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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of May 3, 1995, is by
and among Marion Merrell Dow Inc., a Delaware corporation (the "Company"),
The Dow Chemical Company, a Delaware corporation ("DCC"), Hoechst
Corporation, a Delaware corporation ("Parent"), and H Pharma Acquisition
Corp., a Delaware corporation ("Acquisition").
WHEREAS, the Boards of Directors of Parent, Acquisition, DCC and
the Company have each approved the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, upon the terms and subject to
the conditions of this Agreement, (i) Acquisition would be merged (the
"Merger") with and into the Company in accordance with the General
Corporation Law of the State of Delaware ("Delaware Law") and (ii) each
share of common stock, par value $0.10 per share, of the Company (the
"Shares"), issued and outstanding immediately prior to the Effective Time
(as defined herein) would, except as otherwise expressly provided herein,
be converted into the right to receive the Merger Consideration (as defined
herein); and
WHEREAS, simultaneously with the execution and delivery hereof,
Parent, Acquisition, DCC, RH Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of DCC ("RHAC"), and Dow Holdings Inc., a
Delaware corporation and a wholly owned subsidiary of DCC ("DHI" and,
collectively with DCC and RHAC, "Dow") are entering into a stock purchase
agreement (the "Stock Purchase Agreement") pursuant to which Dow has
agreed, among other things, to sell to Acquisition all of the 196,865,790
Shares held by Dow (the "Dow Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally
bound hereby, the Company, DCC, Parent and Acquisition hereby agree as
follows.
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. At the Effective Time and upon the
terms and subject to the conditions of this Agreement and Delaware Law,
Acquisition shall be merged with and into the Company, whereupon the
separate corporate existence of Acquisition shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation").
At Acquisition's option, subject to Section 9.2 hereof, the Merger may be
structured so that any direct subsidiary of Parent other than Acquisition
is merged with and into the Company. In the event of such election, the
parties agree to execute an appropriate amendment to this Agreement in
order to reflect such election.
Section 1.2 EFFECTIVE TIME; CLOSING. As soon as practicable
after the satisfaction or waiver of the conditions set forth in Article
VII, the parties hereto will file a certificate of merger with the
Secretary of State of the State of Delaware and make all other filings or
recordings required by Delaware Law in connection with the Merger. The
Merger shall become effective at such time as the certificate of merger is
duly filed with the Secretary of State of the State of Delaware (the
"Effective Time"). Prior to such filing, a closing (the "Closing") shall
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be held at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York 10022, or such other place as the parties shall
agree, for the purpose of confirming the satisfaction or waiver of the
conditions set forth in Article VII. The date on which the Closing occurs
is referred to herein as the "Closing Date".
Section 1.3 EFFECTS OF THE MERGER; SUBSEQUENT ACTIONS. (a) The
Merger shall have the effects set forth in Delaware Law. Without limiting
the generality of the foregoing, and subject thereto and any other
applicable laws, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and Acquisition shall vest
in the Surviving Corporation, and all debts, liabilities, restrictions,
disabilities and duties of the Company and Acquisition shall become the
debts, liabilities, restrictions, disabilities and duties of the Surviving
Corporation.
(b) If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of the Company or Acquisition acquired or
to be acquired by the Surviving Corporation as a result of or in connection
with the Merger, or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of the Company or Acquisition, all such
deeds, bills of sale, assignments, assumption agreements and assurances and
to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or assets of the Surviving
Corporation or otherwise to carry out this Agreement.
Section 1.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The
Certificate of Incorporation of Acquisition in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with applicable law;
PROVIDED that the name of the Surviving Corporation as set forth in its
Certificate of Incorporation shall be changed to a new name to be
determined by Acquisition prior to the Effective Time.
(b) The By-Laws of Acquisition in effect at the Effective
Time shall be the By-Laws of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.5 DIRECTORS. The directors of Acquisition at the
Effective Time shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
By-Laws of the Surviving Corporation and until his or her successor is duly
elected and qualified.
Section 1.6 OFFICERS. The officers of the Company at the
Effective Time, and any additional individuals designated by Parent, shall
be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and By-Laws of the
Surviving Corporation and until his or her successor is duly appointed and
qualified.
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Section 1.7 CONVERSION OF SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent,
Acquisition, the Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to
the Effective Time (other than Shares to be cancelled pursuant to Section
1.7(b) hereof and Dissenting Shares (as hereinafter defined)), shall by
virtue of the Merger and without any action on the part of the holder
thereof be converted into the right to receive the Merger Consideration (as
defined below), without interest thereon. As used herein, "Merger
Consideration" means the sum (rounded up to the nearest $0.01) of $25.75 in
cash plus an Additional Contingent Amount (as defined below); PROVIDED,
that the Additional Contingent Amount shall be payable only if Acquisition,
Parent or their affiliates purchase the Dow Shares at least one (1) day
prior to the Effective Time. As used herein, "Additional Contingent
Amount" means a cash amount equal to $0.25 multiplied by a fraction (i) the
numerator of which shall be the number of whole days from the record date
for the regular quarterly cash dividend on the Shares next preceding the
date on which the Effective Time occurs (excluding such record date) to and
including the date on which the Effective Time occurs and (ii) the
denominator of which shall be the number of whole days in the full quarter
during which the Effective Time occurs.
(b) Each Share which is issued and outstanding immediately
prior to the Effective Time and owned by Parent or Acquisition or any
direct or indirect subsidiary of Parent or Acquisition, or which is held in
the treasury of the Company or any of its subsidiaries, shall be cancelled
and retired and no payment of any consideration shall be made with respect
thereto.
(c) Each share of Common Stock, par value $0.01 per share,
of Acquisition issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, par value $0.01 per share, of the
Surviving Corporation.
Section 1.8 COMPANY PLANS. (a) Effective as of the Effective
Time, each outstanding option (including any related stock appreciation
right)(an "Employee Option") issued, awarded or granted pursuant to the
Company's 1992 Incentive Compensation Plan, the 1985 Associate Stock Option
Plan or the Non-Qualified Employee Stock Option Plan (the "Company Plans")
to purchase Shares shall be eliminated by the Company, and each holder of
an eliminated Employee Option shall be entitled to receive from the Company
(or, at Parent's option, any subsidiary of the Company) in consideration
for the elimination of such Employee Option an amount in cash (less
applicable withholding Taxes (as defined in Section 3.10 hereof)) equal to
the product of (i) the number of Shares previously subject to such Employee
Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per Share previously subject to such Employee Option;
PROVIDED, that each Employee Option the exercise price per Share of which
is equal to or greater than the Merger Consideration shall be eliminated in
consideration for a cash payment equal to the product of $0.01 multiplied
by the number of Shares previously subject to such Employee Option.
(b) Each outstanding performance share ("Performance
Share") granted under the Company's 1992 Incentive Compensation Plan (the
"Incentive Plan") shall become fully vested in accordance with the terms of
the Incentive Plan and, effective as of the Effective Time, shall, unless
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theretofore paid and eliminated in accordance with the terms thereof, be
eliminated by the Company, and each holder of an eliminated Performance
Share shall be entitled to receive from the Company (or, at Parent's
option, any subsidiary of the Company) an amount in cash (less applicable
withholding Taxes) equal to the product of (i) the Merger Consideration and
(ii) the number of Performance Shares previously held by such holder.
Section 1.9 STOCKHOLDERS' MEETING. The Company, acting through
its Board of Directors (the "Board"), shall in accordance with applicable
law as soon as practicable following the date hereof:
(i) subject to applicable law, duly call, give notice
of, convene and hold an annual or special meeting of its stockholders (the
"Stockholders' Meeting") for the purpose of considering and taking action
upon this Agreement;
(ii) subject to the fiduciary duties of the Board
under applicable law, include in the Proxy Statement (as defined in Section
3.7) the recommendation of the Board that stockholders of the Company vote
in favor of adoption of this Agreement and the transactions contemplated
hereby; and
(iii) subject to the fiduciary duties of the Board
under applicable law, use its reasonable best efforts to obtain the
necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby.
At such meeting, each of DCC, Parent and Acquisition will vote
(and will cause each of their respective affiliates to vote) all Shares
owned by it (or their respective affiliates) in favor of adoption of this
Agreement and the transactions contemplated hereby.
ARTICLE II
DISSENTING SHARES; EXCHANGE OF SHARES
Section 2.1 DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the
Merger or consented thereto in writing and who has demanded appraisal for
such Shares in accordance with Section 262 of Delaware Law ("Dissenting
Shares") shall not be converted into a right to receive the Merger
Consideration unless such holder fails to perfect or withdraws or otherwise
loses his right to appraisal. If, after the Effective Time, such holder
fails to perfect or withdraws or loses his right to appraisal, such Shares
shall be treated as if they had been converted as of the Effective Time
into a right to receive the Merger Consideration without interest thereon.
The Company shall give Acquisition prompt notice of any demands received by
the Company for appraisal of Shares, and, prior to the Effective Time,
Acquisition shall have the right to participate in all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Acquisition,
make any payment with respect to, or settle or offer to settle, any such
demands.
Section 2.2 EXCHANGE OF CERTIFICATES. (a) Prior to the
Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as paying agent (the "Paying Agent") in
effecting the exchange for the Merger Consideration of certificates (the
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Certificates") that, prior to the Effective Time, represented Shares. Upon
the surrender of each such Certificate formerly representing Shares,
together with a properly completed letter of transmittal, the Paying Agent
shall pay the holder of such Certificate the Merger Consideration
multiplied by the number of Shares formerly represented by such
Certificate, in exchange therefor, and such Certificate shall forthwith be
cancelled. Until so surrendered and exchanged, each such Certificate
(other than Certificates representing Dissenting Shares or Shares held by
Parent, Acquisition or the Company, or any direct or indirect subsidiary
thereof) shall represent solely the right to receive the Merger
Consideration. No interest shall be paid or accrue on the Merger
Consideration. If the Merger Consideration (or any portion thereof) is to
be delivered to any person other than the person in whose name the
Certificate formerly representing Shares surrendered in exchange therefor
is registered, it shall be a condition to such exchange that the
Certificate so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the person requesting such exchange shall
pay to the Paying Agent any transfer or other Taxes required by reason of
the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered, or shall establish to the
satisfaction of the Paying Agent that such Tax has been paid or is not
applicable.
(b) Prior to the Effective Time, Parent or Acquisition
shall deposit, or cause to be deposited, in trust with the Paying Agent the
Merger Consideration to which holders of Shares shall be entitled at the
Effective Time pursuant to Section 1.7(a) hereof; PROVIDED that no such
deposit shall relieve Parent of its obligation to pay the Merger
Consideration pursuant to Section 1.7(a).
(c) The Merger Consideration shall be invested by the
Paying Agent, as directed by Parent, provided such investments shall be
limited to direct obligations of the United States of America, obligations
for which the full faith and credit of the United States of America is
pledged to provide for the payment of principal and interest, commercial
paper rated of the highest quality by Moody's Investors Services, Inc. or
Standard & Poor's Corporation, or certificates of deposit issued by a
commercial bank having at least $1,000,000,000 in assets; PROVIDED, that no
loss on investment made pursuant to this Section 2.2(c) shall relieve
Parent or Acquisition of its obligation to pay the Merger Consideration
pursuant to Section 1.7(a).
(d) Promptly following the date which is six months after
the Effective Time, the Paying Agent shall deliver to Parent all cash and
documents in its possession relating to the transactions described in this
Agreement, and the Paying Agent's duties shall terminate. Thereafter, each
holder of a Certificate formerly representing a Share may surrender such
Certificate to the Surviving Corporation and (subject to applicable
abandoned property, escheat and similar laws) receive in exchange therefor
the Merger Consideration, without any interest thereon.
(e) Promptly after the Effective Time, the Paying Agent
shall mail to each record holder of Certificates that immediately prior to
the Effective Time represented Shares a form of letter of transmittal and
instructions for use in surrendering such Certificates and receiving the
Merger Consideration in exchange therefor.
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(f) After the Effective Time, there shall be no transfers
on the stock transfer books of the Surviving Corporation of any Shares.
If, after the Effective Time, Certificates formerly representing Shares are
presented to the Surviving Corporation or the Paying Agent, they shall be
cancelled and exchanged for the Merger Consideration, as provided in this
Article II, subject to applicable law in the case of Dissenting Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Acquisition as
follows:
Section 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of the Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a material
adverse effect on the business, results of operations (on an annualized
basis) or financial condition of the Company and its subsidiaries, taken as
a whole (a "Material Adverse Effect"). Without limiting the generality of
the foregoing definition of "Material Adverse Effect", such definition
shall specifically include adverse consequences to earnings or financial
condition in excess of $75 million to the Company and its subsidiaries,
taken as a whole, but shall specifically exclude adverse consequences to
earnings and financial condition of $75 million or less unless such adverse
consequences also constitute a material adverse effect on the business,
results of operations (on an annualized basis) or financial condition of
the Company and its subsidiaries, taken as a whole. "Material Adverse
Effect" shall not mean or include any of the events set forth on Schedule
3.1(a) or any of the transactions effected pursuant to this Agreement.
(b) Each of the Company and its subsidiaries is duly
qualified or licensed and in good standing to do business in each
jurisdiction (including any foreign country) in which the property owned,
leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) The Company has heretofore furnished or made available
to Parent complete and correct copies of the Company's Restated Certificate
of Incorporation and By-Laws and the equivalent organizational documents of
each of its subsidiaries, each as amended to the date hereof, as requested
by Parent. Such Restated Certificate of Incorporation, By-Laws and
equivalent organizational documents are in full force and effect. The
Company is not in violation of any of the provisions of its Restated
Certificate of Incorporation or By-Laws and no subsidiary of the Company is
in violation of any of the provisions of such subsidiary's equivalent
organizational documents.
(d) The Company has heretofore furnished or made available
to Parent a complete and correct list of the subsidiaries of the Company,
which list sets forth the amount of capital stock of or other equity
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interests in such subsidiaries owned by the Company, directly or
indirectly. Except as set forth in Schedule 3.1(d), no entity in which the
Company owns, directly or indirectly, less than a 50% equity interest is,
individually or when taken together with all other such entities, material
to the business of the Company and its subsidiaries, taken as a whole.
Section 3.2 CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES.
The authorized capital stock of the Company consists of (i) 350,000,000
Shares of which, as of April 28, 1995, 277,097,048 Shares were issued and
outstanding (including 1,992,600 Shares subject to restrictions issued
pursuant to employee benefit plans of the Company and its subsidiaries or
otherwise) and (ii) 8,000,000 shares of Preferred Stock, par value $1.00
per share, of which, as of April 28, 1995, 2,769,670 shares of Series A
ESOP Convertible Preferred Stock (the "Series A Preferred Shares") were
issued and outstanding. All outstanding shares of capital stock of the
Company have been validly issued, and are fully paid, nonassessable and
free of preemptive rights. As of April 28, 1995, Employee Options to
purchase an aggregate of 22,213,415 Shares were outstanding and the
weighted average exercise price of such Employee Options was $22.86 per
Share. As of April 28, 1995, 2,769,670 Shares were reserved for issuance
upon conversion of the Series A Preferred Shares. Each Series A Preferred
Share is convertible into one Share. Except as set forth above or in
Schedule 3.2, and except as a result of the exercise of Employee Options
outstanding as of April 28, 1995, there are outstanding (i) no shares of
capital stock or other voting securities of the Company, (ii) no securities
of the Company convertible into or exchangeable for shares of capital stock
or voting securities of the Company, (iii) no options, subscriptions,
warrants, convertible securities, calls or other rights to acquire from the
Company, and no obligation of the Company to issue, deliver or sell any
capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company and (iv)
no equity equivalents, performance shares, interests in the ownership or
earnings of the Company or other similar rights issued by the Company
(collectively, "Company Securities"). Except as set forth on Schedule 3.2
or as contemplated by this Agreement, there are no outstanding obligations
of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any Company Securities, other than the Company's
obligations hereunder and under the Restated Certificate of Incorporation
of the Company to redeem the Series A Preferred Shares. Except as set
forth in Schedule 3.2, each of the outstanding shares of capital stock of
each of the Company's subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and is directly or indirectly owned by the
Company, free and clear of all security interests, liens, claims, pledges,
charges, voting agreements or other encumbrances of any nature whatsoever
(collectively, "Liens"). Except as set forth in Schedule 3.2, there are no
existing options, calls or commitments of any character relating to the
issued or unissued capital stock or other equity securities of any
subsidiary of the Company.
Section 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT; FAIRNESS
OPINION. The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The Board, at a
meeting duly called and held on May 3, 1995, (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger,
are in the best interests of the stockholders of the Company (other than
DCC, Parent, Acquisition or their affiliates), (ii) approved this Agreement
and the transactions contemplated hereby, including the Merger, (iii)
resolved, subject to their fiduciary duties under applicable law, to
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recommend that the stockholders of the Company approve and adopt this
Agreement and the Merger and (iv) resolved to redeem, effective immediately
prior to the Merger, all of the outstanding Series A Preferred Shares.
Lehman Brothers Inc. ("Lehman Brothers") has delivered to the Board its
written opinion dated May 3, 1995 to the effect that, as of the date of
such opinion, the consideration to be received by the holders of Shares
(other than DCC, Parent, Acquisition or their affiliates) pursuant to the
Merger is fair to such holders from a financial point of view. As of the
date hereof, the Company has been authorized by Lehman Brothers to permit
the inclusion of such fairness opinion in the Proxy Statement referred to
in Section 3.7. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board and no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than, with respect to
the Merger, the approval and adoption of this Agreement by the holders of a
majority of the outstanding Shares and Series A Preferred Shares (voting
together as a single class) and the filing of the appropriate merger
documents as required by Delaware Law). The Board has taken all action
necessary with respect to the transactions contemplated hereby and by the
Stock Purchase Agreement so as to render inapplicable to such transactions,
including, without limitation, the Merger and the purchase of Shares
pursuant to the Stock Purchase Agreement, the restrictions on business
combinations contained in Section 203 of the Delaware Law and the
supermajority voting requirements contained in Article Fifteenth of the
Company's Restated Certificate of Incorporation. This Agreement has been
duly and validly executed and delivered by the Company and, assuming it
constitutes a valid and binding agreement of the other parties hereto,
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms.
Section 3.4 NON-CONTRAVENTION; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 3.4, the execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby (including the Merger) do not and will not
(i) contravene or conflict with the Restated Certificate of Incorporation
or By-Laws of the Company or the equivalent organizational documents of any
of its subsidiaries; (ii) assuming that all consents, authorizations and
approvals contemplated by subsection (b) below have been obtained and all
filings described therein have been made, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company, any
of its subsidiaries or any of their respective properties; (iii) conflict
with, or result in the breach or termination of any provision of or
constitute a default (with or without the giving of notice or the lapse of
time or both) under, or give rise to any right of termination,
cancellation, or loss of any benefit to which the Company or any of its
subsidiaries is entitled under any provision of any agreement, contract,
license or other instrument binding upon the Company, any of its
subsidiaries or any of their respective properties, or allow the
acceleration of the performance of, any obligation of the Company or any of
its subsidiaries under any indenture, mortgage, deed of trust, lease,
license, contract, instrument or other agreement to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective assets or properties is subject or
bound; or (iv) result in the creation or imposition of any Lien on any
asset of the Company or any of its subsidiaries, except in the case of
clauses (ii), (iii) and (iv) for any such contraventions, conflicts,
violations, breaches, terminations, defaults, cancellations, losses,
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accelerations and Liens which would not individually or in the aggregate
have a Material Adverse Effect or be reasonably expected to prevent the
consummation by the Company of the transactions contemplated by this
Agreement.
(b) The execution, delivery and performance by the Company
of this Agreement and the consummation of the transactions contemplated
hereby (including the Merger) by the Company require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority (either domestic or foreign) other than (i) the filing of a
certificate of merger in accordance with Delaware Law; (ii) compliance with
any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), Regulation (EEC) No. 4064/89 of
the European Community (the "EC Merger Regulation"), and the Canadian
Competition Act; (iii) the filing of a notice pursuant to Section 721 of
the Defense Production Act of 1950, as amended ("Exon-Florio"); (iv)
compliance with any applicable requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and state securities, takeover
and Blue Sky laws; and (v) such actions or filings which, if not taken or
made, would not individually or in the aggregate have a Material Adverse
Effect or be reasonably expected to prevent the consummation by the Company
of the transactions contemplated by this Agreement.
Section 3.5 SEC REPORTS. (a) The Company has filed all required
forms, reports and documents with the Securities and Exchange Commission
(the "SEC") since January 1, 1992. The Company has made available to
Parent, in the form filed with the SEC, the Company's (i) Annual Reports on
Form 10-K for the fiscal years ended December 31, 1994, 1993 and 1992, (ii)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1994, June
30, 1994 and September 30, 1994, (iii) all proxy statements relating to
meetings of the Company's stockholders since December 31, 1992 and (iv) all
other reports or registration statements (other than reports on Form 10-Q
not referred to in (ii) above) filed by the Company with the SEC since
December 31, 1992 (collectively, the "SEC Reports"). The SEC Reports were
prepared in accordance with all applicable requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and the Exchange Act. As
of their respective dates, none of the SEC Reports, including, without
limitation, any financial statements or schedules included therein,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited consolidated interim financial statements of the Company included
in the SEC Reports fairly present, in conformity with generally accepted
accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then
ended (subject to normal year-end adjustments and the lack of footnote
disclosure (to the extent permitted by SEC rules) in the case of any
unaudited interim financial statements and subject to any subsequent
reclassification as indicated in SEC Reports filed prior to the date
hereof). The Company has heretofore provided or made available complete
and correct copies of each of the SEC Reports to Parent.
(b) Except as disclosed in the SEC Reports filed prior to the
date of this Agreement or as set forth in Schedule 3.5(b), the Company and
its subsidiaries have no liabilities of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities incurred in the
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ordinary course of business since December 31, 1994 or liabilities which
would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 3.6 ABSENCE OF CERTAIN CHANGES; NET CASH POSITION;
DERIVATIVES. (a) Since December 31, 1994, except as disclosed in the SEC
Reports filed prior to the date of this Agreement or as set forth in
Schedule 3.6(a), neither the Company nor any of its subsidiaries has (i)
declared, set aside or paid any dividend or other distribution (whether in
cash, stock, or property or any combination thereof) in respect of its
capital stock (other than cash dividends declared and paid on the Series A
Preferred Shares in accordance with their terms and on the Shares to
holders of record on March 31, 1995 in the amount of $0.25 per Share), (ii)
entered into, adopted or amended or materially increased the benefits paid
or payable under any severance, termination or deferred compensation
agreement or arrangement with any director, officer or employee, (iii)
changed any of the accounting principles or practices used by the Company,
except as required as a result of a change in law, SEC guidelines or
generally accepted accounting principles, (iv) settled litigations for
amounts in excess of $3 million in the aggregate, or (v) except as
previously disclosed to Parent, entered into any transaction, or conducted
its business or operations, except in the ordinary course of business
consistent with past practice or where such transactions or conduct would
not, individually or in the aggregate, have a Material Adverse Effect.
Since December 31, 1994, there has not been any material adverse change in
the business, results of operations (on an annualized basis) or financial
condition of the Company and its subsidiaries, taken as a whole. For
purposes of this Section 3.6(a), "material adverse change" shall be
construed without reference to the definition of Material Adverse Effect
and shall not mean or include any of the events set forth in Schedule
3.1(a) or any of the transactions effected pursuant to this Agreement.
(b) As of the date of this Agreement, subject to the last
sentence of this Section 3.6(b), the Net Cash of the Company and its
subsidiaries is at least $250 million. As used herein, "Net Cash" means
the excess of (i) the sum of the cash, cash equivalents, short term
investments, notes receivable (excluding trade notes receivable) and long
term readily marketable financial assets of the Company and its
subsidiaries over (ii) the sum of the accounts payable to DCC and its
affiliates (other than the Company and its subsidiaries), dividends
payable, notes payable (excluding trade notes payable), long term debt
(including current portion of long term debt) and any other balance sheet
liabilities for borrowed money of the Company and its subsidiaries, in each
case determined in conformity with generally accepted accounting
principles. The accounts payable to DCC and its affiliates (other than the
Company and its subsidiaries) included in the $250 million Net Cash
referred to above total $58 million and are as of March 31, 1995.
(c) Schedule 3.6(c) sets forth a complete and correct list
of all Derivative Financial Instruments (including the face, contract or
notional amount of and any open position relating to such Derivative
Financial Instruments and a brief summary of the nature and terms thereof)
as of April 30, 1995 to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any of their
respective assets or properties is subject or bound (including, without
limitation, funds of the Company or any of its subsidiaries invested by any
other person). For purposes of this Agreement, "Derivative Financial
Instrument" means any futures, forward, swap, option or swaption contract,
or any other financial instrument with similar characteristics and/or
15
generally characterized by the financial community as a "derivative"
security.
Section 3.7 PROXY STATEMENT; SCHEDULE 13E-3. The proxy or
information statement or similar materials distributed to the Company's
stockholders in connection with the Merger, including any amendments or
supplements thereto (the "Proxy Statement"), shall not, at the time filed
with the SEC, at the time mailed to the Company's stockholders, at the time
of the Stockholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to any information provided by Parent or Acquisition
specifically for use in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder. None of the
information provided by the Company specifically for use in any Rule 13e-3
Transaction Statement on Schedule 13E-3 required to be filed with the SEC
under the Exchange Act in connection with the Merger (the "Schedule 13E-3")
will at the time the Schedule 13E-3 or any amendments thereto are filed
with the SEC, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading.
Section 3.8 FINDER'S FEE. No broker, finder, investment banker
or other intermediary (other than Lehman Brothers) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or by the Stock Purchase
Agreement based upon arrangements made by and on behalf of the Company.
The Company has heretofore furnished to Parent a complete and correct copy
of all agreements between the Company and Lehman Brothers pursuant to which
Lehman Brothers would be entitled to any payment relating to the
transactions contemplated hereby or by the Stock Purchase Agreement.
Section 3.9 ABSENCE OF LITIGATION. Except as disclosed in the
SEC Reports filed prior to the date hereof, as of the date hereof, there is
no action, suit, claim, investigation or proceeding pending against, or to
the knowledge of the Company, threatened against, the Company or any of its
subsidiaries or any of their respective properties before any court or
arbitrator or any administrative, regulatory or governmental body, or any
agency or official which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect. Except as
disclosed in the SEC Reports filed prior to the date of this Agreement or
in Schedule 3.9, as of the date hereof, there is no action, suit, claim,
investigation or proceeding pending against, or to the knowledge of the
Company, threatened against, the Company or any of its subsidiaries or any
of their respective properties before any court or arbitrator or any
administrative, regulatory or governmental body, or any agency or official
which (i) challenges or seeks to prevent, enjoin, alter or delay the Merger
or any of the other transactions contemplated hereby or by the Stock
Purchase Agreement; or (ii) alleges criminal action or inaction. Without
limiting the generality of the foregoing, as of the date hereof, there is
no action, suit, claim, investigation or proceeding relating to debarment
or potential debarment pending against, or to the knowledge of the Company,
threatened against, the Company or any of its subsidiaries before the
Health Care Financing Administration, the Department of Defense, the
Inspector General of the Department of Health and Human Services or any
16
similar state agency which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect. Except as
disclosed in the SEC Reports filed prior to the date of this Agreement, as
of the date hereof, neither the Company nor any of its subsidiaries nor any
of their respective properties is subject to any order, writ, judgment,
injunction, decree, determination or award having, or which would
reasonably be expected to have, a Material Adverse Effect or which would
prevent or delay the consummation of the transactions contemplated hereby.
Section 3.10 TAXES. Except as set forth in the SEC Reports
filed prior to the date of this Agreement or in Schedule 3.10(a), (a) the
Company and its subsidiaries have filed, been included in or sent, all
material returns, material declarations and reports and information returns
and statements required to be filed or sent by or relating to any of them
relating to any Taxes (as defined below) with respect to any material
income, properties or operations of the Company or any of its subsidiaries
(collectively, "Returns"); (b) as of the time of filing, the Returns
correctly reflected in all material respects the facts regarding the
income, business, assets, operations, activities and status of the Company
and its subsidiaries and any other material information required to be
shown therein; (c) the Company and its subsidiaries have timely paid or
made provision for all material Taxes that have been shown as due and
payable on the Returns that have been filed; (d) the Company and its
subsidiaries have made or will make provision for all material Taxes
payable for any periods that end before the Effective Time for which no
Returns have yet been filed and for any periods that begin before the
Effective Time and end after the Effective Time to the extent such Taxes
are attributable to the portion of any such period ending at the Effective
Time; (e) the charges, accruals and reserves for taxes reflected on the
books of the Company and its subsidiaries are adequate under generally
accepted accounting principles to cover the Tax liabilities accruing or
payable by the Company and its subsidiaries in respect of periods prior to
the date hereof; (f) neither the Company nor any of its subsidiaries is
delinquent in the payment of any material Taxes or has requested any
extension of time within which to file or send any material Return (other
than extensions granted to the Company for the filing of its Returns as set
forth in Schedule 3.10(a)), which Return has not since been filed or sent;
(g) no material deficiency for any Taxes has been proposed, asserted or
assessed in writing against the Company or any of its subsidiaries (or any
member of any affiliated or combined group of which the Company or any of
its subsidiaries is or has been a member for which either the Company or
any of its subsidiaries could be liable) other than those Taxes being
contested in good faith by appropriate proceedings and set forth in
Schedule 3.10(b) (which shall set forth the nature of the proceeding, the
type of return, the deficiencies proposed, asserted or assessed and the
amount thereof, and the taxable year in question); (h) neither the Company
nor any of its subsidiaries has granted any extension of the limitation
period applicable to any material Tax claims other than those Taxes being
contested in good faith by appropriate proceedings; (i) neither the Company
nor any of its subsidiaries is subject to liability for Taxes of any person
(other than the Company or its subsidiaries), including, without
limitation, liability arising from the application of U.S. Treasury
Regulation section 1.1502-6 or any analogous provision of state, local or
foreign law; and (j) neither the Company nor any of its subsidiaries is or
has been a party to any material tax sharing agreement with any corporation
which is not currently a member of the affiliated group of which the
Company is currently a member.
17
"Tax" means with respect to any person (i) any net income, gross
income, gross receipts, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, value-added, windfall profits, custom duty
or other tax, governmental fee, capital stock, social security (or
similar), unemployment, disability, transfer, registration, alternative or
add-on minimum, estimated or other like assessment or charge of any kind
whatsoever, together with any interest and any penalty, addition to tax or
additional amount imposed by any taxing authority (domestic or foreign) on
such person and (ii) any liability of the Company or any subsidiary for the
payment of any amount of the type described in clause (i) as a result of
being a member of an affiliated or combined group.
Section 3.11 EMPLOYEE BENEFITS. (a) Schedule 3.11(a) contains a
true and complete list of each bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance or termination pay,
hospitalization or other medical, dental, life, disability or other
insurance, supplemental unemployment benefits, profit-sharing, pension,
savings or retirement plan, program, agreement or arrangement, and each
other employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), for the benefit of any
employee or terminated employee of the Company or any ERISA Affiliate (the
"Plans"). Schedule 3.11(a) identifies each of the Plans that is an
"employee benefit plan," as that term is defined in section 3(3) of ERISA
(the "ERISA Plans").
(b) With respect to each Plan, the Company has heretofore
delivered or made available to Parent true and complete copies of each of
the following documents (to the extent applicable):
(i) a copy thereof;
(ii) a copy of the most recent annual report and
actuarial report, if required under ERISA, and the most recent report
prepared with respect thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting for Pensions;
(iii) a copy of the most recent actuarial report
prepared with respect thereto in accordance with Statement of Financial
Accounting Standards No. 106, Employer's Accounting for Non-Pension
Postretirement Benefits;
(iv) a copy of the most recent Summary Plan
Description;
(v) if the Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other funding agreement
and the latest financial statements thereof; and
(vi) the most recent determination letter received
from the Internal Revenue Service with respect to each Plan intended to
qualify under section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
18
(c) With respect to each ERISA Plan subject to Title IV of
ERISA, no material liability (other than liabilities for premiums due the
Pension Benefit Guaranty Corporation ("PBGC") (which premiums have been
paid when due)) under Title IV of ERISA has been incurred by the Company or
any ERISA Affiliate that has not been satisfied in full, and, to the
knowledge of the Company, no condition exists that presents a material risk
to the Company or any ERISA Affiliate of incurring a material liability
under such Title. To the extent this representation applies to sections
4064, 4069 or 4204 of Title IV of ERISA, it is made not only with respect
to each ERISA Plan but also with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to which the
Company or any ERISA Affiliate made, or was required to make, contributions
during the five (5)-year period ending on the Effective Time.
(d) The PBGC has not instituted proceedings to terminate
any ERISA Plan and, to the knowledge of the Company, no condition exists
that presents a material risk that such proceedings will be instituted.
(e) Except as set forth on Schedule 3.11(e), with respect
to each ERISA Plan subject to Title IV of ERISA, the present value of
accrued benefits under such plan, based upon the actuarial assumptions used
for funding purposes in the most recent actuarial report prepared by such
plan's actuary with respect to such plan did not exceed, as of its latest
valuation date, the then current value of the assets of such plan allocable
to such accrued benefits.
(f) Neither the Company nor any ERISA Affiliate, nor, to
the knowledge of the Company, any ERISA Plan, nor any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Company or any ERISA Affiliate,
any ERISA Plan, any such trust, or any trustee or administrator thereof, or
any party dealing with any ERISA Plan or any such trust could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA
or a Tax imposed pursuant to section 4975 or 4976 of the Code, except for
such penalties and Taxes which would not, individually or in the aggregate,
have a Material Adverse Effect.
(g) No ERISA Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, as of the last
day of the most recent fiscal year of such ERISA Plan ended prior to the
Effective Time; and all contributions required to be made with respect
thereto (whether pursuant to the terms of any ERISA Plan or otherwise) on
or prior to the Effective Time have been timely made.
(h) No ERISA Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any ERISA Plan a plan described
in section 4063(a) of ERISA.
(i) To the knowledge of the Company, each Plan has been
operated and administered in all material respects in accordance with its
terms and applicable law, including but not limited to ERISA and the Code.
(j) Each ERISA Plan intended to be "qualified" within the
meaning of section 401(a) of the Code has been drafted with the intention
to be so qualified and has been submitted to the Internal Revenue Service
along with a request for a favorable determination letter on or before the
date hereof, and it is anticipated that each such plan will be modified so
as to incorporate any conforming amendments requested or required by the
19
Internal Revenue Service as a condition to the issuance of such favorable
determination letter.
(k) To the Company's knowledge, except as reasonably
estimated and as set forth on Schedule 3.11(k), no amounts payable under
the Plans as a result of the consummation of the transactions contemplated
by this Agreement will fail to be deductible for federal income tax
purposes by application of section 280G of the Code.
(l) Except as set forth on Schedule 3.11(l), no Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of
the Company or any ERISA Affiliate beyond their retirement or other
termination of service (other than (i) coverage mandated by applicable law
or (ii) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in section 3(2) of ERISA).
(m) Except as provided in Schedule 3.11(m), the
consummation of the transactions contemplated by this Agreement will not
(i) entitle any current or former employee or officer of the Company or any
ERISA Affiliate to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement or (ii) accelerate
the time of payment or vesting, or increase the amount of compensation due
any such employee or officer.
(n) There are no pending or, to the knowledge of the
Company, threatened claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such
Plan (other than routine claims for benefits).
(o) The Company has reserved the right to amend or
terminate any Plan which is a welfare benefit plan, as that term is defined
in section 3(l) of ERISA.
Section 3.12 COMPLIANCE. Neither the Company nor any of its
subsidiaries is in violation of, or has violated, any applicable provisions
of (i) any laws, rules, statutes, orders, ordinances or regulations or (ii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise, or other instrument or obligations to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties are bound or
affected, which, individually or in the aggregate, would have or be
reasonably expected to have a Material Adverse Effect.
Section 3.13 ENVIRONMENTAL MATTERS. (a) Except as set forth in
Schedule 3.13 and to the knowledge of the Company, the Company and its
subsidiaries are in compliance with all applicable Environmental Laws
(which compliance includes, but is not limited to, the possession by the
Company and its subsidiaries of all permits and other governmental
authorizations required under applicable Environmental Laws, and compliance
with the terms and conditions thereof), except for any noncompliance that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 3.13, neither the
Company nor any of its subsidiaries has received any communication (written
or oral), whether from a governmental authority, citizens group, employee
or otherwise, that alleges that the Company is not in such compliance, and
there are no past or present actions, activities, circumstances,
conditions, events or incidents that would prevent or interfere with such
compliance in the future.
20
(b) Except as set forth in Schedule 3.13, there is no
Environmental Claim pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries, or, to the knowledge of the
Company, against any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law, which individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth in Schedule 3.13, there are no past
or present actions, activities, circumstances, conditions, events or
incidents (including, without limitation, the release, emission, discharge,
presence or disposal of any Hazardous Material) which could form the basis
of any Environmental Claim against the Company or any of its subsidiaries,
or, to the knowledge of the Company, against any person or entity whose
liability for any Environmental Claim the Company or any of its
subsidiaries has or may have retained or assumed either contractually or by
operation of law, which individually or in the aggregate would reasonably
be expected to have a Material Adverse Effect.
(d) Except as set forth in Schedule 3.13, neither the
Company nor any of its subsidiaries has, and to the knowledge of Company,
no other person has Released, placed, stored, buried or dumped Hazardous
Materials on, beneath or adjacent to any property owned, operated or leased
or formerly owned, operated or leased by the Company or any of its
subsidiaries, and neither the Company nor any of its subsidiaries has
received notice that it is a potentially responsible party for the Cleanup
of any property, whether or not owned or operated by the Company or any of
its subsidiaries, which individually or in the aggregate would reasonably
be expected to have a Material Adverse Effect.
(e) The Company and its subsidiaries have delivered or
otherwise made available for inspection to Parent true, complete and
correct copies and results of any material reports, studies, analyses,
tests or monitoring possessed or initiated by the Company or any of its
subsidiaries pertaining to Hazardous Materials in, on, beneath or adjacent
to the property owned or leased by the Company or any of its subsidiaries
or regarding the Company's and its subsidiaries' compliance with applicable
Environmental Laws.
(f) Except as set forth in Schedule 3.13, no transfers of
permits or other governmental authorizations under Environmental Laws, and
no additional permits or other governmental authorizations under
Environmental Laws, will be required to permit the Company and its
subsidiaries or the Surviving Corporation and its subsidiaries, as the case
may be, to be in full compliance with all applicable Environmental Laws for
the period immediately following the transactions contemplated hereby, as
conducted by the Company and its subsidiaries immediately prior to the date
hereof. To the extent that such transfers or additional permits and other
governmental authorizations are required, the Company and its subsidiaries
agree to use reasonable best efforts to effect such transfers and obtain
such permits and other governmental authorizations at the time such
transfers, permits and other governmental authorizations are required by
law.
(g) The following terms as used in this Section shall have
the following meanings:
21
"Cleanup" means all actions required by governmental
entities or Environmental Laws to: (1) cleanup, remove, treat or remediate
Hazardous Materials in the indoor or outdoor environment; (2) prevent the
Release of Hazardous Materials so that they do not migrate, endanger or
threaten to endanger public health or welfare of the indoor or outdoor
environment; (3) perform pre-remedial studies and investigations and
postremedial monitoring and care; or (4) respond to any government requests
for information or documents in any way relating to cleanup, removal,
treatment or remediation or potential cleanup, removal, treatment or
remediation of Hazardous Materials in the indoor or outdoor environment.
"Environmental Claim" means any claim, action, cause of
action, investigation or notice (written or oral) by any person or entity
alleging potential liability (including, without limitation, potential
liability for investigatory costs, Cleanup costs, governmental response
costs, natural resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from (a) the presence, or
Release into the indoor or outdoor environment, of any Hazardous Materials
at any location, whether or not owned or operated by the Company or any of
its subsidiaries or (b) circumstances forming the basis of any violation,
or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state, local and
foreign laws and regulations relating to pollution or protection of human
health or the environment, including without limitation, laws relating to
Releases or threatened Releases of Hazardous Materials into the indoor or
outdoor environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, Release, disposal, transport or handling of Hazardous Materials
and all laws and regulations with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Materials.
"Hazardous Materials" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil
and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Sec. 300.5, or
defined as such by, or regulated as such under, any Environmental Law.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment (including,
without limitation, ambient air, surface water, groundwater and surface or
subsurface strata) or into or out of any property, including the movement
of Hazardous Materials through or in the air, soil, surface water,
groundwater or property.
Section 3.14 INTELLECTUAL PROPERTY. Except to the extent that
the inaccuracy of any of the following (or the circumstances giving rise to
such inaccuracy) individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, and except as disclosed in the
SEC Reports filed prior to the date of this Agreement or as set forth in
Schedule 3.14: (1) the Company and each of its subsidiaries owns, or is
licensed or has the right to use (in each case, free and clear of any
Liens), all Intellectual Property (as defined below) used in or necessary
for the conduct of its business as currently conducted; (2) to the
knowledge of the Company, the use of any Intellectual Property by the
Company and its subsidiaries does not infringe on or otherwise violate the
rights of any person; (3) to the knowledge of the Company, no product (or
component thereof) or process used, sold or manufactured by and/or for, or
22
supplied to, the Company or any of its subsidiaries infringes or otherwise
violates the Intellectual Property of any other person; and (4) to the
knowledge of the Company, no person is challenging, infringing on or
otherwise violating any right of the Company or any of its subsidiaries
with respect to any Intellectual Property owned by and/or licensed to the
Company and its subsidiaries. For purposes of this Agreement "Intellectual
Property" shall mean trademarks, service marks, brand names, certification
marks, trade dress, assumed names, trade names and other indications of
origin, the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas, whether
patentable or not in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in
part and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; nonpublic information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works, whether
copyrightable or not in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; and any similar intellectual property or proprietary
rights.
Section 3.15 SIGNIFICANT AGREEMENTS. Schedule 3.15 sets forth a
complete and correct list of all contracts, agreements and commitments
(oral or written) between the Company or any of its subsidiaries, on the
one hand, and on the other hand, (i) DCC or any of its affiliates (other
than the Company and its subsidiaries) (excluding contracts, agreements and
commitments which collectively are immaterial to the Company and except for
this Agreement and certain other agreements entered into in connection with
this Agreement and to which Parent is a party or of which Parent is aware);
(ii) Chugai Pharmaceutical Co., Ltd. or any of its affiliates; or (iii)
Tanabe Seiyaku Co., Ltd. or any of its affiliates (the contracts,
agreements and commitments listed in Schedule 3.15, collectively, the
"Significant Agreements"). The Company has heretofore furnished or made
available to Parent complete and correct copies of the Significant
Agreements, each as amended or modified to the date hereof (including any
waivers with respect thereto). Except as set forth on Schedule 3.4 or
Schedule 3.15, each of the Significant Agreements is in full force and
effect and enforceable in accordance with its terms; neither the Company
nor any of its subsidiaries has received any notice (written or oral) of
cancellation or termination of, or any expression or indication of an
intention or desire to cancel or terminate, any of the Significant
Agreements; no Significant Agreement is the subject of, or, to the
knowledge of the Company, has been threatened to be made the subject of,
any arbitration, suit or other legal proceeding; with respect to any
Significant Agreement which by its terms will terminate as of a certain
date unless renewed or unless an option to extend such Significant
Agreement is exercised, neither the Company nor any of its subsidiaries has
received any notice (written or oral), or otherwise has any knowledge, that
any such Significant Agreement will not be so renewed or that any such
extension option will not be exercised; and there exists no event of
default or occurrence, condition or act on the part of the Company or any
of its subsidiaries or, to the knowledge of the Company, on the part of the
other parties to the Significant Agreements which constitutes or would
constitute (with notice or lapse of time or both) a breach of or default
under any of the Significant Agreements, except to the extent that the
inaccuracy of the foregoing insofar as it relates to contracts, agreements
23
and commitments referenced in Section 3.15(i) would not, individually or in
the aggregate, have a Material Adverse Effect.
Section 3.16 INSURANCE. Schedule 3.16 sets forth a complete and
correct list of all material insurance policies (including a brief summary
of the nature and terms thereof and any amounts paid or payable to the
Company or any of its subsidiaries thereunder) providing coverage in favor
of the Company or any of its subsidiaries or any of their respective
properties. Each such policy is in full force and effect, no notice of
termination, cancellation or reservation of rights has been received with
respect to any such policy, there is no default with respect to any
provision contained in any such policy, and there has not been any failure
to give any notice or present any claim under any such policy in a timely
fashion or in the manner or detail required by any such policy, except for
any such failures to be in full force and effect, any such terminations,
cancellations, reservations or defaults, or any such failures to give
notice or present claims which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The coverage
provided by such policies is, in the Company's judgment, reasonable in
scope and amount, in light of the risks attendant to the business and
activities of the Company and its subsidiaries.
Section 3.17 LABOR MATTERS. Except as set forth in Schedule
3.17 and except for normal and customary labor arrangements outside North
America, neither the Company nor any of its subsidiaries is a party to any
collective bargaining or other labor union contract applicable to persons
employed by the Company or any of its subsidiaries, no collective
bargaining agreement is being negotiated by the Company or any of its
subsidiaries and the Company has no knowledge of any material activities or
proceedings of any labor union to organize any of their respective
employees. There is no labor dispute, strike or work stoppage against the
Company or any of its subsidiaries pending or, to the Company's knowledge,
threatened which may interfere with the respective business activities of
the Company or any of its subsidiaries, except where such dispute, strike
or work stoppage would not reasonably be expected to have a Material
Adverse Effect.
Section 3.18 FDA MATTERS.
(a) Schedule 3.18 sets forth a complete and correct list of
all products that are, directly or indirectly, being researched in human
subjects or distributed for commercial sale by the Company or any of its
subsidiaries (the "Products")(including, on such Schedule 3.18, a list of
all material Licenses (as defined below) for each Product that have been
obtained by the Company or any of its subsidiaries, or form the basis for
manufacturing, distribution, sale or human research of a Product by the
Company or any of its subsidiaries).
(b) Except as set forth in Schedule 3.18, (i) with respect
to each Product: (A) the Company and its subsidiaries have obtained all
applicable approvals, clearances, authorizations, licenses and
registrations required by United States or foreign governments or
government agencies, to permit the manufacture, distribution, sale,
marketing or human research of such Product (collectively, "Licenses"); (B)
the Company and its subsidiaries are in full compliance with all terms and
conditions of each License in each country in which such Product is
marketed, and with all requirements pertaining to the
manufacture,distribution, sale or human research of such Product which is
not required to be the subject of a License; (C) the Company and its
24
subsidiaries are in full compliance with all applicable requirements (as
set forth in relevant statutes and regulations) regarding registration,
licensure or notification for each site (in any country) at which such
Product is manufactured, processed, packed, held for distribution or from
which it is distributed; and (D) to the extent such product is intended for
export from the United States, the Company and its subsidiaries are in full
compliance with either all United States Food and Drug Administration
(hereafter, "FDA") requirements for marketing or 21 U.S.C. 381(e) or 382;
(ii) all manufacturing operations performed by the Company and its
subsidiaries have been and are being conducted in full compliance with the
current good manufacturing practice, including, but not limited to, the
good manufacturing practice regulations issued by FDA and counterpart
requirements in the European Union and other countries; (iii) all
nonclinical laboratory studies, as described in 21 C.F.R. 58.3(d),
sponsored by the Company or any of its subsidiaries have been and are being
conducted in full compliance with the good laboratory practice regulations
set forth in 21 C.F.R. Part 58 and counterpart requirements in the European
Union and other countries; and (iv) the Company and its subsidiaries are in
full compliance with all reporting requirements for all Licenses or plant
registrations described in the preceding clauses (b)(i)(A) and (b)(i)(C),
including, but not limited to, the adverse event reporting requirements for
drugs in 21 C.F.R. Parts 312 and 314 and for devices in 21 C.F.R. Parts 812
and 803; except, in the case of the preceding clauses (b)(i)(A) through
(b)(i)(D), inclusive, (b)(ii), (b)(iii) and (b)(iv), for any such failures
to obtain or noncompliances which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing definition of "Licenses", such
definition shall specifically include, with respect to the United States,
new drug applications, abbreviated new drug applications, product license
applications, investigational new drug applications, premarket approval
applications, premarket notifications under Section 510(k) of the Federal
Food, Drug, and Cosmetic Act, investigational device exemptions, and
product export applications issued by FDA, as well as registrations issued
by the Drug Enforcement Administration of the Department of Justice.
(c) Except as set forth in Schedule 3.18, neither the
Company nor any of its subsidiaries nor any of their officers, employees or
agents has made any untrue statement of a material fact or fraudulent
statement to FDA, failed to disclose a fact required to be disclosed to
FDA, or committed any act, made any statement, or failed to make any
statement, that would reasonably be expected to provide a basis for FDA to
invoke its policy respecting "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities," set forth in 56 Fed. Reg. 46191
(September 10, 1991).
(d) The Company has provided or made available to Parent
all documents in its possession concerning communications to or from FDA,
or prepared by FDA, which bear in any material respect on compliance by the
Company and its subsidiaries with FDA regulatory requirements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DCC
DCC represents and warrants to Parent and Acquisition as follows:
25
Section 4.1 ORGANIZATION. DCC is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
Section 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. DCC has all
necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the board of directors of
DCC, and no other corporate proceedings on the part of DCC are necessary to
authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by DCC and,
assuming it constitutes a valid and binding agreement of the other parties
hereto, constitutes a legal, valid and binding agreement of DCC,
enforceable against DCC in accordance with its terms.
Section 4.3 NON-CONTRAVENTION; REQUIRED FILINGS AND CONSENTS.
(a) The execution, delivery and performance by DCC of this Agreement and
the consummation of the transactions contemplated hereby (including the
Merger) do not and will not (i) contravene or conflict with the Certificate
of Incorporation or By-Laws of DCC; (ii) assuming that all consents,
authorizations and approvals contemplated by subsection (b) below have been
obtained and all filings described therein have been made, contravene or
conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or
applicable to DCC or any of its properties; (iii) conflict with, or result
in the breach or termination of any provision of or constitute a default
(with or without the giving of notice or the lapse of time or both) under,
or give rise to any right of termination, cancellation, or loss of any
benefit to which DCC is entitled under any provision of any agreement,
contract, license or other instrument binding upon DCC or any of its
properties, or allow the acceleration of the performance of, any obligation
of DCC under any indenture, mortgage, deed of trust, lease, license,
contract, instrument or other agreement to which DCC is a party or by which
DCC or any of its assets or properties is subject or bound; or (iv) result
in the creation or imposition of any Lien on any asset of DCC, except in
the case of clauses (ii), (iii) and (iv) for any such contraventions,
conflicts, violations, breaches, terminations, defaults, cancellations,
losses, accelerations and Liens which, individually or in the aggregate,
would not reasonably be expected to prevent DCC from performing its
obligations hereunder.
(b) The execution, delivery and performance by DCC of this
Agreement and the consummation of the transactions contemplated hereby by
DCC require no action by or in respect of, or filing with, any governmental
body, agency, official or authority (either domestic or foreign) other than
(i) compliance with any applicable requirements of the HSR Act, the EC
Merger Regulation and the Canadian Competition Act; (ii) the filing of a
notice pursuant to Exon-Florio; (iii) compliance with any applicable
requirements of the Exchange Act and state securities, takeover and Blue
Sky laws; and (iv) such actions or filings which, if not taken or made,
would not, individually or in the aggregate, reasonably be expected to
prevent DCC from performing its obligations hereunder.
Section 4.4 ABSENCE OF LITIGATION. Except as previously
disclosed by DCC to the Company, Parent and Acquisition, as of the date
hereof, there is no action, suit, claim, investigation or proceeding
26
pending against, or to the knowledge of DCC, threatened against, DCC or any
of its properties before any court or arbitrator or any administrative,
regulatory or governmental body, or any agency or official which challenges
or seeks to prevent, enjoin, alter or delay the Merger or any of the other
transactions contemplated by this Agreement or the Stock Purchase
Agreement. As of the date hereof, neither DCC nor any of its properties is
subject to any order, writ, judgment, injunction, decree, determination or
award which would prevent or delay the consummation of the transactions
contemplated hereby.
Section 4.5 CERTAIN MATTERS CONCERNING THE COMPANY. (a) Except
for this Agreement and certain other agreements entered into in connection
with this Agreement and to which Parent is a party or of which Parent is
aware, Schedule 4.5 sets forth a complete and correct list of all
contracts, agreements and commitments (oral or written) between the Company
or any of its subsidiaries, on the one hand, and DCC or any of its
affiliates (other than the Company and its subsidiaries), on the other hand
(the "Dow Agreements").
(b) To the knowledge of DCC, and without having made any
special inquiry or investigation, except as disclosed in the SEC Reports
filed prior to the date of this Agreement or as set forth on Schedule
3.5(b), the Company and its subsidiaries have no liabilities of any nature
(whether accrued, absolute, contingent or otherwise), except for
liabilities incurred in the ordinary course of business since December 31,
1994 or which would not, individually or in the aggregate, have a Material
Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Each of Parent and Acquisition represents and warrants to the
Company as follows:
Section 5.1 ORGANIZATION. Each of Parent and Acquisition is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted. As of the closing pursuant to the Stock
Purchase Agreement and as of the Closing hereunder, Acquisition will be a
direct wholly owned subsidiary of Parent.
Section 5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent and Acquisition has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
the board of directors of Acquisition and Parent and by the sole
stockholder of Acquisition, and no other corporate proceedings on the part
of Parent or Acquisition are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly
and validly executed and delivered by each of Parent and Acquisition and,
assuming it constitutes a valid and binding agreement of the other parties
hereto, constitutes a legal, valid and binding agreement of each of Parent
and Acquisition, enforceable against each of Parent and Acquisition in
accordance with its terms.
27
Section 5.3 NON-CONTRAVENTION; REQUIRED FILINGS AND CONSENTS.
(a) The execution, delivery and performance by Parent and Acquisition of
this Agreement and the consummation of the transactions contemplated hereby
(including the Merger) do not and will not (i) contravene or conflict with
the Certificate of Incorporation or By-Laws of Parent or Acquisition; (ii)
assuming that all consents, authorizations and approvals contemplated by
subsection (b) below have been obtained and all filings described therein
have been made, contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Parent or Acquisition or any of their
respective properties; (iii) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without
the giving of notice or the lapse of time or both) under, or give rise to
any right of termination, cancellation, or loss of any benefit to which
Parent or Acquisition is entitled under any provision of any agreement,
contract, license or other instrument binding upon Parent, Acquisition or
any of their respective properties, or allow the acceleration of the
performance of, any obligation of Parent or Acquisition under any
indenture, mortgage, deed of trust, lease, license, contract, instrument or
other agreement to which Parent or Acquisition is a party or by which
Parent or Acquisition or any of their respective assets or properties is
subject or bound; or (iv) result in the creation or imposition of any Lien
on any asset of Parent or Acquisition, except in the case of clauses (ii),
(iii) and (iv) for any such contraventions, conflicts, violations,
breaches, terminations, defaults, cancellations, losses, accelerations and
Liens which, individually or in the aggregate, would not reasonably be
expected to prevent the consummation of the Merger.
(b) The execution, delivery and performance by Parent and
Acquisition of this Agreement and the consummation of the transactions
contemplated hereby (including the Merger) by Parent and Acquisition
require no action by or in respect of, or filing with, any governmental
body, agency, official or authority (either domestic or foreign) other than
(i) the filing of a certificate of merger in accordance with Delaware Law;
(ii) compliance with any applicable requirements of the HSR Act, the EC
Merger Regulation and the Canadian Competition Act; (iii) compliance with
any applicable requirements of the Exchange Act and state securities,
takeover and Blue Sky laws; (iv) the filing of a notice pursuant to Exon-
Florio; and (v) such actions or filings which, if not taken or made, would
not, individually or in the aggregate, reasonably be expected to prevent
the consummation of the Merger.
Section 5.4 ABSENCE OF LITIGATION. Except as previously
disclosed by Parent and Acquisition to the Company and DCC, as of the date
hereof, there is no action, suit, claim, investigation or proceeding
pending against, or to the knowledge of Parent and Acquisition, threatened
against, Parent or Acquisition or any of their respective properties before
any court or arbitrator or any administrative, regulatory or governmental
body, or any agency or official which challenges or seeks to prevent,
enjoin, alter or delay the Merger or any of the other transactions
contemplated by this Agreement or the Stock Purchase Agreement. As of the
date hereof, neither Parent nor Acquisition nor any of their respective
properties is subject to any order, writ, judgment, injunction, decree,
determination or award which would prevent or delay the consummation of the
transactions contemplated hereby.
Section 5.5 PROXY STATEMENT; SCHEDULE 13E-3. None of the
information provided by Parent or Acquisition specifically for use in the
Proxy Statement shall, at the time filed with the SEC, at the time mailed
28
to the Company's stockholders, at the time of the Stockholders' Meeting or
at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. None of the information
provided by Parent or Acquisition specifically for use in the Schedule 13E-
3(if required to be filed) will at the time the Schedule 13E-3 or any
amendments thereto are filed with the SEC, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
Section 5.6 NO PRIOR ACTIVITIES. Since the date of its
incorporation, Acquisition has not engaged in any activities other than in
connection with or as contemplated by this Agreement or the Stock Purchase
Agreement or in connection with arranging any financing required to
consummate the transactions contemplated hereby and thereby.
Section 5.7 FINANCING. Upon the terms and subject to the
conditions of this Agreement, Parent or Acquisition will have available all
funds necessary to satisfy its obligation to pay the aggregate Merger
Consideration.
Section 5.8 PARENT NOT AN INTERESTED STOCKHOLDER. As of the
date hereof, (i) neither Parent nor any of its affiliates is, with respect
to the Company, an "Interested Stockholder", as such term is defined in
Section 203 of Delaware Law and (ii) except to the extent that Parent and
its affiliates may be deemed to hold Shares as a result of this Agreement
or the Stock Purchase Agreement, Parent and its affiliates collectively do
not hold directly or indirectly five percent (5%) or more of the
outstanding voting securities of the Company.
ARTICLE VI
COVENANTS
Section 6.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as
otherwise expressly provided in this Agreement, during the period from the
date hereof to the Effective Time, the Company and its subsidiaries will
each conduct its operations according to its ordinary course of business
consistent with past practice, and the Company and its subsidiaries will
each use its reasonable best efforts to preserve intact its business
organization, to keep available the services of its officers and employees
and to maintain existing relationships with licensors, licensees,
suppliers, contractors, distributors, customers and others having business
relationships with it. Without limiting the generality of the foregoing,
and except as disclosed in the SEC Reports filed prior to the date of this
Agreement, as otherwise expressly provided in this Agreement, as required
by law or as set forth in Schedule 6.1, prior to the Effective Time,
neither the Company nor any of its subsidiaries will, without the prior
written consent of Acquisition (which consent will be deemed to include the
consent of any person designated from time to time by Acquisition by
written notice to the Company):
(a) amend its certificate or articles of incorporation or
by-laws or equivalent organizational documents;
29
(b) authorize for issuance, issue, sell, deliver or agree
or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other securities or
equity equivalents (including, without limitation, stock appreciation
rights), except as required by option agreements as in effect as of the
date hereof or upon any conversion of Series A Preferred Shares, or amend
any of the terms of any such securities or agreements outstanding as of the
date hereof;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock, or property or any combination thereof) in respect
of its capital stock (except that the Company may declare and pay dividends
on the Series A Preferred Shares in accordance with their terms and may
declare and pay its regular quarterly cash dividends in respect of issued
and outstanding Shares in an amount not to exceed $0.25 per Share per
quarter; PROVIDED, that the record dates for determining the holders of
Shares entitled to receive such regular quarterly cash dividends shall be
the close of business on the last business day of each calendar quarter),
or, except for the redemption of the Series A Preferred Shares pursuant
hereto and pursuant to the Company's Restated Certificate of Incorporation,
redeem, repurchase or otherwise acquire any of its securities or any
securities of its subsidiaries;
(d) (i) incur any indebtedness for borrowed money (except
for short term indebtedness incurred in the ordinary course of business
consistent with past practice pursuant to existing lines of credit) or
issue any debt securities or, except in the ordinary course of business
consistent with past practice, assume, guarantee or endorse the obligations
of any other person; (ii) make any loans, advances or capital contributions
to, or investments in, any other person (other than to wholly owned
subsidiaries of the Company); (iii) pledge or otherwise encumber shares of
capital stock of the Company or any of its subsidiaries; (iv) enter into or
invest in any Derivative Financial Instruments except in the ordinary
course of business consistent with the Company's current investment and
risk management policies; or (v) except in the ordinary course of business
consistent with past practice, mortgage or pledge any of its assets,
tangible or intangible, or create or suffer to exist any Lien thereupon;
(e) enter into, adopt or (except as may be required by law
or the terms of any such arrangement) amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase agreement, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust, plan,
fund or other arrangement for the benefit or welfare of any director,
officer or employee, or (except, in the case of employees who are not
officers or directors, for normal compensation increases in the ordinary
course of business consistent with past practice that, in the aggregate, do
not result in a material increase in benefits or compensation expense to
the Company) increase in any manner the compensation or benefits of any
director, officer or employee or pay any benefit not required by any plan
or arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock options, restricted stock, stock
appreciation rights or performance units);
(f) acquire, sell, lease or dispose of any assets outside
the ordinary course of business or any assets which in the aggregate are
30
material to the Company and its subsidiaries, taken as a whole, or enter
into any contract, agreement, commitment or transaction outside the
ordinary course of business consistent with past practice;
(g) change any of the accounting principles or practices
used by it, except as may be required as a result of a change in law, SEC
guidelines or generally accepted accounting principles;
(h) (i) acquire (by merger, consolidation, or acquisition
of stock or assets) any corporation, partnership or other business
organization or division thereof; (ii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $1,000,000
or, in the aggregate, are in excess of $5,000,000; (iii) settle any
litigations for amounts in excess of $200,000 individually or $1,000,000 in
the aggregate; or (iv) enter into or amend any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(i) make any Tax election or settle or compromise any Tax
liability, other than in the ordinary course of business;
(j) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities set forth in Schedule 3.5(b) or reflected
or reserved against in the consolidated financial statements (or the notes
thereto) of the Company and its consolidated subsidiaries or incurred in
the ordinary course of business consistent with past practice;
(k) terminate, modify, amend or waive compliance with any
provision of any of the Significant Agreements, or fail to take any action
necessary to preserve the benefits of any Significant Agreement to the
Company or any of its subsidiaries; or
(l) take, or agree in writing or otherwise to take, any of
the actions described above in Section 6.1.
Section 6.2 BOARDS OF DIRECTORS AND COMMITTEES; SECTION 14(f).
(a) Promptly following the purchase by Acquisition, Parent
or their affiliates of the Dow Shares and from time to time thereafter,
Acquisition shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Board that equals the product
of (i) the total number of directors on the Board (giving effect to the
election of any additional directors pursuant to this Section) and (ii) the
percentage that the number of Shares owned by Acquisition and its
affiliates (including any Shares purchased pursuant to the Stock Purchase
Agreement) bears to the total number of outstanding Shares, and the Company
shall, upon request by Acquisition, promptly either increase the size of
the Board or use its reasonable best efforts to secure the resignation of
such number of directors as is necessary to enable Acquisition's designees
to be elected to the Board and shall cause Acquisition's designees to be so
elected. Promptly upon request by Acquisition, the Company will use its
reasonable best efforts to cause persons designated by Acquisition to
constitute the same percentage as is on the Board of (i) each committee of
the Board, (ii) each board of directors of each subsidiary of the Company
designated by Acquisition and (iii) each committee of each such board.
Simultaneously with the purchase by Acquisition, Parent or their affiliates
of the Dow Shares, DCC shall use its reasonable best efforts to cause each
31
employee of DCC who is on the Board to resign from the Board and from the
board of directors of any subsidiary of the Company on which such
individual serves. Subject to the foregoing, the Company shall use its
reasonable best efforts to ensure that all of the members of the Board as
of the date hereof who are not employees of DCC shall remain members of the
Board until the Effective Time.
(b) The Company's obligations to appoint designees to the
Board shall be subject to Section 14(f) of the Exchange Act, and Rule 14f-1
promulgated thereunder. As promptly as practicable following the date of
this Agreement, the Company shall take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 6.2 and shall file with the SEC and distribute to its stockholders
such information as is required under Section 14(f) and Rule 14f-1. Parent
or Acquisition will supply to the Company in writing and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of Acquisition's
designees pursuant to this Section 6.2 and prior to the Effective Time, any
amendment of this Agreement or the Restated Certificate of Incorporation or
By-Laws of the Company, any termination of this Agreement by the Company,
any extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Acquisition or any waiver of any of
the Company's rights hereunder, will require the concurrence of a majority
of the directors of the Company then in office who are not designees of
Acquisition or employees of DCC or the Company. From and after the
purchase of the Dow Shares by Acquisition, Parent or their affiliates and
prior to the Effective Time, Parent and Acquisition will cooperate with the
Company to ensure that the Board at all times includes at least two
directors who are not designees of Acquisition or employees of DCC or the
Company.
Section 6.3 PROXY STATEMENT; SCHEDULE 13E-3.
(a) The Company shall, as promptly as practicable following
the date hereof, prepare and file the Proxy Statement with the SEC under
the Exchange Act. As soon as practicable following completion of review of
the Proxy Statement by the SEC, the Company shall mail the Proxy Statement
to its stockholders who are entitled to vote at the Stockholders' Meeting.
Subject to the fiduciary obligations of the Board under applicable law, the
Proxy Statement shall contain the recommendation of the Board that the
stockholders of the Company adopt this Agreement and the Merger.
(b) In the event Parent and the Company determine that the
Schedule 13E-3 is required to be filed with the SEC in connection with the
Merger, then, as promptly as practicable following notice of such
determination, the Company, Parent and Acquisition shall prepare and file
the Schedule 13E-3 with the SEC.
(c) The Company, Parent and Acquisition shall cooperate
with one another in the preparation and filing of the Proxy Statement and
the Schedule 13E-3 (if required to be filed) and shall use their reasonable
best efforts to promptly obtain and furnish the information required to be
included in the Proxy Statement and the Schedule 13E-3 and to respond
promptly to any comments or requests made by the SEC with respect to the
Proxy Statement or the Schedule 13E-3 (if required to be filed). Each
party hereto shall promptly notify the other parties of the receipt of
32
comments of, or any requests by, the SEC with respect to the Proxy
Statement or the Schedule 13E-3 (if required to be filed), and shall
promptly supply the other parties with copies of all correspondence between
such party (or its representatives) and the SEC (or its staff) relating
thereto. The Company, Parent and Acquisition each agrees to correct any
information provided by it for use in the Proxy Statement or the Schedule
13E-3 (if required to be filed) which shall have become, or is, false or
misleading.
Section 6.4 ACCESS TO INFORMATION. (a) Subject to applicable
law and the agreements set forth in Section 6.4(b), between the date hereof
and the Effective Time, the Company will give each of Parent and
Acquisition and their counsel, financial advisors, auditors, and other
authorized representatives reasonable access to all employees, plants,
offices, warehouses and other facilities and to all books and records of
the Company and its subsidiaries, will permit each of Parent and
Acquisition and their respective counsel, financial advisors, auditors and
other authorized representatives to make such inspections as Parent or
Acquisition may reasonably require and will cause the Company's officers
and those of its subsidiaries to furnish Parent or Acquisition or their
representatives with such financial and operating data and other
information with respect to the business and properties of the Company and
any of its subsidiaries as Parent or Acquisition may from time to time
reasonably request. No investigation pursuant to this Section 6.4 shall
affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereunder. The foregoing
shall not require the Company to permit any inspection, or to disclose any
information, which in the reasonable judgment of the Company would result
in the disclosure of any trade secrets of third parties or violate any
obligation of the Company with respect to confidentiality if the Company
shall have used reasonable efforts to obtain the consent of such third
party to such inspection or disclosure.
(b) Each of Parent and Acquisition agrees to be bound by
the confidentiality agreement, dated as of August 18, 1994 (the
"Confidentiality Agreement"), among Hoechst AG ("HAG"), Hoechst Celanese
Corporation ("HCC"), Roussel Uclaf S.A. ("RU"), DCC and the Company as if
the references to HAG, HCC and RU therein were to Parent and Acquisition,
except that Parent and Acquisition may (i) enter into this Agreement and
the Stock Purchase Agreement and (ii) acquire Shares pursuant to the Merger
and the Stock Purchase Agreement.
Section 6.5 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things reasonably necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and the Stock
Purchase Agreement. Without limiting the generality of the foregoing,
Parent, Acquisition, DCC and the Company shall cooperate with one another
(i) in the preparation and filing of any required filings under the HSR Act
and the other laws referred to in Sections 3.4(b), 4.3(b) and 5.3(b); (ii)
in determining whether action by or in respect of, or filing with, any
governmental body, agency, official or authority (either domestic or
foreign) is required, proper or advisable or any actions, consents, waivers
or approvals are required to be obtained from parties to any contracts, in
connection with the transactions contemplated by this Agreement and the
Stock Purchase Agreement; and (iii) in seeking timely to obtain any such
actions, consents and waivers and to make any such filings. In case at any
33
time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers and
directors of each party hereto shall take all such necessary action.
Section 6.6 PUBLIC ANNOUNCEMENTS. Parent and Acquisition, on
the one hand, and DCC and the Company, on the other hand, will consult with
each other before issuing any press release with respect to the
transactions contemplated by this Agreement and the Stock Purchase
Agreement, and shall not issue any such press release prior to such
consultation, except as may be required by applicable law or by applicable
rules of any securities exchange.
Section 6.7 INDEMNIFICATION; INSURANCE.
(a) From and after the purchase by Acquisition, Parent or
their affiliates of the Dow Shares, Parent and Acquisition shall indemnify
and hold harmless each person who is, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, an officer,
director or employee of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties" and individually, the "Indemnified
Party") against all losses, liabilities, expenses, claims or damages in
connection with any claim, suit, action, proceeding or investigation based
in whole or in part on the fact that such Indemnified Party is or was a
director, officer or employee of the Company or any of its subsidiaries and
arising out of acts or omissions occurring prior to and including the
Effective Time (including but not limited to the transactions contemplated
by this Agreement) to the fullest extent permitted by Delaware Law, for a
period of not less than six years following the Effective Time; PROVIDED
that in the event any claim or claims are asserted or made within such six-
year period, all rights to indemnification in respect of any such claim or
claims shall continue until final disposition of any and all such claims.
(b) Parent shall cause the Certificate of Incorporation and
By-Laws of the Surviving Corporation and its subsidiaries to include
provisions for the limitation of liability of directors and indemnification
of the Indemnified Parties to the fullest extent permitted under applicable
law and shall not permit the amendment of such provisions in any manner
adverse to the Indemnified Parties, as the case may be, without the prior
written consent of such persons, for a period of six years from and after
the date hereof.
(c) Without limitation of the foregoing, in the event any
such Indemnified Party is or becomes involved in any capacity in any
action, proceeding or investigation in connection with any matter,
including, without limitation, the transactions contemplated by this
Agreement, occurring prior to, and including, the Effective Time, Parent
will pay as incurred such Indemnified Party's legal and other expenses
(including the cost of any investigation and preparation) incurred in
connection therewith. Parent shall pay all expenses, including attorneys'
fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 6.7 or any
action involving an Indemnified Party resulting from the transactions
contemplated by this Agreement.
(d) For six years after the Effective Time, the Surviving
Corporation shall cause to be maintained the current policies of directors'
and officers' liability insurance maintained by the Company (provided that
the Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions which are substantially
34
equivalent) with respect to matters occurring prior to the Effective Time,
to the extent such policies are available; PROVIDED, that in no event shall
the Surviving Corporation be required to expend, in order to maintain or
procure insurance coverage pursuant to this Section 6.7(c), any amount per
annum greater than 125% of the current annual premiums paid by the Company
for such insurance (which the Company represents and warrants to be not
more than $620,000).
(e) Any determination to be made as to whether any
Indemnified Party has met any standard of conduct imposed by law shall be
made by legal counsel reasonably acceptable to such Indemnified Party,
Parent and the Surviving Corporation, retained at Parent's and the
Surviving Corporation's expense.
(f) This Section 6.7 is intended to benefit the Indemnified
Parties and their respective heirs, executors and personal representatives
and shall be binding on the successors and assigns of Parent, Acquisition
and the Surviving Corporation.
Section 6.8 NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent or Acquisition, and Parent or Acquisition
shall give prompt notice to the Company, upon becoming aware of (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate and (ii) any failure of the
Company, Parent or Acquisition, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; PROVIDED, that the delivery of any notice
pursuant to this Section 6.8 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
Section 6.9 REDEMPTION OF SERIES A PREFERRED STOCK; TERMINATION
OF STOCK PLANS. (a) Effective immediately prior to the Merger, the Company
shall redeem for cash all of the outstanding Series A Preferred Shares at
the applicable redemption price determined in accordance with the Company's
Restated Certificate of Incorporation (which shall not exceed $37.41 per
Series A Preferred Share). Upon such redemption, the Company shall retire
the shares so redeemed and restore such shares to the status of authorized
but unissued shares of Preferred Stock, par value $1.00 per share,
undesignated as to series. The foregoing provisions of this Section 6.9
shall be of no further force or effect if the Company purchases all of the
outstanding Series A Preferred Shares prior to the Merger.
(b) Except as may be otherwise agreed to by the Parent and
the Company, the Company Plans shall terminate as of the Effective Time.
Prior to the purchase by Parent, Acquisition and their affiliates of the
Dow Shares, the Board (or, if appropriate, any committee thereof) shall
adopt such resolutions or take such other actions as are required to (i)
effect the transactions contemplated by Section 1.8 hereof and (ii) with
respect to any stock option, stock appreciation or other stock benefit plan
of the Company or any of its subsidiaries not addressed by the preceding
clause (i), ensure that, following the Effective Time, no participant
therein shall have any right thereunder to acquire any capital stock of the
Surviving Corporation or any subsidiary thereof.
(c) Between the date of this Agreement and the Effective
Time, the Company shall reasonably cooperate with Parent and Acquisition in
structuring transactions (including those described in Sections 1.8(a),
1.8(b) and 6.9(b)) with respect to Employee Options and Performance Shares
35
so as to optimize the tax treatment of the Company, Parent and Acquisition
in connection therewith.
Section 6.10 NO SOLICITATION. (a) The Company will immediately
cease any existing discussions or negotiations with any third parties
conducted prior to the date hereof with respect to any Acquisition Proposal
(as defined below). The Company shall not, directly or indirectly, through
any officer, director, employee, representative or agent or any of its
subsidiaries, (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or would lead to, a proposal or offer for a
merger, consolidation, business combination, sale of substantial assets,
sale of a substantial percentage of shares of capital stock (including,
without limitation, by way of a tender offer) or similar transactions
involving the Company or any of its subsidiaries, other than the
transactions contemplated by this Agreement (any of the foregoing inquiries
or proposals being referred to in this Agreement as an "Acquisition
Proposal"), (ii) subject to the fiduciary duties of the Board under
applicable law, engage in negotiations or discussions concerning, or
provide any non-public information to any person or entity relating to, any
Acquisition Proposal, or (iii) agree to, approve or recommend any
Acquisition Proposal; PROVIDED, that nothing contained in this Section 6.10
shall prevent the Company from, and the Company may without any liability
for breach of this Agreement, (A) furnish information to, or enter into
discussions or negotiations with, any person in connection with an
unsolicited bona fide written Acquisition Proposal by such person or
recommend an Acquisition Proposal to the stockholders of the Company, if
and only to the extent that the Board determines in good faith after
consultation with outside legal counsel that such action is necessary for
the Board to comply with its fiduciary duties to stockholders under
applicable law and prior to furnishing such information to, or entering
into discussions or negotiations with, such person, the Board receives from
such person an executed confidentiality agreement with terms no less
favorable to the Company than those contained in the Confidentiality
Agreement; or (B) comply with Rules 14d-9 and 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal.
(b) The Company shall notify Parent immediately (and no
later than 24 hours) after receipt by the Company of any Acquisition
Proposal or any request for non-public information in connection with an
Acquisition Proposal or for access to the properties, books or records of
the Company by any person or entity that informs the Company that it is
considering making, or has made, an Acquisition Proposal. Such notice
shall be made orally and shall indicate the identity of the offeror and the
terms and conditions of such proposal, inquiry or contract.
Section 6.11 UNDISCLOSED AGREEMENTS. If, after the date hereof,
Parent becomes aware that there are any contracts, agreements and
commitments (oral or written; PROVIDED, that oral agreements referred to in
this Section 6.11 shall not include oral agreements entered into pursuant
to any contracts, agreements or commitments listed on Schedule 4.5)
existing as of the date of this Agreement between the Company or any of its
subsidiaries, on the one hand, and DCC or any of its affiliates (other than
the Company and its subsidiaries), on the other hand, which are not set
forth in Schedule 4.5, then, from and after the purchase by Acquisition,
Parent or their affiliates of the Dow Shares, the Company and, following
the Effective Time, the Surviving Corporation shall have the right,
exercisable within 60 days after Parent becomes aware of such contract,
agreement or commitment, to, at its sole discretion, terminate (effective
as of the date on which Acquisition, Parent or their affiliates purchase
36
the Dow Shares; PROVIDED, that any payments (not in excess of the fair
market value of the goods or services to which such payments relate) made
to DCC or any of its affiliates pursuant to such contract, agreement or
commitment shall not be required to be repaid pursuant to this clause) any
or all of such contracts, agreements or commitments, and neither Parent nor
the Company nor any of their respective subsidiaries shall incur or be
subject to any penalty or liability whatsoever with respect to such
termination. DCC agrees to be, and agrees to cause its applicable
affiliates to be, bound by any such termination. The termination
provisions set forth in this Section 6.11 shall be the sole remedy of
Parent, Acquisition and the Company, and their affiliates, for any breach
of the representations and warranties set forth in Section 4.5.
Sectopm 6.12 EMPLOYEE MATTERS. (a) For a period of at least two
years after the Effective Time, Parent shall cause the Surviving
Corporation to provide benefit plans (other than any stock-based plans,
programs or arrangements) that are in the aggregate substantially as
favorable as the Company's existing compensation, welfare and pension
benefit plans, programs and arrangements for the benefit of current and
former employees and directors of the Company (subject to such modification
as may be required by applicable law).
(b) If any employee of the Company or any of its
subsidiaries becomes a participant in any employee benefit or compensation
plan, arrangement, practice or policy of Parent or any affiliate of Parent,
such employee shall be given credit for eligibility and vesting under such
plan for all service prior to the Effective Time with the Company, any of
its subsidiaries, affiliates or any predecessors for which the employee
would have been credited in the Company's plans immediately prior to the
Effective Time.
Section 6.13 ACQUISITION. (a) Prior to the purchase by
Acquisition, Parent or their affiliates of the Dow Shares, each of Parent
and Acquisition shall take all steps necessary to cause Acquisition to
become a direct wholly owned subsidiary of Parent and remain so until the
Effective Time.
(b) Parent will take all action necessary to cause
Acquisition to perform its obligations hereunder and to consummate the
Merger on the terms and conditions set forth herein.
Section 6.14 CERTAIN INTERCOMPANY ACCOUNTS AND MATTERS.
Effective as of the purchase by Parent, Acquisition or their affiliates of
the Dow Shares, DCC and its subsidiaries, on the one hand, and the Company
and its subsidiaries, on the other hand, shall repay all outstanding
intercompany obligations between them for borrowed money, in accordance
with the terms of such obligations; PROVIDED, that any such obligations
between Marion Merrell Dow KK and Dow Chemical Japan ("Japanese
Intercompany Accounts") may remain outstanding until December 31, 1995;
PROVIDED, FURTHER, that Parent shall cause Marion Merrell Dow KK to perform
its obligations with respect to the Japanese Intercompany Accounts and
Parent guarantees the performance of the obligations of Marion Merrell Dow
KK with respect to the Japanese Intercompany Accounts.
Section 6.15 STOCK PURCHASE AGREEMENT. Upon the terms and
subject to the conditions set forth in the Stock Purchase Agreement, Parent
shall cause Acquisition to, and Acquisition shall, purchase the Dow Shares.
37
Section 6.16 NAME CHANGES. (a) Within 90 days following the
purchase of the Dow Shares by Parent, Acquisition or their affiliates, the
Company shall cause its subsidiaries to delete "DOW" from their respective
company names and within the same 90 days initiate all the necessary legal
filings with the appropriate local governmental authority to effectuate a
name change to a new name that does not contain DOW or a name confusingly
similar to DOW. Within eighteen (18) months following the purchase of the
Dow Shares by Parent, Acquisition or their affiliates, the Company and its
subsidiaries will also replace their current names, which include DOW, to
their new company names on all stationary, business cards, real and
personal property, directories, labels, advertising and promotional
material, drug registrations and any and all applications, registrations or
other documents filed or to be filed with international, national and local
governmental offices, agencies or authorities in any country.
(b) From and after the date Acquisition, Parent or their
affiliates purchase the Dow Shares, the Company shall indemnify and hold
DCC and its subsidiaries harmless from and against the out-of-pocket costs
and expenses described in the next sentence of this Section 6.16(b) which
DCC or its subsidiaries incur as a result of defending any suits, claims,
administrative or legal proceedings brought against DCC or any of its
subsidiaries to the extent that the basis of any such suit, claim or
proceeding is premised on the use of the name and trademark DOW by the
Company or any of its subsidiaries or on their products. The Company's
indemnification under this Section 6.16(b) shall be limited solely to the
out-of-pocket costs and expenses (including reasonable fees and expenses of
outside counsel) incurred by DCC or its subsidiaries in successfully
obtaining dismissal or other favorable disposition of any such suits,
claims or proceedings but shall not include the amounts of any settlement
payments, judgments or other payments of any type.
Section 6.17 1989 STOCK ACQUISITION AGREEMENT. Notwithstanding
Section 10.1 of the 1989 Stock Acquisition Agreement, dated as of July 17,
1989 among the Company, RH Acquisition Corp. and DCC (the "1989 Stock
Acquisition Agreement"), Section 7.23 of the 1989 Stock Acquisition
Agreement is hereby waived by the Company and DCC and shall be of no
further effect from and after the purchase of the Dow Shares by Parent,
Acquisition or their affiliates; PROVIDED, HOWEVER, that nothing herein
shall be deemed to amend, waive or supersede any other provision of the
1989 Stock Acquisition Agreement, including, without limitation, Section
7.18 and Section 7.19 thereof.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 CONDITIONS TO THE COMPANY'S, PARENT'S AND
ACQUISITION'S OBLIGATION TO EFFECT THE MERGER. The respective obligations
of the Company, Parent and Acquisition to effect the Merger are subject to
the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been adopted by the
affirmative vote of the stockholders of the Company by the requisite vote
in accordance with Delaware Law;
(b) any waiting period applicable to the Merger under the
HSR Act, EC Merger Regulation and the Canadian Competition Act shall have
terminated or expired;
38
(c) no statute, rule, regulation, executive order, decree,
ruling, injunction or other order shall have been enacted, entered,
promulgated or enforced by any court or governmental or supranational
authority of competent jurisdiction within the United States or the
European Community which prohibits the Merger or makes the Merger illegal;
and
(d) Acquisition, Parent or their affiliates shall have
purchased the Dow Shares.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 TERMINATION. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company:
(a) by mutual written consent of Parent, Acquisition, DCC
and the Company;
(b) by Parent, DCC or the Company if any court or
governmental or supranational authority of competent jurisdiction within
the United States or the European Community shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable;
(c) by Parent, DCC or the Company, at any time after January
31, 1996, if the Merger shall not have occurred by such date; PROVIDED,
that the right to terminate this Agreement under this subparagraph (c)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause or resulted in the failure of the
Merger to have occurred by such date; PROVIDED, FURTHER, that no party
hereto shall have the right to terminate this Agreement under this
subparagraph (c) if Acquisition, Parent or their affiliates shall have
acquired the Dow Shares;
(d) by Parent, at any time prior to the purchase by
Acquisition, Parent or their affiliates of the Dow Shares, if (i) there
shall have been a breach of any representation or warranty of the Company
contained herein or of Dow contained in the Stock Purchase Agreement which
would have a Material Adverse Effect or prevent the consummation of the
Merger or the transactions contemplated by the Stock Purchase Agreement,
(ii) there shall have been a breach of any covenant or agreement of the
Company or DCC contained herein or of Dow contained in the Stock Purchase
Agreement which would have a Material Adverse Effect or prevent the
consummation of the Merger or the transactions contemplated by the Stock
Purchase Agreement, which shall not have been cured prior to two business
days following notice of such breach, or (iii) the Board shall have
withdrawn or modified in a manner adverse to Parent its approval or
recommendation of this Agreement, the Merger or the transactions
contemplated by the Stock Purchase Agreement or shall have recommended, or
the Company shall have entered into an agreement providing for, an
Acquisition Proposal, or the Board shall have resolved to do any of the
foregoing;
39
(e) by DCC if Acquisition fails to purchase the Dow Shares
in violation of Acquisition's obligations under the Stock Purchase
Agreement; or
(f) at any time prior to the purchase by Acquisition,
Parent or their affiliates of the Dow Shares, by the Company, DCC or Parent
in the event the Stock Purchase Agreement shall have been terminated by the
mutual written consent of the parties thereto.
Section 8.2 EFFECT OF TERMINATION. In the event of the
termination and abandonment of this Agreement pursuant to Section 8.1, this
Agreement shall forthwith become void and have no effect, without any
liability on the part of any party hereto, other than the provisions of
this Section 8.2 and Section 8.3. The termination of this Agreement shall
not relieve any party from liability for any breach of this Agreement.
Section 8.3 FEES AND EXPENSES. Each party shall bear its own
expenses and costs in connection with this Agreement and the transactions
contemplated hereby.
Section 8.4 AMENDMENT. Subject to Section 6.2(c), this
Agreement may be amended by action taken by the Company, DCC, Parent and
Acquisition at any time before or after adoption of the Merger by the
stockholders of the Company but, after any such approval, no amendment
shall be made which decreases the Merger Consideration or changes the form
thereof or which adversely affects the rights of the Company's stockholders
hereunder without the approval of such stockholders. This Agreement may
not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
Section 8.5 EXTENSION; WAIVER. Subject to Section 6.2(c), at
any time prior to the Effective Time, the Company and DCC, on the one hand,
and Parent and Acquisition, on the other hand, may (i) extend the time for
the performance of any of the obligations or other acts of the other party,
(ii) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document, certificate or writing
delivered pursuant hereto, or (iii) waive compliance by the other party
with any of the agreements or conditions contained herein. Any agreement
on the part of any party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party hereto to assert any of its rights
hereunder shall not constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein shall not survive beyond the
purchase by Acquisition, Parent or their affiliates of the Dow Shares. The
covenants and agreements herein shall survive in accordance with their
respective terms.
Section 9.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
(including the Schedules hereto), the Stock Purchase Agreement and the
Confidentiality Agreement (i) constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and supersede all
other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and (ii) shall not be
40
assigned by operation of law or otherwise; PROVIDED that Acquisition may
assign its rights and obligations in whole or in part to any direct
subsidiary of Parent (provided that such transferee agrees in writing to be
bound by this Agreement), but no such assignment shall relieve Acquisition
of its obligations hereunder if such assignee does not perform such
obligations.
Section 9.3 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in
person, by facsimile or by registered or certified mail (postage prepaid,
return receipt requested), to the other party as follows:
if to Parent or Acquisition:
Hoechst Corporation
Route 202-206
P.O. Box 2500
Somerville, New Jersey 08876-1258
Fax: 908-231-4848
Attention: Harry R. Benz
with copies to:
Hoechst AG
65926 Frankfurt am Main
Germany
Fax: 011-49-69-319-113
Attention: Peter Schuster
and
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Fax: 212-735-2000
Attention: Roger S. Aaron
and
Franklin M. Gittes
if to the Company:
Marion Merrell Dow Inc.
9300 Ward Parkway
Kansas City, Missouri 64114
Fax: 816-966-3805
Attention: General Counsel
with copies to:
Shook, Hardy & Bacon PC
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2118
Fax: 816-421-5547
Attention: Jennings J. Newcom
and
Randall B. Sunberg
41
and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Fax: 212-558-3355
Attention: Francis J. Aquila
if to DCC, to:
The Dow Chemical Company
2030 Dow Center
Midland, Michigan 48674
Fax: 517-636-0861
Attention: Jane M. Gootee
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Fax: 312-701-7711
Attention: Scott J. Davis
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 9.4 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the law of the State of Delaware, without
regard to the principles of conflicts of law thereof. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to
jurisdiction of the courts of the State of Delaware and of the United
States of America located in the State of Delaware (the "Delaware Courts")
for any litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such Delaware Courts), waives any objection to
the laying of venue of any such litigation in the Delaware Courts and
agrees not to plead or claim in any Delaware Court that such litigation
brought therein has been brought in an inconvenient forum.
Section 9.5 PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns, and, except as provided in Section 6.7
nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 9.6 REMEDIES. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity. Notwithstanding anything to the contrary
contained herein, the Company's exclusive remedy for Parent's or
Acquisition's breach of Section 6.15 shall be an action for monetary
damages.
Section 9.7 SEVERABILITY. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
42
provision shall not affect the validity and enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid and unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity
or unenforceability, nor shall such invalidity or unenforceability affect
the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
Section 9.8 DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
Section 9.9 CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(b) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(c) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession in the United States, in each case applied on a basis consistent
with the manner in which the audited financial statements for the fiscal
year of the Company ended December 31, 1994 were prepared;
(d) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the stock or other equity
interests the holder of which is generally entitled to vote for the
election of the board of directors or other governing body of such
corporation, partnership, joint venture or other legal entity; PROVIDED,
that Carderm Capital L.P., a Delaware limited partnership, shall be deemed
a subsidiary of the Company for all purposes under this Agreement.
Section 9.10 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
43
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be executed on its behalf by its representatives thereunto duly
authorized, all as of the day and year first above written.
HOECHST CORPORATION
By: /s/ Harry R. Benz
------------------------------
Name: Harry R. Benz
Title: Secretary and Treasurer
H PHARMA ACQUISITION CORP.
By: /s/Klaus Schmieder
------------------------------
Name: Klaus Schmieder
Title: Vice President and
Treasurer
MARION MERRELL DOW INC.
By: /s/ Fred W. Lyons, Jr.
------------------------------
Name: Fred W. Lyons, Jr.
Title: Chairman and Chief
Executive Officer
THE DOW CHEMICAL COMPANY
By: /s/ Enrique C. Falla
------------------------------
Name: Enrique C. Falla
Title: Executive Vice
President and Chief
Financial Officer
44
SCHEDULES TO AGREEMENT OF MERGER
Schedule 3.1(a) Deemed Not to Be A Material Adverse Effect
Schedule 3.1(d) Entities Less Than 50% Owned by the Company
Schedule 3.2 Capitalization
Schedule 3.4 Non-Contravention, Filings and Consents
Schedule 3.5(b) Undisclosed Liabilities
Schedule 3.6(a) Changes Since December 31, 1994
Schedule 3.6(c) Derivative Financial Instruments
Schedule 3.9(a) Litigation
Schedule 3.10(a) Tax Matters
Schedule 3.10(b) Tax Proceedings
Schedule 3.11(a) Employee Benefit Plans
Schedule 3.11(e) Funding of ERISA Plans
Schedule 3.11(k) Application of Section 280G
Schedule 3.11(l) Benefits Beyond Retirement or Termination
Schedule 3.11(m) Severance Pay and Acceleration of Vesting of Stock
Options
Schedule 3.13 Environmental Matters
Schedule 3.14 Intellectual Property
Schedule 3.15 Significant Agreements
Schedule 3.16 Insurance Summary
Schedule 3.18 FDA Matters
Schedule 4.5 Dow Agreements
Schedule 6.1 Conduct of Business
These schedules have been omitted but will be furnished supplementally to
the Commission upon request.