Representatives or DEI Alternates; provided, however, that if a Radian Representative or Radian Alternate is not present at any meeting of the Members Committee then, at such meeting, only such business as set forth on the agenda for such meeting may be considered and voted upon. The affirmative vote of a majority of the Members Committee at a meeting at which a quorum is present being entitled to vote at any such meeting must be obtained in connection with the decision of any matter being considered by the Members Committee. If a quorum is not present, the Representatives and Alternates present may adjourn the meeting without notice, other than an announcement at the meeting, until a quorum shall be present. VI.6 Committees. The Members Committee may appoint from among its members an Executive Committee, an Audit Committee, a Compensation Committee and other committees, composed of two or more Representatives (one of which must be a Radian Representative or Radian Alternate), to serve at the pleasure of the Members Committee. Except as expressly limited by applicable law or this Agreement, each such committee shall exercise such powers and authority as the Members Committee may determine and specify in a writing designating such committee or any amendment thereto. Unless otherwise specified in the writing designating the committee, a majority of the members of such committee may elect its Chair, fix its rules of procedure, fix the time and place of meetings and specify what notice of meetings, if any, shall be given. Written records of the proceedings of any committee shall be maintained and furnished to the Members Committee. VI.7 Action Without Meeting. Any action required or permitted to be taken at a meeting of the Members Committee, or of any committee thereof, may be taken without a meeting if all members of the Members Committee, or committee thereof, consent in writing to such action. VI.8 Compensation. The Members Committee shall not receive any compensation, but shall be reimbursed by the Company for reasonable expenses associated with attendance at meetings. VI.9 Rules of Procedure. The Members Committee may from time to time adopt detailed rules and procedures not inconsistent with this Agreement for the management of the business of the Company. VI.10 Certain Transactions. (a) Except as otherwise set forth in this Agreement, the Company shall not engage in any of the following actions without the prior affirmative vote of a majority of the Members Committee present at a meeting, which majority shall include at least one Radian Representative or Radian Alternate: (i) the dissolution or winding-up of the Company; provided, however, that nothing in this Section 6.10(a)(i) shall be construed to conflict with the requirement in Section 9.1(a) of this Agreement that a Bankruptcy of any Member shall cause the dissolution of the Company; (ii) the sale by the Company of any Company Interests or derivative rights relating to such Company Interests; (iii) changing the nature of the business conducted by the Company or conducting any activity that is outside the business purposes of the Company, as set forth in Section 2.3, or otherwise in contravention of this Agreement; (iv) amending this Agreement or the Certificate of Formation of the Company; (v) prior to January 1, 1999, any change in the accounting policies or procedures of the Company set forth on Schedule 6.10(a)(v), except for any such changes in accounting policies and procedures required by reason of a concurrent change in GAAP, government cost accounting standards or other applicable governmental requirements; (vi) (A) the amendment or modification of the transfer pricing provision in any contract between the Company and TDCC or any of TDCC's Affiliates as of the Closing Date or (B) the entry into any contract between the Company or any Subsidiary of the Company, on the one hand, and any Member or any of its Affiliates, on the other hand, except as a result of a competitive bidding process or on terms substantially similar to, or more favorable to the Company or such Subsidiary than, those that could be entered into by the Company in a similar transaction with unaffiliated third parties; (vii) amending the Company's policy regarding earnings distributions to Members or the declaration of dividends; (viii) the purchase or other acquisition of another business; provided, however, that such consent shall not be required if the aggregate payments involved in such transaction and in all such transactions during the previous 12-month period do not require an additional capital contribution by Radian in excess of $10 million; or (ix) sell all, or substantially all, of the Company's assets or enter into any other arrangement in which the Company's business is transferred to a third party. In connection with any of the proposed actions set forth in this Section 6.10(a), the officers of the Company shall keep the Members Committee informed of the Company's business activities and provide, or cause to be provided, to the Members Committee such information as may be reasonably necessary for the Members Committee to make a prudent judgment to approve or disapprove the proposed action. (b) The Members Committee shall keep the Members informed of the Company's business activities. In addition to providing the periodic reports required by Section 7.1 of this Agreement, the Members Committee shall promptly advise, or cause to be advised, the Members of any material developments in the Company's business, including, without limitation, prior notice of the terms and conditions of proposed significant investments, acquisitions or dispositions, or other significant transactions involving the Company. (c) Except as otherwise provided hereunder or required under the Act, whenever it is stated in this Agreement, including without limitation, this Section 6.10, that an action of the Company or of the Members Committee on behalf of the Company or any other action under this Agreement requires the consent or agreement of or waiver by the Members, such action shall require the consent or agreement of each Member. VI.11 Right to Rely on Authority of the Representatives. Any action taken by the Representatives in their capacity as such, acting on behalf of the Company pursuant to the authority conferred on them in this Agreement, shall be binding on the Company. In no event shall any Person dealing with the Representatives with respect to the conduct of the affairs of the Company be obligated to ascertain that the terms of this Agreement have been complied with, or be obligated to inquire into the necessity or expediency of any act or action of the Representatives. Every contract, agreement, promissory note or other instrument or document executed by a Representative with respect to any property of the Company or the conduct of its affairs, in his/her capacity as a Representative acting on behalf of the Company pursuant to the authority conferred on him/her in this Agreement, shall be conclusive evidence in favor of any and every Person relying thereon or claiming under this Agreement that (i) at the time of the execution and/or delivery of such instrument or document, this Agreement was in full force and effect, (ii) such instrument or document was duly executed in accordance with the terms and provisions of this Agreement and is binding upon the Company, and (iii) the Representative was duly authorized and empowered to execute and deliver any and every such instrument or document for and on behalf of the Company. Nothing set forth in this Section 6.11 shall be construed as relieving the Representatives from liability to the Company or the Members for breach of any of the provisions of this Agreement, or for acting or failing to act in such manner as constitutes an exception from indemnification provisions contained in Section 6.13. VI.12 Responsibility of Members and Representatives. No Member or Representative (or their Affiliates) shall have any fiduciary or other duty or responsibility to the Company, or to any other Member or Representative (or their Affiliates), except as expressly provided in this Agreement or for acts or omissions that constitute willful misconduct or constitute an intentional criminal act. No Representative or Alternate shall be liable to the Company or any Member or other Representative or Alternate (or their Affiliates) because of a decision by the Members Committee to have the Company engage in, or not engage in, a particular business, activity or project. VI.13 Indemnification. (a) The Company shall indemnify, to the full extent permitted by the laws of the State of Delaware, any person who was or is a defendant or is threatened to be made a defendant to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person (i) is or was a Member, Representative, Alternate, officer, employee or agent of the Company, or (ii) is or was a Member, Representative, Alternate, officer, employee or agent of the Company and is or was serving at the request of the Company as a Member, Representative, Alternate, director, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that the commission or omission which formed the basis of such action, suit or proceeding does not constitute gross negligence or willful misconduct or constitute an intentional criminal act on the part of such person. Any repeal, amendment or modification of this Section 6.13 shall not affect any rights or obligations then existing between the Company and any then incumbent or former Member, Representative, Alternate, officer, employee or agent with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon such state of facts. (a) Expenses incurred by any current or former Member, Representative, Alternate, officer, employee or agent in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding, upon receipt of an undertaking by or on behalf of the Member, Representative, Alternate, officer, employee or agent to repay such amount if it ultimately shall be determined that the Member, Representative, Alternate, officer, employee or agent is not entitled to be indemnified by the Company as authorized in this Section 6.13. (b) The indemnification and advancement of expenses mandated or permitted by, or granted pursuant to, this Section 6.13 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any agreement, contract, vote of Members or disinterested Representatives (or Alternates) or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise both as to action by the person in an official capacity and as to action in another capacity while holding such office. The provisions of this Article VI shall not be deemed to preclude the indemnification of any person who is not specified in subsections (a) and (b) above, but whom the Company has the power or obligation to indemnify under the laws of the State of Delaware or otherwise. (c) The Company may purchase and maintain insurance on behalf of any person who is or was a Member, Representative, Alternate, officer, employee or agent of the Company, or is or was serving at the request of the Company as a Member, Representative, Alternate, director, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise against any liability asserted against and incurred by such person in any such capacity, or arising out of the person's status as such, whether or not the Company would have the power or the obligation to indemnify such person of the Company against such liability under the provisions of this Section 6.13. (d) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 6.13 shall continue as to a person who has ceased to be a Member, Representative, Alternate, officer, employee or agent of the Company and shall inure to the benefit of the heirs, executors and administrators of such person. VI.14 Designation of Tax Matters Partner; Expenses Regarding Tax Matters; Filing of Tax Returns. (a) DEI is hereby designated as the "Tax Matters Partner" under Section 6231(a)(7) of the Code. During any Company income tax audit or other income tax controversy with any governmental agency, the Tax Matters Partner shall keep the Members informed of all material facts and developments on a timely basis, and shall consult with the Members at their request. The Tax Matters Partner shall not be authorized to enter into a settlement which binds the Members or the Company without the advance written consent of the Member, except for settlements for de minimis amounts (e.g., not exceeding $100,000 in the aggregate). The Tax Matters Partner shall take all actions necessary to cause each qualifying Member to be a "notice partner" within the meaning of Sections 6223(a) and 6231(a)(8) of the Code. (b) All reasonable expenses incurred by the Tax Matters Partner with respect to any tax matter which does or may affect the Company, or any Member by reason thereof, including but not limited to expenses incurred by the Tax Matters Partner acting in its capacity as Tax Matters Partner in connection with Company- level administrative or judicial tax proceedings, shall be paid for out of Company assets. If the Members are permitted by the Company or permitted under the Code to participate in Company- level administrative or judicial tax proceedings, the Company shall be responsible for all expenses incurred by them in connection with such participation. The cost of any adjustments to the Members and the cost of any resulting audits or adjust- ments of the Members' tax returns will be borne solely by the Members and the cost of any adjustments to the Company and the cost of any resulting audits or adjustments of the Company's tax returns will be borne solely by the Company. (c) The Tax Matters Partner shall prepare and timely file all tax returns of the Company. The Company shall reimburse the Tax Matters Partner for the reasonable costs of preparing and filing the tax returns of the Company. ARTICLE VII BOOKS AND RECORDS; REPORTS TO MEMBERS; CAPITAL ACCOUNT MAINTENANCE VII.1 Books; Reports. The Company shall maintain or cause to be maintained separate, full and accurate books and records of the Company, and the Members or any authorized representative of the Members will have the right to inspect, examine and copy the same, and to meet with employees of the Company responsible for preparing the same, at reasonable times during business hours and upon reasonable notice. In addition, the Members Committee shall provide or shall cause to be provided to each Member, its representatives and an independent accounting firm (if any) designated by the Member, reasonable access to all such books and records, during which the Member or such accounting firm may conduct an audit of the Company; provided, however, that any such audit shall be conducted at the sole expense of the Member. Within eight (8) business days after the last day of each fiscal quarter (or at an earlier date if requested by a Member), the Company will prepare and deliver to the Members financial statements in forms reasonably requested by each Member. The Members Committee shall also prepare and distribute, or cause to be prepared and distributed, to each Member within sixty (60) days after the last day of each fiscal quarter, or as soon thereafter as is practicable, a report which includes (i) a statement showing results of operations and changes in net assets prepared on an accrual basis, for such fiscal quarter, (ii) a statement showing Net Cash Flow for such fiscal quarter, (iii) a statement showing computation of related party fees and Member distributions, and (iv) a statement describing any event of default and any known event which, with the giving of notice or lapse of time or both, would constitute an event of default under any indebtedness of the Company. The Members Committee shall also prepare and distribute, or cause to be prepared and dis- tributed, to each Member within forty-five (45) days after the end of each fiscal year, or as soon thereafter as is practicable, a report with respect to the Company which includes the items set forth in (i), (ii) and (iii) of the foregoing sentence with respect to such fiscal year. Such annual report shall be audited by, and accompanied by an auditor's report containing the opinion of, the Company's independent public accountants (which opinion, if qualified, shall state the basis for such qualification). The Members Committee shall also use its reasonable best efforts to cause the auditors to provide an annual earnings clearance within fifteen (15) days after the end of each fiscal year. The costs of any audits or earnings clearances shall be an expense of the Company. The Members Committee shall also engage, or cause to be engaged, independent public accountants to report on the Company's consolidated financial statements in accordance with GAAP. Initially, the auditors of the Company shall be Deloitte & Touche LLP. VII.2 Accounting and Fiscal Year. The Company books and records shall be kept on the accrual basis. The Company's Fiscal Year shall be the calendar year. The books will be closed at the end of each Fiscal Year. VII.3 Maintenance of Capital Accounts. The Members Committee shall cause the Capital Accounts of the Members to be determined and maintained throughout the full term of the Company in accordance with Section 704(b) of the Code. VII.4 Bank Accounts. All cash funds and securities of the Company shall be deposited in money market, checking and savings accounts, certificates of deposit, bankers' acceptances, treasury bills or notes, or other Federal government debt securities or commercial paper, all of which shall be kept in the name of the Company in such Company custody account or accounts as shall be authorized by the Members Committee or such officers of the Company as may be delegated such authority from time to time by the Members Committee. Company funds shall be used only for the benefit of the Company and shall not be commingled with the funds of any other Person. VII.5 Insurance. The Company shall maintain insurance of such types and for such amounts as are customary for Persons conducting businesses similar to that conducted by the Company. Any insurance maintained by the Company shall name the Members and Parents as an additional named insureds (and shall identify the Members' status as Members of the Company) and shall provide at least thirty (30) days' prior notice of change (other than an increase in coverage), cancellation or non-renewal to the Members. ARTICLE VIII TRANSFER OF COMPANY INTEREST; RADIAN OPTION TO SELL; LIENS VIII.1 Transfer of Company Interest Generally. No Member may assign, transfer or otherwise dispose of all or any portion of its Company Interest except in accordance with the terms of this Article VIII. Any attempt by any Member to assign, transfer or otherwise dispose of all or any portion of its Company Interest other than in accordance with this Article VIII shall be null, void ab initio and of no force and effect. VIII.2 Transfers of Company Interests. Except as otherwise consented to in writing by the other Member (which consent may be granted or withheld in the sole and absolute discretion of any Member), no Member may sell, transfer or otherwise dispose of (collectively a "Transfer") all or any portion of its Company Interest. In addition to such consent, no Member may make such a Transfer unless (i) such a Transfer is pursuant to a written agreement pursuant to which the transferee agrees to be bound by all of the terms of this Agreement as if it were originally a party to this Agreement, (ii) such a Transfer does not cause a termination of the Company for Federal income tax purposes and (iii) such a Transfer complies with applicable Federal and state securities laws. VIII.3 Radian Option to Sell. From and including December 31, 1997 through December 31, 1998, Radian, at its option, upon written notice of not less than thirty (30) days, may exercise the sell option set forth in this Section 8.3. If Radian gives the notice referred to in the preceding sentence, Radian shall have the right to require DEI to purchase, and the obligation to sell all, but not less than all, of Radian's Company Interest at a price equal to $131,327,406 plus (i) the Earnings Shortfall, (ii) the amount of any then outstanding Ordinary Loans or Member Loans made by Radian or any of its Affiliates (plus interest thereon), and (iii) any amounts then outstanding and owed by the Company to HSB under the loan agreement dated as of January 1, 1996 between HSB and Radian (the "Loan Agreement") (it being understood that Radian's rights and obligations under the Loan Agreement will be assigned at the Closing to the Company). The "Earnings Shortfall" shall equal the sum of the Preferred Accounting Earnings for Fiscal Year 1996 and Fiscal Year 1997 minus the sum of 40% of the Accounting Earnings of the Company (which for purposes of this Agreement shall never be less than zero) for Fiscal Year 1996 and Fiscal Year 1997, respectively; provided, however, that the Earnings Shortfall shall not exceed $5,000,000 in the aggregate. If DEI and Radian cannot agree upon the Accounting Earnings of the Company within sixty (60) days after the notice referred to in the first sentence of this Section 8.3, either DEI or Radian may, by notice to the other, invoke the Appraisal Procedure. If the Appraisal Procedure is required to determine the Accounting Earnings, the fees and expenses of such Appraisal Procedure shall be shared equally by DEI and Radian. The closing of such sale shall take place upon the date that is within fifteen (15) days after the later to occur of (i) the determination of the Accounting Earnings in accordance with this Section 8.3 and (ii) compliance with any applicable legal requirements; provided, however, that if such sale is not in compliance with any applicable legal requirements, then DEI and Radian shall equitably adjust the arrangements set forth in this Section 8.3 in light of what is legally possible and in compliance with any applicable legal requirements in order to effectuate the intent of the parties. Upon the closing of such sale, DEI shall assume all obligations under any guarantee provided by Radian or its Affiliates pursuant to Section 3.5 of this Agreement in a written agreement mutually acceptable to DEI and Radian, and the Company's obligations under the Loan Agreement and obligation to pay Radian any amounts in connection with any Ordinary Loans or Member Loans shall be cancelled. Notwithstanding any other provision of this Agreement, DEI may assign any of its rights and obligations under this Section 8.3 to TDCC or any of TDCC's Affiliates and Radian may assign any of its rights and obligations under this Section 8.3 to HSB or any of HSB's Affiliates. VIII.4 Liens. No Member may, except with the consent of the other Member (which consent may be granted or withheld in such Member's sole discretion), create or permit to exist any Lien on its Company Interest or any portion thereof (except (i) Liens for current taxes not delinquent or taxes being contested in good faith and by appropriate proceedings or (ii) Liens arising in the ordinary course of business for sums not due or sums being contested in good faith and by appropriate proceedings). Any attempt by any Member to create or permit to exist any Lien (other than the Liens described in the second parenthetical in the immediately preceding sentence) on its Company Interest or any portion thereof shall be null, void ab initio and of no force and effect. Notwithstanding anything to the contrary contained in this Agreement, if any Person obtains a Lien on the Company Interest, or portion thereof, of any Member and forecloses on such Lien, (i) the Company shall continue, (ii) the Person foreclosing on the Lien shall succeed to the economic interests of the Company Interest, or portion thereof, upon which it foreclosed but not the voting or other interests which comprise such Company Interest, or portion thereof, (iii) the Person foreclosing on such Lien shall not be admitted as a "Member" without the approval of the Members Committee and the consent of the other Members (which consent may be granted or withheld in the sole and absolute discretion of each such Member), and (iv) any sale or other disposition of the Company Interest, or portion thereof, upon which such Person foreclosed shall be subject to the terms of Article VIII of this Agreement. ARTICLE IX DISSOLUTION AND WINDING-UP IX.1 Dissolution. The Company shall be dissolved upon the first to occur of the following events (each, a "Dissolution Event"): (a) the Bankruptcy of any Member; (b) the election by the Members to dissolve the Company; (c) the occurrence of any event that makes it unlawful for the business of the Company to be carried on or for the Members to carry it on as a limited liability company; (d) the entry of a decree of judicial dissolution; or (e) subject to Sections 9.8 and 9.9, the occurrence of any other event that, absent an agreement to the contrary, causes a dissolution of the Company under the Act; provided that, except as provided in the Contribution Agreement, if a dissolution of the Company is caused by the Bankruptcy of any Member (the "Bankrupt Member"), then DEI, if it is not the Bankrupt Member or Radian, if it is not the Bankrupt Member (in either case, the "Non-Bankrupt Member") may elect to, upon notice to the Bankrupt Member, purchase (or have an Affiliate purchase) all, but not less than all, of the Bankrupt Member's Company Interest at the Purchase Price. The "Purchase Price" to be paid to the Bankrupt Member (by the Non-Bankrupt Member) in any sale and purchase of the Bankrupt Member's Company Interest pursuant to this Section 9.1 shall be (x) 50% of what the entire Company could be sold for multiplied by the Bankrupt Member's Company Interest, determined (unless otherwise agreed) in accordance with the Appraisal Procedure (which Appraisal Procedure shall be at the expense of the Bankrupt Member), reduced by (y) the amount of any actual losses, costs, fees, expenses or damages suffered by the Company, the Non-Bankrupt Member or any of its Affiliates as a result of such dissolution, and shall be payable to the Bankrupt Member in five equal annual installments, without interest, commencing on the date of the transfer of the Company Interest of the Bankrupt Member (which shall be the tenth (10th) business day following the determination of the Purchase Price); provided, however, that if Radian is the Bankrupt Member and if DEI elects to purchase (or have an Affiliate purchase) all of Radian's Company Interest on or prior to December 31, 1998, then the fair market value of Radian's Company Interest for purposes of (x) above shall be equal to the amount set forth in Section 8.3 of this Agreement as if Radian had exercised its option to sell; provided further, however, that such fair market value (prior to the adjustment set forth below) shall be discounted at a rate of 10% per year or portion thereof if such purchase shall occur prior to December 31, 1997. In any winding up pursuant to Section 9.2 of this Agreement, the amount otherwise distributable to the Bankrupt Member pursuant to the following provisions of this Article IX shall be reduced by the amount of any actual losses, costs, fees, expenses or damages suffered by the Company or the Non-Bankrupt Member or any of its Affiliates as a result of such dissolution. Notwithstanding the foregoing, if the enforceability of such Non-Bankrupt Member's right to purchase the Bankrupt Member's Company Interest as set forth above is in any way limited by general equitable principles, Bankruptcy, moratorium, or other laws affecting creditors' rights generally then, upon notice to the Bankrupt Member and the Company, the Non-Bankrupt Member or any of its Affiliates shall have the right to purchase from the Company all, but not less than all, of the assets and liabilities of the Company at the fair market value therefor. If DEI and Radian cannot agree upon such fair market value within sixty (60) days after the notice to purchase all the assets and liabilities of the Company is delivered, either DEI or Radian may, by notice to the other, invoke the Appraisal Procedure. If the Appraisal Procedure is required to determine the fair market value of all the assets and liabilities of the Company, the fees and expenses of such Appraisal Procedure shall be borne by the Bankrupt Member. The closing of such sale shall take place upon the date that is within thirty (30) days after such fair market value is determined in accordance with this Section 9.1. IX.2 Winding-Up. Upon dissolution of the Company, and if the Non-Bankrupt Member has not made any election pursuant to Section 9.1, the Member with the largest Company Interest or, if a dissolution of the Company is caused by the Bankruptcy of any Member, the Non-Bankrupt Member shall wind up the affairs of the Company in accordance with the Act and, to the extent permitted by applicable law, shall settle accounts between the Members as specified in this Article IX. The Member charged with winding up the affairs of the Company and settling accounts among the Members under this Agreement shall be referred to as the "Liquidating Member". IX.3 Accounting on Dissolution. If the Company is not continued in accordance with the terms of this Agreement following a dissolution, then on the date (the "Accounting Date") which is four (4) months following the date of dissolution, a proper accounting shall be made of the Company assets, liabilities and operations, from the date of the last previous accounting to the Accounting Date. Any items of income, gain, credit, loss, expense and other deductions which are realized subsequent to the date of the last previous accounting to the Accounting Date shall be allocated in accordance with Article V and proper adjustments shall be made to the Capital Account of each Member. IX.4 Accounting; Allocations of Residual Net Profits and Residual Net Loss After Dissolutions. (a) Except as provided in Section 9.4(c), any items of gain or loss that are realized from Company operations or from sales of Company assets subsequent to the Accounting Date and before the date of liquidation shall be allocated as provided in Article V. (b) Except as provided in Section 9.4(c) and in addition to the adjustments to the Member's Capital Accounts described above, if any of the Company's assets are to be distributed in kind rather than sold, the fair market value of such assets shall be determined by the Members and a simulated aggregate gain (if any) or loss (if any) for those assets (based upon the difference between such fair market value and the Gross Asset Value of such assets immediately before such revaluation) shall be allocated to the Members' Capital Accounts as that simulated aggregate gain (or loss) would have been allocated under Article V if such assets had been sold for a cash price equal to each asset's fair market value on the Accounting Date. If DEI and Radian cannot agree upon such fair market value within sixty (60) days after the Accounting Date, either DEI or Radian may, by notice to the other, invoke the Appraisal Procedure. If the Appraisal Procedure is required to determine the fair market value of such assets, the fees and expenses of such Appraisal Procedure shall be shared equally by DEI and Radian. (c) Prior to the fourth (4th) anniversary of the Closing, loss from the sale or deemed sale of assets in conjunction with a dissolution pursuant to this Agreement shall be specially allocated 100% to DEI; provided, however, that the Losses specially allocated pursuant to this Section 9.4(c) shall not exceed the Stairstep Loss Cap calculated as of the date of the sale or deemed sale giving rise to the Loss. IX.5 Conversion of Assets to Cash. (a) If the Company Interest of the Bankrupt Member is not purchased in accordance with the terms of this Agreement, then commencing with the date that is four (4) months after the date of dissolution, unless arrangements satisfactory to all Members are otherwise made, sufficient assets of the Company will be converted into cash to permit the Company to pay all its liabilities other than long-term debts which (i) are secured by Company assets from which the projected net income is sufficient to pay installments of principal and interest on such debts as they become due and (ii) contain terms specifying that neither the dissolution of the Company nor the distribution of such property that is subject to and secured by such debts constitutes a default or causes the acceleration of the maturity of such indebtedness ("Approved Debts"). (b) Notwithstanding the provisions of Sections 9.6 and 9.7 regarding the method and timing of the liquidation of the assets of the Company, but subject to the order of priorities set forth in this Agreement, if on commencement of the winding up process in accordance with Section 9.2, the Members determine that an immediate sale of part or all of the Company's assets would be impractical or would cause undue loss to the Members, the Members may defer for a reasonable time the liquidation of any assets except those necessary to satisfy the liabilities of the Company. (c) In the event that Company assets are distributed in kind pursuant to Section 9.4(b), the Members shall be consulted to determine the most tax-efficient manner to make such distribution, consistent with the liquidation priorities of Section 9.6. IX.6 Distributions in Liquidation. As soon as the actions required by Sections 9.3, 9.4 and 9.5 have been completed, the Liquidating Member shall cause the cash and assets of the Company to be distributed in the following order: (a) To creditors of the Company (other than Members) in payment of all liabilities of the Company (other than Approved Debts) in the order of priority as provided by law. If any liability is contingent or uncertain in amount, a reserve equal to the maximum amount to which the Company could reasonably be held liable will be established. Upon the payment or other discharge of such liability, the amount remaining in such reserve not needed, if any, will be distributed in accordance with the remaining provisions of this Section 9.6. (b) To the Members in payment of all Member Loans and any interest thereon in accordance with the amount owing to each Member. (c) To the Members in payment of all loans other than Member Loans (including, without limitation, any Ordinary Loans) and any interest thereon in accordance with the amount owing to each Member. (d) To each Member in accordance with the positive balance in its Capital Account, as set forth in Section 9.7. (e) Notwithstanding the foregoing provisions of this Section 9.6 and the provisions of Article V, any distribution which would be payable to a Member whose actions in violation of this Agreement caused the dissolution of the Company shall be reduced by the amount of losses, costs, fees, expenses and damages suffered by the Company or any Member or its Affiliates (other than the Member whose actions caused a dissolution) as a result of such dissolution, and a corresponding allocation of Net Losses or gross deductions shall be made to such Member. IX.7 Compliance with Treasury Regulations. In the event that the Company or any Member's Company Interest is "liquidated" within the meaning of Treasury Regulation Section 1.704- 1(b)(2)(ii)(g), liquidating distributions shall be made, pursuant to this Agreement, in accordance with the Members' positive Capital Account balances, as required by Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2), by the end of the taxable year or, if later, within ninety (90) days after the date of such liquidation. In determining any Member's Capital Account balance pursuant to this Section 9.7, any item of gain, loss, deduction, and credit that has not previously been allocated pursuant to Article V shall be so allocated. IX.8 Section 708 Termination. Notwithstanding any other provision of this Article IX, in the event that the Company is liquidated within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations, but no Dissolution Event has occurred, the assets of the Company shall not be liquidated, the Company's liabilities shall not be paid or discharged, and the Company's affairs shall not be wound up. IX.9 Continuation of the Company. Unless required by applicable law, no sale, transfer, assignment or other disposition by either Member of all or any part of its Company Interest in accordance with the terms of this Agreement shall cause a dissolution of the Company, and, if such a dissolution is required under applicable law, immediately upon such sale, transfer, assignment or other disposition by either Member, the Company shall be reconstituted as a limited liability company, governed by this Agreement, among the transferee, purchaser or assignee and the remaining Member or Members; provided, however, that nothing in this Section 9.9 shall be construed to conflict with the requirement in Section 9.1(a) of this Agreement that a Bankruptcy of any Member shall cause the dissolution of the Company. A Member's rights (i) under the Transaction Documents and (ii) to be a Member shall terminate upon a Transfer of that Member's Company Interest (including without limitation a Transfer pursuant to Sections 8.2, 8.3 or 9.1 of this Agreement). IX.10 Waiver of Certain Rights. Except as provided in this Agreement or as otherwise agreed in writing by the Members, to the extent permitted by Delaware law, each Member hereby waives (i) all rights it may have under Delaware law to cause the dissolution of the Company (other than dissolution by operation of law as a result of a transfer of its Company Interest as expressly permitted by this Agreement), (ii) to the extent a dissolution occurs by operation of law, the right to cause the Company to wind up its affairs and make distributions to the Members pursuant to Article IX upon the occurrence of such dissolution and (iii) all rights to partition with respect to real and personal property, provided that this clause shall not apply to assets that have previously been distributed by the Company to the Members. ARTICLE X MISCELLANEOUS PROVISIONS X.1 Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no assignment of any Company Interest, or portion thereof, shall be effective unless made in accordance with the terms of this Agreement. The sale, transfer or assignment of a Company Interest, or portion thereof, in accordance with the terms of this Agreement shall result in the transfer to the purchaser, transferee or assignee of a Company Interest, or portion thereof, that is equal to the sold, transferred or assigned Company Interest, or the sold, trans- ferred or assigned portion thereof, of the seller, transferor or assignor and shall cause the purchaser, transferee or assignee to be subject to and to incur all obligations pertaining to the sold, transferred or assigned Company Interest, or the sold, transferred or assigned portion thereof. X.2 Notices. All communications, notices and consents provided for in this Agreement shall be in writing and be given by delivery (including delivery by courier, overnight delivery service or facsimile transmittal), with delivery effective on receipt. Notices shall be addressed as follows: if to DEI to: Dow Environmental Inc. c/o The Dow Chemical Company 2030 Dow Center Midland, Michigan 48674 Telecopy: (517) 636-0861 Attention: General Counsel if to Radian at: Radian Corporation c/o The Hartford Steam Boiler Inspection and Insurance Company One State Street P.O. Box 5024 Hartford, Connecticut 06102-5024 Telecopy: (203) 722-5710 Attention: General Counsel or at such other address as either DEI or Radian may from time to time designate by notice duly given in accordance with the provisions of this Section. X.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the conflicts of law rules of such state. X.4 Choice of Forum. All suits, actions or proceedings arising out of or relating to this Agreement shall be brought in a state or federal court located in the State of Delaware, which courts shall be an appropriate forum for all such suits, actions or proceedings. Each Member waives any objection which it may now or hereafter have to the laying of venue in any such court of any such suit, action or proceeding. X.5 Consent to Jurisdiction. Each Member irrevocably submits to the jurisdiction of any state or federal court located in the State of Delaware in any such suit, action or proceeding referred to in Section 10.4. X.6 Waiver of Jury Trial. EACH MEMBER WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH SUIT, ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. X.7 Entire Agreement; Amendments. This Agreement (including the exhibit and schedules to this Agreement) together with the other Transaction Documents (including any exhibits or schedules thereto) embody the entire agreement and understanding between the parties with respect to the subject matter of this Agreement, and supersede any agreements, representations, warranties or understandings, oral or written, between the parties with respect to the subject matter of this Agreement and the other Transaction Documents entered into prior to the date of this Agreement. This Agreement may be amended or modified (including, without limitation, to admit a new member or members, other than any new member or members admitted to the Company pursuant to a transfer of the Company Interest (or a portion thereof) of a Member pursuant to Section 8.2) only by an instrument in writing executed by all of the Members owning Company Interests as of the date of such amendment or modification. X.8 Execution in Counterparts. This Agreement may be signed in counterparts. Any single counterpart or set of counterparts signed, in either case, by all the parties to this Agreement constitutes a full and original agreement for all purposes. X.9 Remedies and Waiver. No failure or delay in exercising any right under this Agreement shall operate as a waiver of or impair any such right. No single or partial exercise of any such right shall preclude any other or further exercise thereof or the exercise of any other right. Any waiver must be given in writing to be effective, and no waiver shall be deemed a waiver of any other right. X.10 Headings. The headings of Articles and Sections have been included in this Agreement for convenience only and shall not constitute a part of this Agreement for any other purpose. X.11 Third Party Beneficiaries. This Agreement is solely for the benefit of the parties to this Agreement and the parties having the right to indemnification pursuant to Section 6.13, and no provision of this Agreement confers upon third parties (other than the parties having the right to indemnification pursuant to Section 6.13) any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement. X.12 Further Assurances. Each Member agrees to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by the Transaction Documents and to vest in the Company good title to the Contributed Assets, subject only to Permitted Liens. X.13 Public Announcements. Except as may be required by applicable law or any listing agreement of any Member or Member's Affiliates with any national securities exchange, neither the Company nor any Member nor any Affiliate thereof will issue any press release or make any public statement with respect to the business of the Company or its financial performance or condition without the prior written consent of the Members unless either (i) a draft of the proposed release has been provided to each Member at least twenty-four (24) hours prior to its proposed release in order to permit the Members to comment thereon, (ii) such press release or other public statement contains factual information (or discussion or analysis of or comment based upon such factual information) previously provided in writing to such Person by the Members Committee, or (iii) required by law. X.14 Termination. This Agreement shall terminate if the Contribution Agreement terminates and the Closing has not occurred. IN WITNESS WHEREOF, the parties have signed this Agreement on the date first written above. DOW ENVIRONMENTAL INC. By:/s/ Paul Goldstein Paul Goldstein President RADIAN CORPORATION By:/s/ Donald M. Carlton Donald M. Carlton President and Chief Executive Officer EXHIBIT A Schedule of Definitions "Accounting Date" has the meaning set forth in Section 9.3 of this Agreement. "Accounting Earnings" means the maximum amount of earnings before interest expense and taxes on income that the Company is allowed to report under GAAP. "Act" means the Delaware Limited Liability Company Act, Delaware Code Title 6, Sec. 18-101 et seq., or any successor thereto, as in effect at the time of reference. "Adjusted Deficit Capital Account" means, with respect to any Member, the deficit balance, if any, in such Member's Capital Account as of the end of the taxable year, after giving effect to the following adjustments: (i) credit to such Capital Account of any amount which such Member is obligated to restore or deemed obligated to restore under Treas. Regs. Sec. 1.704-1(b)(2)(ii)(b)(3) and 1.704-1(b)(2)(ii)(c), as well as any addition thereto pursuant to the penultimate sentences of Treas. Regs. Sec. 1.704-2(g)(1) and (i)(5); and (ii) debit to such Capital Account of the items described in Treas. Regs. Sec. 1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition of Adjusted Deficit Capital Account is intended to comply with Treas. Regs. Sec. 1.704-1(b)(2)(ii)(d), and will be interpreted consistently with those regulations. "Affiliate" has the meaning set forth in the Contribution Agreement. "Agreement" has the meaning set forth in the Preamble to this Agreement. "Alternates" has the meaning set forth in Section 6.3 of the Agreement. "Appraisal Procedure" means the following: If any price, value, amount or determination to be determined under the Agreement cannot timely be established by agreement, then either DEI or Radian, by written notice to the other, may invoke this Appraisal Procedure. Each of DEI and Radian shall appoint its Qualified Expert to conduct an appropriate valuation and shall give notice of such appointment to the other Member within fifteen (15) days after delivery of the notice invoking such procedure. If DEI or Radian does not appoint its Qualified Expert within such fifteen (15) day period, the valuation made by the Qualified Expert appointed by the other Member shall be conclusive and binding on the Members. If within thirty (30) days after appointment of the Qualified Experts, such Qualified Experts are unable to agree upon an appropriate valuation but the higher valuation is not greater than 110% of the lower valuation, then the valuation which shall be binding on the Members shall be the average of the two valuations given by the Qualified Experts. If the higher valuation is greater than 110% of the lower valuation, the two (2) Qualified Experts jointly shall appoint a third Qualified Expert within fifteen (15) days thereafter, or, if they do not do so, either DEI or Radian may request the American Arbitration Association, or any organization successor thereto, to appoint the third Qualified Expert. The decision of the third Qualified Expert shall be given within sixty (60) days after its appointment, shall be at least equal to the lower valuation, shall not exceed the higher valuation and shall be binding on the Members. "Approved Debts" has the meaning set forth in Section 9.5(a) of this Agreement. "Bankrupt" means any Person with respect to which a Bankruptcy shall have occurred. "Bankruptcy" shall mean with respect to any Person the occurrence of either of the following events: (i) the Person shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or (ii) an involuntary case or other proceeding shall be commenced against the Person seeking liquidation, reorgani- zation or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of sixty (60) days; or an order for relief shall be entered against the Person under the federal bankruptcy laws as now or hereafter in effect. "Bankrupt Member" has the meaning set forth in Section 9.1 of this Agreement. "Capital Account" shall mean a separate account maintained for each Member in accordance with Treas. Reg. 1.704-1(b)(2)(iv) as follows: (a) To each Member's Capital Account there shall be credited such Member's Capital Contributions, such Member's distributive share of Net Profits and any items in the nature of income or gain which are specially allocated pursuant to Section 5.2 of this Agreement, and the amount of any Company liabilities assumed by such Member or which are secured by any Property distributed to such Member. (b) To each Member's Capital Account there shall be debited the amount of cash and the Gross Asset Value of any Property distributed to such Member pursuant to any provision of this Agreement, such Member's distributive share of Net Losses and any items in the nature of expenses or losses which are specially allocated pursuant to Section 5.2 of this Agreement, and the amount of any liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company. "Capital Contribution" has the meaning set forth in Article III of this Agreement. "Closing" has the meaning set forth in the Contribution Agreement. "Closing Date" has the meaning set forth in the Contribution Agreement. "Code" means the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder. "Company" has the meaning set forth in the Preamble to this Agreement. "Company Interests" has the meaning set forth in Section 4.1 of this Agreement. "Contributed Assets" has the meaning set forth in the Contribution Agreement. "Contributing Member" has the meaning set forth in Section 3.6 of this Agreement. "Contribution Agreement" means that certain Contribution Agreement dated as of the Closing Date among TDCC, The Hartford Steam Boiler Inspection and Insurance Co., DEI and Radian. "Credit Facility" has the meaning set forth in Section 3.5(b) of this Agreement. "Debt" shall mean, as to any person, (a) indebtedness of such Person for borrowed money, (b) indebtedness of such Person for the deferred purchase price of services or property (other than normal trade accounts payable), (c) obligations of such Person under leases which have been, or, in accordance with generally accepted accounting principles, should be, recorded as capitalized leases, (d) indebtedness of such Person consisting of unpaid reimbursement obligations in respect of all outstanding drawings under letters of credit issued for the account of such Person and (e) Debt of others guaranteed by such Person. "Debt Ratio" means a fraction (i) the numerator of which is equal to the Debt of the Company and (ii) the denominator of which is the sum of Debt plus the sum of the current GAAP equity accounts of each of the Members. "DEI" has the meaning set forth in the Preamble of this Agreement. "DEI Alternate" and "DEI Alternates" have the meanings set forth in Section 6.3 of this Agreement. "DEI Representative" and "DEI Representatives" means an employee or employees of DEI or one or more of its Affiliates selected by DEI to represent it on the Members Committee. "Depreciation" means, for each Fiscal Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Fiscal Year, except that if the Gross Asset Value of an asset differs from its adjusted basis for Federal income tax purposes at the beginning of such Fiscal Year, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization, or other cost recovery deduction for such Fiscal Year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for Federal income tax purposes of an asset at the beginning of such Fiscal Year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Members Committee. "Dissolution Event" has the meaning set forth in Section 9.1 of this Agreement. "Earnings Shortfall" has the meaning set forth in Section 8.3 of this Agreement. "Fiscal Year" has the meaning set forth in Section 7.2 of this Agreement. "GAAP" means 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. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for Federal income tax purposes, except as follows: (i) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the fair market value of such asset at the time it is accepted by the Company, unreduced by any liability secured by such asset, as determined by the contributing Member and the Representatives; (ii) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Property as consideration for an interest in the Company; and (c) the liquidation of the Company within the meaning of Treas. Regs. Sec. 1.704-1(b)(2)(ii)(g). (iii) The Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the fair market value of such asset, unreduced by any liability secured by such asset, on the date of distribution as determined by the distributee and the Representatives; and (iv) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Sec. 734(b) or Code Sec. 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treas. Regs. Sec. 1.704-1(b)(2)(iv)(m) and para- graph (vi) of the definition of "Net Profits" and "Net Losses" and Section 5.2(g) of this Agreement. If the Gross Asset Value of an asset has been determined or adjusted pursuant to paragraphs (i), (ii), or (iv) of this Agreement, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Profits and Net Losses. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, easement, right of way, title defect or encumbrance of any kind with respect to such asset. "Liquidating Member" has the meaning set forth in Section 9.2 of this Agreement. "Loan Agreement" has the meaning set forth in Section 8.3 of this Agreement. "Loss" has the meaning set forth in the Contribution Agreement. "Member" has the meaning set forth in the Preamble of this Agreement. "Member Loan" has the meaning set forth in Section 3.6 of this Agreement. "Members Committee" means the committee of Representatives described in Article VI of this Agreement. "Net Cash Flow" shall mean all cash, revenues, and funds received by the Company, including Capital Contributions, less the sum of the following to the extent paid or set aside by the Company: (i) all principal and interest payments on indebtedness of the Company and all other sums paid to lenders; (ii) all cash expenditures incurred incident to the normal operation of the Company's business; and (iii) such Reserves as the Representatives deem reasonably necessary to the proper operation of the Company's business; all as determined by the Representatives. "Net Profits" and "Net Losses" shall mean, for each Fiscal Year, an amount equal to the Company's taxable income or loss for such Fiscal Year, determined in accordance with Code Sec. 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Sec. 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (i) any income of the Company that is exempt from Federal income tax and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition shall be added to such taxable income or loss; (ii) any expenditures of the Company described in Code Sec. 705(a)(2)(B) or treated as Code Sec. 705(a)(2)(B) expendi- tures pursuant to Treas. Regs. Sec. 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition shall be subtracted from such taxable income or loss; (iii) in the event the Gross Asset Value of any Company asset is adjusted pursuant to paragraphs (ii) or (iii) of the definition of "Gross Asset Value," the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Profits or Net Losses; (iv) gain or loss resulting from any disposition of Property with respect to which gain or loss is recognized for Federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; (v) in lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss there shall be taken into account Depreciation for such Fiscal Year, computed in accordance with the definition of Depreciation above; (vi) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Sec. 734(b) or Code Sec. 743(b) is required pursuant to Treas. Regs. Sec. 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in complete liquidation of a Member's Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Profits or Net Losses; and (vii) notwithstanding any other provision of this definition, any items which are specially allocated pursuant to Section 5.2 of this Agreement shall not be taken into account in computing Net Profits or Net Losses. The amounts of items of Company income, gain, loss or deduction available to be specially allocated pursuant to Section 5.2 of this Agreement shall be determined by applying rules analogous to those set forth in paragraphs (i) through (vi) above. "Newco Services Business" has the meaning set forth in the Contribution Agreement. "Non-Bankrupt Member" has the meaning set forth in Section 9.1 of this Agreement. "Non-Contributing Member" has the meaning set forth in Section 3.6 of this Agreement. "Non-Contributing Member's Share" has the meaning set forth in Section 3.6 of this Agreement. "Nonrecourse Deductions" has the meaning set forth in Treas. Regs. Sec. 1.704-2(b)(1). "Nonrecourse Liability" has the meaning set forth in Treas. Regs. Sec. 1.704-2(b)(3). "Ordinary Loans" has the meaning set forth in Section 3.5(d) of this Agreement. "Parent" shall mean with respect to DEI, TDCC, and with respect to Radian, The Hartford Steam Boiler Inspection and Insurance Company. "Partner Nonrecourse Debt" has the meaning set forth in Treas. Regs. Sec. 1.704-2(b)(4). "Partner Nonrecourse Debt Minimum Gain" means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treas. Regs. Sec. 1.704-2(i)(3). "Partner Nonrecourse Deductions" has the meaning set forth in Treas. Regs. Sec. 1.704-2(i)(1) and 1.704-2(i)(2). "Partnership Minimum Gain" has the meaning set forth in Treas. Regs. Sec. 1.704-2(b)(2) and 1.704-2(d). "Permitted Liens" has the meaning set forth in the Contribution Agreement. "Person" has the meaning set forth in the Contribution Agreement. "Preferred Accounting Earnings" shall mean Accounting Earnings equal to $19 million for Fiscal Year 1996 and $21 million for Fiscal Year 1997. "Prime Rate" means the rate publicly announced from time to time by Citibank, N.A. in New York City as its prime rate. "Property" means all real and personal property contributed to or acquired by the Company and any improvements thereto, and shall include both tangible and intangible property. "Purchase Price" has the meaning set forth in Section 9.1 of this Agreement. "Qualified Expert" means either (i) an investment banking firm or (ii) an independent accounting firm, in either case, of national and international reputation. "Radian" has the meaning set forth in the Preamble to this Agreement. "Radian Alternate" and "Radian Alternates" have the meanings set forth in Section 6.3 of this Agreement. "Radian Representative" and "Radian Representatives" means an employee or employees of Radian or one or more of its Affiliates selected by Radian to represent it on the Members Committee. "Regulatory Allocations" has the meaning set forth in Section 5.2(h) of this Agreement. "Representatives" means each of the Representatives of the Company designated from time to time by the Members in accordance with Section 6.3 of this Agreement. As used in this Agreement and for purposes of the Act, the term Representative shall have the same meaning and have such rights, powers and authorities of a "manager" as provided in the Act and as otherwise provided by law. "Restricted Asset" has the meaning set forth in the Contribution Agreement. "Stairstep Loss Cap" means an amount equal to $200,000,000 less the product of (i) the number of days that have elapsed since the Closing Date and (ii) $136,986.30; provided, however, that such Stairstep Loss Cap shall never be less then zero. "Subsidiary" or "Subsidiaries" has the meaning set forth in the Contribution Agreement. "Tax Matters Partner" has the meaning set forth in Section 6.14 of this Agreement. "TDCC" has the meaning set forth in Section 2.2 of this Agreement. "Transaction Documents" has the meaning set forth in the Contribution Agreement. "Transfer" has the meaning set forth in Section 8.2 of this Agreement. "Treasury Regulations" or "Treas. Regs." includes temporary and final regulations promulgated under the Code in effect on the date of this Agreement and the corresponding sections of any regulations subsequently issued that amend or supersede those regulations. Limited Liability Company Agreement Schedule 6.1 Initial Officers and Duties Designation. The officers of the Company shall be chosen by the Members Committee and shall be a President, a Secretary and a Treasurer. The Members Committee also may choose such other officers or agents as from time to time may appear necessary or advisable in the conduct of the business and affairs of the Company. Any number of offices may be held by the same person, unless otherwise prohibited by law or the Limited Liability Company Agreement. The Members Committee also may delegate to any other officer of the Company the power to choose such other officers and to prescribe their respective duties and powers. Election and Term. The Members Committee shall elect the officers of the Company at its first regular meeting during each Fiscal Year. The officers so elected shall exercise such powers and perform such duties as shall be determined from time to time by the Members Committee; and all officers of the Company shall hold office until their successors are elected by the Members Committee, or until their earlier resignation or removal. Resignation. Any officer may resign at any time by giving written notice to the President or the Secretary of the Company. Unless otherwise stated in such notice of resignation, the acceptance thereof shall not be necessary to make it effective; and such resignation shall take effect at the time specified therein or, in the absence of such specification, it shall take effect upon the receipt of the notice of resignation. Removal. Except where otherwise expressly provided in a contract authorized by the Members Committee, any officer elected by the Members Committee may be removed at any time with or without cause by the affirmative vote of a majority of the entire Members Committee. Vacancies. A vacancy in any office may be filled for the unexpired portion of the term by the Members Committee. Chair of the Members Committee. The Chair of the Members Committee, shall preside at all meetings of the Representatives of the Members Committee. The Chair of the Members Committee also shall perform such other duties and may exercise such other powers as may be assigned from time to time by the Members Committee. President. The President shall be the chief executive officer of the Company, and, subject to the control of the Members Committee, shall be in general and active charge of the business and affairs of the Company. The President shall have power to sign certificates of stock, contracts and instruments of conveyance, checks, drafts, notes, orders for the payment of money, authorized bonds, and similar obligations. In the absence or disability of the Chair of the Members Committee, or if the Members Committee does not appoint one, the President shall preside at all meetings of the Members and of the Members Committee. The President shall perform such other duties as may be assigned from time to time by the Members Committee. Vice Presidents. Each Senior Vice President or Vice President, if there be any, shall have such powers and perform such duties as may be assigned by the President or the Members Committee. Secretary. The Secretary shall keep the minutes and give notices of all meetings of the Members Committee and such committees as directed by the Members Committee. The Secretary shall have charge of such books and papers as the Members Committee may require. The Secretary is authorized to certify copies of extracts from minutes and of documents in the Secretary's charge, and anyone may rely on such certified copies to the same effect as if such copies were originals and may rely upon any statement of fact concerning the Company certified by the Secretary. The Secretary shall perform all acts incident to the office of Secretary, subject to the control of the Members Committee. Treasurer. The Treasurer shall have the custody of the Company funds and securities, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Members Committee. The Treasurer shall disburse the funds of the Company as may be ordered by the Members Committee, taking proper vouchers for such disbursements, and shall render to the President and the Members Committee, at its regular meetings, or when the Members Committee so requires, an account of all transactions taken as Treasurer and of the financial condition of the Company. If required by the Members Committee, the Treasurer shall give the Company a bond in such sum and with such surety or sureties as shall be satisfactory to the Members Committee for the faithful performance of the duties of the office of Treasurer and for the restoration to the Company, in case of the Treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the possession or under the control of the Treasurer and belonging to the Company. Other Officers. Such other officers as the Members Committee may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Members Committee. The Members Committee may delegate to any other officers of the Company the power to choose such other officers and to prescribe their respective duties and powers. Compensation of Officers. The officers of the Company shall receive such compensation for their services as the Members Committee from time to time may determine. Limited Liability Company Agreement Schedule 6.10(a)(v) Accounting Policies and Procedures The current GAAP accounting policies and procedures followed by Radian Corporation, which are hereby adopted by the Company, to the extent that those policies and procedures do not substantially conflict with The Dow Chemical Company Accounting Manual (2 volumes). See: The Dow Chemical Company Accounting Manual (2 volumes) -----END PRIVACY-ENHANCED MESSAGE-----