EXHIBIT 99.1
CONTRIBUTION AGREEMENT
dated as of
January 30, 1996
among
THE DOW CHEMICAL COMPANY,
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY,
DOW ENVIRONMENTAL INC.
and
RADIAN CORPORATION
TABLE OF CONTENTS
SECTION Page
ARTICLE I
DEFINITIONS
1.01. Definitions. . . . . . . . . . . . . . . . . . . . 1
1.02. Accounting Terms and Determinations. . . . . . . . 9
ARTICLE II
ORGANIZATION; CONTRIBUTION
2.01. Organization of Newco. . . . . . . . . . . . . . . 10
2.02. Contribution . . . . . . . . . . . . . . . . . . . 10
2.03. Excluded Assets. . . . . . . . . . . . . . . . . . 12
2.04. Assumption of Liabilities. . . . . . . . . . . . . 13
2.05. Excluded Liabilities . . . . . . . . . . . . . . . 14
2.06. INTENTIONALLY OMITTED. . . . . . . . . . . . . . . 15
2.07. Assignment of Certain Contracts and Other
Assets . . . . . . . . . . . . . . . . . . . . . . 15
2.08. Closing. . . . . . . . . . . . . . . . . . . . . . 17
2.09. Closing Balance Sheet. . . . . . . . . . . . . . . 18
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DEI AND RADIAN
3.01. Existence and Power. . . . . . . . . . . . . . . . 19
3.02. Authorization. . . . . . . . . . . . . . . . . . . 19
3.03. Governmental Authorization . . . . . . . . . . . . 20
3.04. Non-Contravention. . . . . . . . . . . . . . . . . 20
3.05. Restricted Assets. . . . . . . . . . . . . . . . . 20
3.06. Third Quarter Financial Statements . . . . . . . . 21
3.07. Absence of Certain Changes . . . . . . . . . . . . 21
3.08. Properties . . . . . . . . . . . . . . . . . . . . 23
3.09. Sufficiency of Assets. . . . . . . . . . . . . . . 24
3.10. No Undisclosed Liabilities . . . . . . . . . . . . 25
3.11. Litigation . . . . . . . . . . . . . . . . . . . . 25
3.12. Material Contracts . . . . . . . . . . . . . . . . 25
3.13. Licenses and Permits . . . . . . . . . . . . . . . 27
3.14. Insurance Coverage . . . . . . . . . . . . . . . . 27
3.15. Compliance with Laws . . . . . . . . . . . . . . . 28
3.16. Inventories. . . . . . . . . . . . . . . . . . . . 28
3.17. Receivables; Payables. . . . . . . . . . . . . . . 28
3.18. Intellectual Property. . . . . . . . . . . . . . . 29
3.19. Finders' Fees. . . . . . . . . . . . . . . . . . . 29
3.20. Environmental Matters. . . . . . . . . . . . . . . 29
3.21. Warranties . . . . . . . . . . . . . . . . . . . . 31
3.22. Customers and Suppliers. . . . . . . . . . . . . . 31
3.23. Books and Records. . . . . . . . . . . . . . . . . 31
3.24. Taxes. . . . . . . . . . . . . . . . . . . . . . . 31
3.25. No Other Agreement . . . . . . . . . . . . . . . . 32
3.26. Derivatives. . . . . . . . . . . . . . . . . . . . 32
3.27. Material Equity Investment Entities. . . . . . . . 32
3.28. Employment Plans and Benefit Arrangements. . . . . 34
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TDCC AND HSB
4.01. Existence. . . . . . . . . . . . . . . . . . . . . 35
4.02. Authorization. . . . . . . . . . . . . . . . . . . 35
4.03. Governmental Authorization . . . . . . . . . . . . 36
4.04. Non-Contravention. . . . . . . . . . . . . . . . . 36
4.05. Required Approval. . . . . . . . . . . . . . . . . 37
4.06. Finders' Fees. . . . . . . . . . . . . . . . . . . 37
ARTICLE V
COVENANTS
5.01. Conduct of the Business. . . . . . . . . . . . . . 37
5.02. Access to Information. . . . . . . . . . . . . . . 39
5.03. Notices of Certain Events. . . . . . . . . . . . . 40
5.04. Reasonable Efforts; Further Assurances . . . . . . 40
5.05. Certain Filings. . . . . . . . . . . . . . . . . . 40
5.06. Public Announcements . . . . . . . . . . . . . . . 41
5.07. Stockholder Approval . . . . . . . . . . . . . . . 41
5.08. WARN . . . . . . . . . . . . . . . . . . . . . . . 41
5.09. INTENTIONALLY OMITTED. . . . . . . . . . . . . . . 41
5.10. Impairment of Assets . . . . . . . . . . . . . . . 41
5.11. Covenant of Parent . . . . . . . . . . . . . . . . 42
5.12. Covenants Not to Compete . . . . . . . . . . . . 42
5.13. Liens on Interests in Newco. . . . . . . . . . . . 43
5.14. Covenants Not to File Involuntary Bankruptcy . . . 43
5.15. INTENTIONALLY OMITTED. . . . . . . . . . . . . . . 43
5.16. INTENTIONALLY OMITTED. . . . . . . . . . . . . . . 43
5.17. Transfers of Capital Stock of Contributing
Subsidiary . . . . . . . . . . . . . . . . . . . . 43
5.18. Technology Access. . . . . . . . . . . . . . . . . 45
5.19. Certain Radian Property. . . . . . . . . . . . . . 46
ARTICLE VI
EMPLOYEES AND EMPLOYEE BENEFITS
6.01. Leased Employees . . . . . . . . . . . . . . . . . 46
6.02. Employment by Newco. . . . . . . . . . . . . . . . 47
6.03. Newco Plans. . . . . . . . . . . . . . . . . . . . 47
6.04. Relocation . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VII
CONDITIONS TO CLOSING
7.01. Conditions to the Closing. . . . . . . . . . . . . 49
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.01. Survival . . . . . . . . . . . . . . . . . . . . . 50
8.02. Indemnification. . . . . . . . . . . . . . . . . . 50
8.03. Notice of Third Party Claims; Assumption of
Defense. . . . . . . . . . . . . . . . . . . . . . 53
8.04. Settlements or Compromises . . . . . . . . . . . . 54
8.05. Failure of Indemnifying Party to Act . . . . . . . 55
ARTICLE IX
TERMINATION
9.01. Grounds for Termination. . . . . . . . . . . . . . 55
9.02. Effect of Termination. . . . . . . . . . . . . . . 56
ARTICLE X
MISCELLANEOUS
10.01. Notices . . . . . . . . . . . . . . . . . . . . . 56
10.02. Amendments; No Waivers. . . . . . . . . . . . . . 57
10.03. Expenses. . . . . . . . . . . . . . . . . . . . . 57
10.04. Successors and Assigns. . . . . . . . . . . . . . 58
10.05. Governing Law . . . . . . . . . . . . . . . . . . 58
10.06. Counterparts. . . . . . . . . . . . . . . . . . . 58
10.07. Entire Agreement. . . . . . . . . . . . . . . . . 58
10.08. Captions. . . . . . . . . . . . . . . . . . . . . 58
10.09. Specific Performance. . . . . . . . . . . . . . . 58
10.10. Severability. . . . . . . . . . . . . . . . . . . 58
10.11. No Third Party Beneficiaries. . . . . . . . . . . 59
Annex I Third Quarter Financial Statements of DEI
Annex II Third Quarter Financial Statements of Radian
Exhibit A Technology Access
Schedule 1.01 Debt
Schedule 2.02(a) Liens on Assets
Schedule 2.02(a)(iv) Other Contracts
Schedule 2.02(a)(xi) Contributed Amounts
Schedule 2.02(b)(x) Liens on Contributed Assets
Schedule 2.02(b) Certain Contributed Assets
Schedule 2.03(x) Excluded Assets of Radian
Schedule 2.03(xi) Excluded Assets of DEI
Schedule 2.04(c) Certain Assumed Liabilities
Schedule 2.07(f) Special Foreign Assets
Schedule 3.03 Government Authorization
Schedule 3.05 Restricted Assets
Schedule 3.07 Absence of Certain Changes
Schedule 3.08(a) Real Property
Schedule 3.08(b) Personal Property
Schedule 3.08(d) Liens
Schedule 3.08(e) Violation of Law
Schedule 3.10 No Undisclosed Liabilities
Schedule 3.11 Litigation
Schedule 3.12(a) Contracts
Schedule 3.12(b) Defaults
Schedule 3.13 Licenses and Permits
Schedule 3.16 Inventories
Schedule 3.17 Aging of Receivables
Schedule 3.18 Intellectual Property
Schedule 3.20 Environmental Matters
Schedule 3.21 Warranties
Schedule 3.22 Customers and Suppliers
Schedule 3.24 Taxes
Schedule 3.25 No Other Agreements
Schedule 3.26 Derivative Financial Instruments
Schedule 3.27 Material Equity Investment Entities
Schedule 3.28 Employment Plans and Benefit Arrangements
Schedule 4.03 Government Authorization
Schedule 8.02(g) Income Tax Caps
Schedule 10.03 Expenses
CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT, dated as of January 30,
1996, is among The Dow Chemical Company, a Delaware corporation
("TDCC"), Dow Environmental Inc., a Delaware corporation and a
wholly owned subsidiary of TDCC ("DEI"), The Hartford Steam
Boiler Inspection and Insurance Company, a Connecticut
corporation ("HSB") and Radian Corporation, a Texas corporation
and a wholly owned subsidiary of HSB ("Radian"). TDCC and HSB
are sometimes individually referred to as a "Parent." DEI and
Radian are sometimes individually referred to in this Agreement
as a "Contributing Subsidiary" and are sometimes collectively
referred to in this Agreement as "Contributing Subsidiaries."
RECITALS
A. TDCC and HSB have caused the formation of Radian
International LLC, a Delaware limited liability company
("Newco"), pursuant to a Limited Liability Company Agreement,
dated as of January 1, 1996, between DEI and Radian (the "LLC
Agreement").
B. Each of TDCC and HSB, on behalf of itself and
its Affiliates, wishes to develop through Newco the Newco
Services Business (as defined below).
C. Each of TDCC, HSB, DEI and Radian wishes to
contribute or cause the contribution of, as the case may be, the
Contributed Assets (as defined below) to Newco and to cause Newco
to perform, assume and discharge the Assumed Liabilities (as
defined below).
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01. Definitions. (a) The following terms, as used
in this Agreement, have the following meanings:
"Affiliate" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by, or
under common control with such other Person; provided that Newco
shall not be an Affiliate of any party to this Agreement for
purposes of this Agreement. For the purposes of this definition,
"control," when used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or
cause the direction of the operation or management and policies
of such Person, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Agreement" means, on any date, this Contribution
Agreement as originally in effect on the date of this Agreement
and as thereafter from time to time amended, supplemented,
amended and restated, or otherwise modified and in effect on such
date.
"Bankruptcy" has the meaning set forth in the LLC
Agreement.
"Benefit Arrangement" means any retirement or deferred
compensation plan, stock plan, unemployment compensation plan,
vacation pay, severance pay, bonus or benefit arrangement,
insurance or hospitalization program or any other fringe benefit
arrangement for any current or former employee, director,
consultant or agent (whether pursuant to contract, arrangement,
custom or informal understanding) which does not constitute an
Employee Plan, or any employment agreement (i) that is
maintained, administered or contributed to by DEI or Radian or
any of their respective ERISA Affiliates, or (ii) to which DEI or
Radian or any of their respective ERISA Affiliates is a party or
has any liability or contingent liability.
"Books and Records" means, with respect to any party,
copies of all books, records, files and papers, whether in hard
copy or computer format, related to the business of such party
(excluding minute books for its board of directors, committees or
shareholder meetings, incorporation documents, and stock transfer
records and tax or similar or related corporate records)
including without limitation engineering information, sales and
promotional literature, manuals and data, sales and purchase
correspondence, lists of present and former suppliers, lists of
present and former customers, personnel and employment records
(excluding at the Closing personnel records relating to
individual performance or evaluation records, medical histories
or other such sensitive information, which shall be contributed
at such time as the respective individual becomes an employee of
Newco), and any information relating to any Tax imposed on the
assets of such party.
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
"Closing Balance Sheet" means, with respect to each
Contributing Subsidiary, an audited balance sheet of its
Contributed Business as of 11:59 p.m. on December 31, 1995,
together with the notes thereto, consistent with the accounting
principles used in the preparation of the Third Quarter Balance
Sheet, except as may be required by GAAP.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company Interest" has the meaning set forth in the LLC
Agreement.
"Confidentiality Agreement" means that certain letter
agreement, dated August 9, 1995, between TDCC and HSB.
"Contributed Business" means, with respect to each
Contributing Subsidiary, all of its assets and liabilities that
are being contributed to or assumed by Newco, including without
limitation the assets and liabilities that (i) are Restricted
Assets or (ii) are listed on Schedules 2.02(b) and 2.04(c) which
will be contributed to or assumed by DEI from TDCC or its
Affiliates other than DEI or will be contributed to or assumed by
Radian from HSB or its Affiliates other than Radian pursuant to
this Agreement. For the avoidance of doubt, the assets and
liabilities of TDCC and Affiliates of TDCC other than DEI, and
the assets and liabilities of HSB and Affiliates of HSB other
than Radian, except for the assets and liabilities that are
listed on Schedules 2.02(b) and 2.04(c), are not included in the
definition of Contributed Business.
"Debt" means, with respect to each Contributing
Subsidiary and its Subsidiaries, taken as a whole, (i) indebted-
ness of such party for borrowed money, (ii) indebtedness of such
party for the deferred purchase price of services or property,
(iii) obligations of such party under leases which have been, or,
in accordance with GAAP, should be, recorded as capitalized
leases, (iv) indebtedness of such party consisting of unpaid
reimbursement obligations in respect of all outstanding drawings
under letters of credit issued for the account of such party, (v)
debt of others guaranteed by such party and (vi) indebtedness of
such party consisting of unpaid reimbursement obligations in
respect of amounts incurred or expended by an Affiliate on behalf
of a Contributing Subsidiary or any of its Subsidiaries for
services or property provided to such party or in satisfaction of
any obligation of such party; provided, however, that aggregate
indebtedness pursuant to this clause (vi) shall not exceed the
amounts set forth on Schedule 1.01; provided, further, however,
that amounts payable under existing written intercompany service
agreements shall not be covered under clause (vi) above. Debt
shall not include amounts excluded from the Assumed Liabilities
pursuant to Section 2.05(v) of this Agreement related to foreign,
U.S. Federal and state income taxes.
"Employee Plan" means any "employee benefit plan", as
defined in Section 3(3) of ERISA, that (i) is subject to any
provision of ERISA, and (ii) is maintained, administered or
contributed to by DEI or Radian respectively, or any of their
respective ERISA Affiliates or to which DEI or Radian or any of
their respective ERISA Affiliates is a party or has any liability
or contingent liability.
"Employee Seconding Agreements" means the agreements,
dated as of the Closing Date (i) between DEI and Newco pursuant
to which DEI will lease to Newco the services of the DEI Leased
Employees, (ii) between Radian and Newco pursuant to which Radian
will lease to Newco the services of the Radian Leased Employees
and (iii) between TDCC and Newco pursuant to which TDCC will
lease to Newco the services of the TDCC Leased Employees, each
for the amount described in such agreements.
"Environmental Investigation or Audit" means, without
limitation, any audits, studies, reports, analyses, representa-
tive samples and monitoring data relating to a Regulated Environ-
mental Activity, conducted internally (for purposes other than
day-to-day routine monitoring and data analysis) or by outside
consultants or engineers, with respect to any properties or
assets of a Contributing Subsidiary, but shall not include
publicly available studies or reports submitted to regulatory
agencies.
"Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, judicial decisions, regula-
tions, ordinances, rules, judgments, orders, decrees, codes,
plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and governmental restrictions, whether now
or hereafter in effect, relating to human health, to the
environment or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the
environment, including without limitation ambient air, surface
water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
Hazardous Substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means all liabilities
(including without limitation liabilities relating to the offsite
disposal of materials generated in the operation of facilities
constituting Contributed Assets), whether such liabilities are
vested or unvested, contingent or fixed, actual or potential, or
known or unknown, which (i) arise under or relate to matters
covered by Environmental Laws (including without limitation any
matters disclosed or required to be disclosed on Schedule 3.20)
and (ii) relate to actions occurring or conditions existing on or
prior to the Closing Date.
"Environmental Permits" means, with respect to each
Contributing Subsidiary, all permits, licenses, authorizations,
certificates and approvals of governmental authorities relating
to, or required by, Environmental Laws and necessary for the
operation of the Contributed Business of such party in the manner
currently operated.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute thereto, and
the rules and regulations promulgated thereunder.
"ERISA Affiliate" of any entity means any other entity
which, together with such entity, would be treated as a single
employer under Section 414 of the Code.
"Excluded Businesses" means (i) any businesses or
activities conducted by TDCC or any of its Affiliates other than
the businesses or activities conducted as of the date of this
Agreement by DEI and its Subsidiaries or conducted with the
assets listed on Part I of Schedule 2.02(b) and (ii) any
businesses or activities conducted by HSB or any of its
Affiliates other than the businesses or activities conducted as
of the date of this Agreement by Radian and its Subsidiaries or
conducted with the assets listed on Part II of Schedule 2.02(b).
"GAAP" means the generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession in the United
States, in each case applied on a basis consistent with the
manner in which the financial statements for the respective
Contributed Subsidiary ended September 30, 1995 were prepared.
"Hazardous Substances" means any toxic, radioactive,
caustic or otherwise hazardous substance, including petroleum,
its derivatives, by-products and other hydrocarbons, or any
substance having any constituent elements displaying any of the
foregoing characteristics, including without limitation any
substance regulated under Environmental Laws.
"Intellectual Property Right" means, with respect to
each Contributing Subsidiary, any trademark, service ▇▇▇▇,
service name, registration thereof or application for
registration therefor, trade name, invention, patent, patent
application, trade secret, know-how, copyright, copyright
registration, application for copyright registration, technology,
formulae, research and development data, computer software
programs, or any other similar type of proprietary intellectual
property right, in each case which is owned or licensed by such
Contributing Subsidiary or any of its respective Subsidiaries.
"Leased Employee" means any employee who provides
services to Newco pursuant to the Employee Seconding Agreements,
including "DEI Leased Employees" (those employees of DEI who
perform services for Newco pursuant to an Employee Seconding
Agreement), "Radian Leased Employees" (those employees of Radian
who perform services for Newco pursuant to an Employee Seconding
Agreement) and "TDCC Leased Employees" (those employees of TDCC
who perform services for Newco pursuant to an Employee Seconding
Agreement).
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest, easement, right of way,
or encumbrance of any kind in respect of such asset.
"Loss" means, collectively, any and all damage, loss,
cost, liability and expense, excluding interest and tax benefits,
but net of insurance proceeds received from third party insurers
and including without limitation reasonable expenses of
investigation and reasonable attorneys' fees and expenses in
connection with any claim, action, suit, proceeding or
governmental investigation.
"Material Adverse Change" means, with respect to any
Contributing Subsidiary, a material adverse change in the
business, assets, condition (financial or otherwise), or results
of operations of its Contributed Business taken as a whole.
"Net Debt" means, with respect to Radian's Contributed
Business, (i) Debt as of the Closing Date to HSB less (ii) the
sum of the cash, cash equivalents, and investments which have
terms of less than 120 days and are publicly traded equity
interests.
"Newco Protected Business" means solely (i) the
businesses conducted by DEI and Radian, and their respective
Subsidiaries, as of the date of this Agreement and (ii) the
businesses conducted as of the date of this Agreement with the
assets listed on Schedule 2.02(b).
"Newco Services Business" means (i) the Newco Protected
Business and, to the extent not covered by the Newco Protected
Business, (ii) the following businesses: (a) remediation,
including without limitation soil remediation, groundwater
remediation, thermal treatment, bioremediation and containment,
(b) consulting and engineering, including without limitation
hazardous waste practice, (c) strategic chemical management,
including without limitation environmental management, process
optimization, pollution prevention, environmental health and
safety programs, life cycle analysis, materials management and
outsourcing, and (d) systems, including without limitation water
systems, air systems, process systems and operations.
"Permitted Lien" means, with respect to the Contributed
Assets, any or all of the following: (i) Liens for property
taxes and assessments not yet delinquent or being contested in
good faith by appropriate proceedings and against which adequate
reserves or accruals have been established in such party's
Closing Balance Sheet, (ii) the rights of lessors and lessees
under leases executed in the ordinary course of business, (iii)
the rights of licensors and licensees under licenses executed in
the ordinary course of business, (iv) Liens, and rights to Liens,
of mechanics, warehousemen, carriers, repairmen and others
arising by operation of law and incurred in the ordinary course
of business, securing obligations not yet delinquent or being
contested in good faith by appropriate proceedings and against
which adequate reserves or accruals have been established in such
party's Closing Balance Sheet, (v) other Liens (other than Liens
securing Debt) which do not, individually or in the aggregate,
materially detract from the value of, or materially interfere
with the current or currently intended use of, the Contributed
Assets of such party subject thereto, or materially impair the
conduct of the business currently conducted, or currently
intended to be conducted, with such Contributed Assets, and (vi)
Liens disclosed on Schedule 3.08(d).
"Person" means an individual, a corporation, a
partnership, a limited liability company, an association, a trust
or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"Pre-Contribution Tax Period" means any Tax period
ending on or before 12:01 a.m. on January 1, 1996 or, in the case
of any Tax period which includes, but does not end on, January 1,
1996, the portion of such period up to but not including January
1, 1996.
"Regulated Environmental Activity" means any
generation, treatment, storage, recycling, transportation or
disposal of any Hazardous Substance.
"Release" means any discharge, emission or release,
including a Release as defined in CERCLA at 42 U.S.C. Sec. 9601(22).
The term "Released" has a corresponding meaning.
"Subsidiary" or "Subsidiaries" of any Person means any
corporation, partnership, limited liability company, association,
trust, joint venture or other entity or organization of which
such Person, either alone or through or together with any other
Subsidiary, owns, directly or indirectly, more than 50% of the
stock or other equity interests, the holder of which is generally
entitled to vote for the election of the board of directors or
other governing body of such corporation, partnership, limited
liability company, association, trust, joint venture or other
entity or organization.
"Tax" and "Taxes" mean any and all foreign, federal,
state, local or other tax assessments or other governmental
charges, including without limitation any income, franchise,
sales, use, withholding, employment, payroll, social security,
property, VAT, transfer, trade, net worth, business, occupation
taxes and any customs duties, other duties or governmental
charges, including without limitation any installment payment for
any of the foregoing, that are from time to time, imposed by, or
required to be paid to any governmental authority (including
penalties, additions, and interest on or with respect to any of
the foregoing).
"Third Quarter Balance Sheet" means, with respect to
each Contributing Subsidiary, the balance sheet of its
Contributed Business as of September 30, 1995.
"Third Quarter Financial Statements" means, with
respect to each Contributing Subsidiary, its Third Quarter
Balance Sheet and the unaudited statement of income for its
Contributed Business for the nine-month period then ended, in the
case of DEI, attached as Annex I and, in the case of Radian,
attached as Annex II.
"Transaction Documents" means collectively, this
Agreement, the LLC Agreement, the Confidentiality Agreement, and
any other documents, instruments and agreements related to or
contemplated under such agreements or to be executed at the
Closing.
(b) Each of the following terms is defined in the
Section set forth opposite such term:
Term Section
Acquiror 5.17(b)
Acquiror Proposal 5.17(b)
Anti-Competitive Contract 3.27(c)
Assumed Contracts 2.02(a)
Assumed Liabilities 2.04
BSL 5.12
Claims 8.02(h)
Closing 2.08(a)
Closing Date 2.08(a)
Contracts 2.02(a)
Contributed Amounts 2.02(a)
Contributed Assets 2.02(a)
Contributing Subsidiary Preamble
Conveyance Documents 2.08(b)
DEI Preamble
DEI Plans 3.28
DEI 401(k) Plan 6.03
Derivative Financial Instrument 3.26
Ecobilan Consent 2.07(e)
Employment Transfer Date 6.01
Excluded Assets 2.03
Excluded Liabilities 2.05
HSB Preamble
HSB ESOP 3.28
HSB Stock 6.03
Impaired Asset 5.10
Indemnified Party 8.02
Indemnified Parties 8.02
Indemnifying Party 8.02
IRS 3.28
LLC Agreement Recitals
Material Equity Investment Entity 3.27(a)
Material Lease 3.12
Newco Recitals
Newco Plans 6.03
Newco 401(k) Plan 6.03
Offeror 5.17(b)
Offeree 5.17(b)
Parent Preamble
Permit 3.13
Personal Property 2.02(a)
Radian Preamble
Radian Plans 3.28
Real Property 3.08
Required Consent 3.04
Restricted Assets 2.07(a)
Shares 5.17(b)
Special Foreign Assets 2.07(f)
Subsidiary Contracts 3.12(b)
TDCC Preamble
TDCC 401(k) Plan 6.03
1.02. Accounting Terms and Determinations. Unless
otherwise specified, all accounting terms used in this Agreement
shall be interpreted, all accounting determinations shall be
made, and all financial statements required to be delivered by
any Person under this Agreement shall be prepared in accordance
with GAAP applied on a basis consistent (except for changes
concurred in by such Person's independent public accountants)
with the Third Quarter Balance Sheet of such Person.
ARTICLE II
ORGANIZATION; CONTRIBUTION
2.01. Organization of Newco. Upon the terms and
subject to the conditions of this Agreement, prior to the
Closing, DEI and Radian shall enter into and execute the LLC
Agreement and shall cause Newco to be formed under the laws of
the State of Delaware (or shall not undo these actions if they
have already occurred). The LLC Agreement shall terminate if
this Agreement terminates and the Closing has not occurred.
Newco shall conduct no business, other than preparations for the
Closing, prior to the Closing.
2.02. Contribution. (a) Upon the terms and subject to
the conditions of this Agreement, each of Radian and DEI agrees
and each of HSB and TDCC agrees to cause Radian and DEI,
respectively, to transfer, assign and deliver, or cause to be
transferred, assigned and delivered to Newco at Closing or, in
the case of Restricted Assets, at such time or times as permitted
pursuant to Section 2.07 of this Agreement, as a contribution,
free and clear of all Liens, other than Permitted Liens or Liens
set forth on Schedule 2.02(a), all of its right, title and
interest in, to and under the assets, properties and business
(other than Excluded Assets) of Radian and DEI, respectively, of
every kind and description, wherever located, real, personal or
mixed, tangible or intangible, of such party as the same shall
exist on the Closing Date or, in the case of Restricted Assets,
at such time or times as permitted pursuant to Section 2.07 of
this Agreement, including all assets (other than Excluded Assets)
shown on its Third Quarter Balance Sheet and not disposed of in
the ordinary course of business, and all assets (other than
Excluded Assets) thereafter acquired until the Closing Date by
such party and not disposed of in the ordinary course of business
(collectively, with respect to each such party, the "Contributed
Assets"). Without in any way limiting the generality of the
foregoing, the Contributed Assets shall include (other than
Excluded Assets) all right, title and interest of such party in,
to and under:
(i) all real property and leases of, and other
interests in, real property (including leases, lands,
options and other such interests), in each case together
with all buildings, fixtures and improvements erected
thereon and all easements, rights of way and all of such
party's rights in any public or private thoroughfare
abutting such real property including without limitation,
the items listed on Schedule 3.08(a);
(ii) all personal property and interests therein,
including machinery, pipes, tools, equipment, furniture,
office equipment, communications equipment, vehicles,
storage tanks, spare and replacement parts, fuel and other
trade fixtures, fixed assets and tangible property
("Personal Property"), including without limitation the
items listed on Schedule 3.08(b);
(iii) all raw materials, work-in-process, supplies and
other inventories;
(iv) all rights under all contracts, agreements,
leases, licenses, commitments, sales and purchase orders and
other instruments (collectively, "Contracts") to which the
Contributing Subsidiary is a party, including, but not
limited to, Contracts listed on Schedule 2.02(a)(iv) or
Schedule 3.12(a) and all Contracts entered into by each
Contributing Subsidiary between the date of this Agreement
and the Closing (collectively, the "Assumed Contracts")
(provided, however, that the Assumed Contracts shall not
include Contracts entered into in breach of this Agreement);
(v) all accounts receivable, notes receivable and
other receivables;
(vi) all prepaid expenses, including, but not limited
to, real estate and ad valorem taxes, leases and rentals;
(vii) all ▇▇▇▇▇ cash located at operating facilities
of such party;
(viii) all rights, claims, credits, causes of action or
rights of set-off of such party or its Subsidiaries against
third parties, including without limitation unliquidated
rights under manufacturers' and vendors' warranties (but
excluding counterclaims, cross claims, warranty claims and
indemnity claims and other rights, whether or not yet
asserted, relating to litigation or other claims against
such party that are not Assumed Liabilities);
(ix) all licenses, permits or other governmental
authorizations, including without limitation the items
listed on Schedule 3.13;
(x) Books and Records;
(xi) with respect to DEI, all funds on deposit in the
bank accounts set forth on Part I of Schedule 2.02(a)(xi)
and, with respect to Radian, all funds on deposit in the
bank accounts set forth on Part II of Schedule 2.02(a)(xi)
(the "Contributed Amounts");
(xii) all capital stock and other securities or other
ownership interests of the Material Equity Investment
Entities listed on Schedule 3.27;
(xiii) all of the Contributing Subsidiary's
Intellectual Property Rights;
(xiv) all goodwill attributable to the Contributing
Subsidiary; and
(xv) with respect to DEI, the assets and properties
set forth on Part I of Schedule 2.02(b) and with respect to
Radian, the assets and properties set forth on Part II of
Schedule 2.02(b).
(b) Upon the terms and subject to the conditions of
this Agreement, TDCC agrees to transfer, assign and deliver, or
cause to be transferred, assigned and delivered, to DEI prior to
the Closing, as a contribution, free and clear of all Liens,
other than Permitted Liens or Liens set forth on
Schedule 2.02(b)(x), all of the right, title and interest in, to
and under the assets and properties set forth on Part I of
Schedule 2.02(b) (except for Restricted Assets). Upon the terms
and subject to the conditions of this Agreement, HSB agrees to
transfer, assign and deliver, or cause to be transferred,
assigned and delivered, to Radian prior to the Closing, as a
contribution, free and clear of all Liens, other than Permitted
Liens or Liens set forth on Schedule 2.02(b)(x), all of the
right, title and interest in, to and under the assets and
properties set forth on Part II of Schedule 2.02(b) (in each
case, except for Restricted Assets).
2.03. Excluded Assets. Each party expressly
understands and agrees that, notwithstanding any provision of
this Agreement to the contrary, the following assets and
properties of the Contributing Subsidiaries (the "Excluded
Assets") shall be excluded from the Contributed Assets:
(i) all assets sold or otherwise disposed of in the
ordinary course of the operation of its business and not in
violation of any provisions of this Agreement during the
period from the date of this Agreement until the Closing
Date;
(ii) counterclaims, cross claims, warranty claims and
indemnity claims and other rights, whether or not yet
asserted, relating to litigation or other claims against
such party that are not Assumed Liabilities;
(iii) all rights pursuant to any loan agreement
between DEI and TDCC or Radian and HSB, other than the loan
agreement dated as of the Closing Date between HSB and
Newco;
(iv) minute books for the board of directors,
committees or shareholder meetings, incorporation documents,
and stock transfer records and tax or similar or related
corporate records;
(v) all licenses provided by TDCC to DEI and its
Subsidiaries to use "DOW" in any company name and the DOW
Diamond trademark;
(vi) all assets (including refunds and credits)
related to foreign, U.S. Federal and state income taxes,
both current and deferred;
(vii) all insurance policies and proceeds therefrom;
(viii) with respect to DEI, the bank accounts (but not
the funds in those accounts) set forth on Part I of
Schedule 2.02(a)(xi) and, with respect to Radian, the bank
accounts (but not the funds in those accounts) set forth on
Part II of Schedule 2.02(a)(xi);
(ix) all licenses, permits or other governmental
authorizations, listed on Schedule 3.13, which are not
transferable as a matter of law;
(x) with respect to Radian, the assets and
properties set forth on Schedule 2.03(x); and
(xi) with respect to DEI, the assets and properties
set forth on Schedule 2.03(xi).
2.04. Assumption of Liabilities. Upon the terms and
subject to the conditions of this Agreement, DEI and Radian shall
cause Newco, effective at the time of Closing (except for
liabilities and obligations related to Restricted Assets, which
shall be assumed by Newco when the related Restricted Asset is
contributed to Newco), to assume the following liabilities and
obligations of the Contributing Subsidiaries as the same shall
exist on the Closing Date (collectively, the "Assumed
Liabilities"):
(a) except to the extent that a liability or
obligation referred to in this subparagraph (a) is an Excluded
Liability, all liabilities and obligations reflected on the Third
Quarter Balance Sheet of each party (other than any such
liabilities paid or discharged prior to the Closing Date) and all
liabilities and obligations of the type included in the line item
categories set forth on such Third Quarter Balance Sheet incurred
after the date of the Third Quarter Balance Sheet until the
Closing Date to the extent such liabilities and obligations are
incurred in the ordinary course of business and are not incurred
in violation of any provision of this Agreement (and other than
any such liabilities paid or discharged prior to the Closing
Date);
(b) all liabilities and obligations of the
Contributing Subsidiaries arising under the Assumed Contracts,
including without limitation the Contracts listed on Schedule
2.02(a)(iv) or Schedule 3.12(a), other than (x) liabilities or
obligations arising under Contracts that are Excluded Assets, (y)
liabilities or obligations attributable to any failure by any
such party or its Affiliates to comply with the terms of
Contracts that are Excluded Assets or (z) liabilities or
obligations arising under Contracts that are entered into in
breach of this Agreement; and
(c) all liabilities and obligations set forth in
Part I of Schedule 2.04(c) (which shall be certain liabilities
and obligations of TDCC assumed by DEI) and in Part II of
Schedule 2.04(c) (which shall be certain liabilities and
obligations of HSB assumed by Radian) except, in each case, for
liabilities related to Restricted Assets.
2.05. Excluded Liabilities. Notwithstanding any
provision in this Agreement, Newco is assuming only the Assumed
Liabilities and is not assuming any other liability or obligation
of whatever nature, whether presently in existence or arising
after the date of this Agreement (all such liabilities and
obligations not being assumed being referred to as the "Excluded
Liabilities"). Without in any way limiting the generality of the
foregoing, the following are Excluded Liabilities for purposes of
this Agreement:
(i) any liability or obligation arising from, or
with respect to, the Contributed Assets or the operations of
the Contributed Business which is incurred in, or
attributable to, any period ending on or prior to
September 30, 1995, except (x), to the extent not excluded
pursuant to clause (ii), (iii), (iv), (v) or (vi) below,
liabilities and obligations reflected on the Third Quarter
Balance Sheet of each party or (y) any liability or
obligation pursuant to the Assumed Contracts which, pursuant
to Section 2.04(b) of this Agreement, is an Assumed
Liability;
(ii) with respect to Radian, liability for Debt to
HSB to the extent that Radian's Net Debt exceeds
$18,672,594;
(iii) with respect to DEI, liability for Debt to TDCC;
provided, however, that (a) Debt owed by Dow Umweltservice
GmbH to Dow Deutschland Inc. as reflected on Schedule 1.01
and (b) accounts payable under existing written intercompany
service agreements not to exceed $3.256 million shall be
Assumed Liabilities and not Excluded Liabilities;
(iv) any liability or obligation relating to an
Excluded Asset;
(v) all liabilities related to foreign, U.S. Federal
and state income taxes, both current and deferred; and
(vi) all Environmental Liabilities.
2.06. Intentionally Omitted.
2.07. Assignment of Certain Contracts and Other
Assets. (a) Anything in this Agreement to the contrary notwith-
standing, this Agreement shall not constitute an agreement to
assign any asset listed on Schedule 3.05 or any asset (including
without limitation securities or other ownership interests) or
any Contract or Permit or instrument beneficially owned by either
Contributing Subsidiary or listed on Schedule 2.02(b), or any
claim or right or any benefit arising thereunder or resulting
therefrom if, in any such case, an attempted assignment thereof,
without the consent of a third party thereto, would constitute a
breach or other contravention thereof or in any way adversely
affect the rights of any party thereunder unless or until such
time as the consent of such third party has been obtained
(collectively, the "Restricted Assets").
(b) Both before and after the Closing, each party
shall use all commercially reasonable efforts to obtain any
required consent of third parties for the assignment of any of
its Restricted Assets or any claim or right or any benefit
arising thereunder to Newco. The parties shall cause Newco to
accept assignment of, and in the case of Contracts, assume the
liabilities relating to, any Restricted Asset as soon as such
consent is obtained and shall treat such assignment or assumption
as being effective on the Closing Date. If such consent to
assignment is not obtained, or if an attempted assignment thereof
would be ineffective or would adversely affect the rights of such
party thereunder so that Newco would not in fact receive all such
rights, the parties will use all commercially reasonable efforts
to obtain for Newco the benefits that Newco would have obtained
if such Restricted Asset could have been assigned to Newco.
Those efforts shall include, if such actions will not cause, on a
collective basis, material adverse consequences for Newco or the
parties to this Agreement or if the relevant third party consents
to such action, (i) subcontracting, sub-licensing or sub-leasing
to Newco the rights and obligations under the Restricted Asset,
or (ii) making an arrangement under which such party would
enforce for the benefit of Newco, with Newco assuming such
party's obligations or providing the personnel, equipment or
facilities (at Newco's expense) to such party to perform those
obligations, any and all rights of such party against a third
party. Except as provided in Section 2.07(e), each party will
promptly pay to Newco, when received, all monies (net of
reasonable out-of-pocket expenses) received by such party in
respect of any Restricted Asset or any claim or right or any
benefit arising thereunder, regardless of whether a consent for
the assignment of such Restricted Asset has been or can be
obtained.
(c) Notwithstanding the foregoing, if efforts to
obtain any required consent of third parties for the assignment
of any of its Restricted Assets or any claim or right or any
benefit arising thereunder to Newco would require Newco to (i)
assume any additional obligation (including, but not limited to,
an agreement from Newco which restricts the business activity of
Newco or any of its Affiliates or contains any form of non-
competition clause) or (ii) incur any additional out-of-pocket
expense not reasonably related to the value of the Restricted
Asset, then such obligation or expense shall not be assumed or
incurred without the prior written approval of both TDCC and HSB.
If such approval is not obtained, and if all other commercially
reasonable efforts to obtain such consent have failed, then TDCC,
HSB or such Contributing Subsidiary, as the case may be, shall
dispose of such Restricted Asset. Such party will promptly pay
to Newco, when received, all monies (net of reasonable out-of-
pocket expenses) received by such party in respect of any
disposition of any Restricted Asset.
(d) If, and to the extent that in respect of any
Restricted Asset, (i) consent from a third party cannot be
obtained, (ii) any of the arrangements contemplated in
Section 2.07(b) cannot be made or (iii) approval from TDCC or HSB
to incur any expense or assume any obligation cannot be obtained
and disposition as contemplated in Section 2.07(c) cannot be
made, none of the parties to this Agreement shall have any
further obligation to the other under this Section 2.07 with
respect to such Restricted Asset; provided, however, that the
provisions set forth in Sections 5.12 and 8.02 shall survive with
respect to such Restricted Asset.
(e) DEI's shares of common stock of Ecobilan, S.A.
shall be treated as a Restricted Asset until consents can be
obtained from third parties such that it would not be prejudicial
to Newco for these shares to be transferred to Newco (the
"Ecobilan Consent"). The earnings of Ecobilan, S.A. prior to the
date that the Ecobilan Consent is effective shall not,
notwithstanding anything to the contrary in this Agreement, inure
to the benefit of Newco.
(f) The capital stock and other securities or other
ownership interests of each of the Material Equity Investment
Entities (as defined in Section 3.27) owned by Radian and listed
on Schedule 2.07(f) (the "Special Foreign Assets") shall be
treated as a Restricted Asset; provided, however, that Radian
shall not be required to attempt to assign any of the Special
Foreign Assets or any claim or right or any benefit arising
thereunder to Newco. Notwithstanding anything to the contrary in
this Agreement, Radian agrees to transfer, assign and deliver, or
cause to be transferred, assigned and delivered to Newco as a
contribution, free and clear of all Liens, other than Permitted
Liens or Liens set forth on Schedule 2.02(b)(x), all proceeds
(net of reasonable out-of-pocket expenses), if any, with respect
to the dissolution, sale or disposition of any of the Special
Foreign Assets as soon as practicable after such dissolution,
sale or disposition. Radian, at the direction, with the
assistance, and in collaboration with Newco, will use all
commercially reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary
or desirable under applicable laws and regulations and any
applicable contractual obligations to cause the dissolution, sale
or disposition, on the best terms practicable, of the Special
Foreign Assets as soon as practicable after the Closing Date.
2.08. Closing. (a) The closing (the "Closing") of
the contribution of the Contributed Assets and the assumption by
Newco of the Assumed Liabilities under this Agreement shall take
place at the offices of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as soon as possible, but in no
event later than two (2) business days, after satisfaction of the
conditions set forth in Article VII, or at such other time or
place as the parties may agree (the "Closing Date"). It is
understood and agreed that notwithstanding the Closing Date for
the transactions described herein, the Contributed Business of
each Contributing Subsidiary shall be deemed to have been
operated for the benefit of Newco from and after January 1, 1996.
TDCC agrees to reimburse Newco for any dividends declared or paid
by DEI to TDCC or any of its Affiliates during between January 1,
1996 and the Closing Date. HSB agrees to reimburse Newco for any
dividends declared or paid by Radian to HSB or any of its
Affiliates during the period between January 1, 1996 and the
Closing Date.
(b) At the Closing, Newco shall enter into an
Assignment and Assumption Agreement with each of TDCC, HSB, DEI
and Radian reasonably satisfactory in form and substance to TDCC
and HSB and their respective counsel, and each of TDCC, HSB, DEI
and Radian shall deliver to Newco such special warranty deeds,
bills of sale, stock powers, endorsements, consents and
assignments reasonably satisfactory in form and substance to TDCC
and HSB and their respective counsel, and other good and
sufficient instruments of conveyance and assignment (the
"Conveyance Documents") as TDCC and HSB and their respective
counsel shall deem reasonably necessary or appropriate to vest in
Newco all right, title and interest in, to and under the
Contributed Assets and to effect the assumption by Newco of the
Assumed Liabilities.
2.09. Closing Balance Sheet. (a) As promptly as
practicable after the Closing Date, each of HSB and TDCC will
prepare, or cause its respective Contributing Subsidiary to
prepare, a Closing Balance Sheet. TDCC will cause Deloitte &
Touche LLP and HSB will cause Coopers & ▇▇▇▇▇▇▇ LLP to conduct an
audit for the purpose of rendering its unqualified report on its
Closing Balance Sheet. As promptly as practicable, but no later
than February 29, 1996, each of DEI or Radian will cause its
Closing Balance Sheet, together with the report thereon of
Deloitte & Touche LLP or Coopers & ▇▇▇▇▇▇▇ LLP, as the case may
be, to be delivered to the other party. Each Closing Balance
Sheet shall (x) fairly present the consolidated financial
position of the Contributed Business as of 11:59 p.m. on December
31, 1995 on a basis consistent with the accounting principles
used in the preparation of the Third Quarter Balance Sheet of
such Contributing Subsidiary and (y) be prepared in accordance
with GAAP on a basis consistent with those used in the
preparation of such Third Quarter Balance Sheet, except, in the
case of DEI, with respect to the treatment of goodwill and
except, in the case of Radian, with respect to the treatment of
salary continuation agreements.
(b) The parties agree that they will, and DEI and
Radian agree to cause Newco and their respective independent
accountants to, cooperate and assist in the preparation of the
Closing Balance Sheets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DEI AND RADIAN
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
SPECIFICALLY PROVIDED FOR IN THIS AGREEMENT, ALL OF THE
CONTRIBUTED ASSETS ARE CONTRIBUTED TO NEWCO "AS IS" AND "WHERE
IS" WITHOUT IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR
INTENDED USE OR PARTICULAR PURPOSE OR OTHERWISE.
Each Contributing Subsidiary hereby represents and
warrants to each other party and Newco as of the date of this
Agreement that:
3.01. Existence and Power. Such Contributing
Subsidiary is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and
has all powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted. Such Contributing Subsidiary is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased
by it or the nature of its activities make such qualification
necessary, except for those jurisdictions where failure to be so
qualified would not, individually or in the aggregate, result in
a Material Adverse Change. Such Contributing Subsidiary has
delivered or made available to the other parties true and
complete copies of the certificate of incorporation and bylaws of
such party as currently in effect.
3.02. Authorization. The execution, delivery and
performance by such Contributing Subsidiary of this Agreement,
the other Transaction Documents to which it is a party and all
other documents, instruments and certificates executed and
delivered by such Contributing Subsidiary in connection with this
Agreement or with such other documents, and the consummation by
such Contributing Subsidiary of the transactions contemplated by
this Agreement or by such other documents are within such
Contributing Subsidiary's powers and have been duly authorized by
all necessary action on the part of such Contributing Subsidiary.
This Agreement and each of the other Transaction Documents have
been duly and validly executed and delivered by such Contributing
Subsidiary and each constitutes a valid and binding agreement of
such Contributing Subsidiary, enforceable in accordance with its
terms, except as (i) the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent transfer,
moratorium or similar laws from time to time in effect affecting
creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of
general applicability.
3.03. Governmental Authorization. Except as set forth
on Schedules 3.03 and 3.05, the execution, delivery and
performance by such Contributing Subsidiary of this Agreement,
the other Transaction Documents to which it is a party and all
other documents, instruments and certificates executed and
delivered by such Contributing Subsidiary in connection with this
Agreement or with such other documents, require no action by or
in respect of, or filing with, any governmental body, agency,
official or authority other than any actions or filings necessary
to transfer or obtain any Permit.
3.04. Non-Contravention. The execution, delivery and
performance by such Contributing Subsidiary of this Agreement,
the other Transaction Documents to which it is a party and all
other documents, instruments and certificates executed and
delivered by such Contributing Subsidiary in connection with this
Agreement or with such other documents do not and will not (i)
contravene or conflict with the certificate of incorporation or
bylaws of such Contributing Subsidiary; (ii) assuming compliance
with the matters referred to in Section 3.03, contravene or
conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding
upon or applicable to such Contributing Subsidiary or its
Contributed Business; (iii) assuming the obtaining of all
consents necessary for the assignment of that party's Restricted
Assets (each such consent, a "Required Consent" and collectively,
the "Required Consents"), constitute a default under or give rise
to any right of termination, cancellation or acceleration of any
right or obligation or to a loss of any benefit relating to the
Contributed Business of such Contributing Subsidiary or its
Affiliates to which such Contributing Subsidiary is entitled, or
cause or require the creation of any encumbrance on any
Contributed Asset or the assumption of any debt, other than
Assumed Liabilities, by Newco under any provision of any note,
bond, mortgage, indenture, lease, license, franchise, permit,
agreement, contract or other instrument or obligation binding
upon such Contributing Subsidiary or its Subsidiaries, or any
Person controlling such Contributing Subsidiary or by which any
of the Contributed Assets is or may be bound for which a written
waiver has not been obtained as of the date of this Agreement, or
any Permit; (iv) result in the creation or imposition of any Lien
on any Asset, other than Permitted Liens; or (v) contravene or
conflict with any collective bargaining agreement binding upon
such Contributing Subsidiary.
3.05. Restricted Assets. Schedule 3.05 sets forth, as
to such Contributing Subsidiary, all of that Contributing
Subsidiary's Restricted Assets (other than Assumed Contracts that
are Restricted Assets).
3.06. Third Quarter Financial Statements. The Third
Quarter Financial Statements of such Contributing Subsidiary
fairly present, in all material respects in conformity with GAAP
applied on a consistent basis (except, in the case of DEI with
respect to the treatment of goodwill and, except, in the case of
Radian, with respect to the treatment of salary continuation
agreements), the financial position of such Contributing
Subsidiary and its respective Subsidiaries, taken as a whole, as
of the dates thereof and their results of operations for the
periods then ended. The Third Quarter Financial Statements
reflect all adjustments which are, in the opinion of the
management of such Contributing Subsidiary, necessary for a fair
statement of the results for the period. All such adjustments
are, in the opinion of the management of such Contributing
Subsidiary, of a normal recurring nature.
3.07. Absence of Certain Changes. Since September 30,
1995, the Contributed Business of such Contributing Subsidiary or
its Affiliates has been conducted in the ordinary course
consistent with past practice, and except as set forth on
Schedule 3.07 or as otherwise required or contemplated by this
Agreement, there has not been, with respect to the Contributed
Business of such Contributing Subsidiary or its Affiliates:
(a) any Material Adverse Change;
(b) any creation or other incurrence of any Lien
(other than Permitted Liens or Liens described on
Schedule 2.02(a)) on any material Contributed Asset other
than in the ordinary course of business consistent with past
practice;
(c) any creation of any obligation or liability
(whether fixed, contingent, unliquidated, absolute or
otherwise) with respect to any of the Contributed Assets to
be contributed by it or its Affiliates or with respect to
its Contributed Business that would be an Assumed Liability,
except trade or business obligations incurred in the
ordinary course of business consistent with past practice;
(d) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting its
Contributed Business or any Contributed Asset which,
individually or in the aggregate, has had, or could
reasonably be expected to result in, a Material Adverse
Change;
(e) any transaction, contract, agreement or other
instrument entered into, or commitment made, by such
Contributing Subsidiary relating to its Contributed Business
or any Contributed Asset (including the acquisition or
disposition of any assets) or any relinquishment by such
Contributing Subsidiary of any contract or other right, in
either case, material to its Contributed Business taken as a
whole, other than transactions and commitments in the
ordinary course of business consistent with past practices
and those required or contemplated by this Agreement or the
other Transaction Documents or any material amendment,
modification or waiver of any Contract;
(f) any change in any method of accounting or
accounting practice by such Contributing Subsidiary with
respect to its Contributed Business, except for any such
change after the date of this Agreement required by reason
of a concurrent change in GAAP;
(g) any (i) grant of any severance or termination
pay to any employee of its Contributed Business, (ii)
entering into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing
agreement) with any employee of its Contributed Business,
(iii) increase in benefits payable under any existing
severance or termination pay policies or employment
agreements or (iv) increase in compensation, bonus or other
benefits payable to employees of its Contributed Business,
other than, in the case of clauses (i) through (iv) above,
in the ordinary course of business consistent with past
practice;
(h) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union
or representative thereof to organize any employees of its
Contributed Business, or any lockouts, strikes, slowdowns,
work stoppages or threats thereof by or with respect to such
employees;
(i) any commitment for a capital expenditure or for
additions or improvements to property, buildings and
equipment, in each case that is anticipated to have an
outstanding balance in excess of $500,000 on the Closing
Date;
(j) any transaction, contract, agreement or other
instrument entered into, or commitment made, by such
Contributing Subsidiary with an Affiliate of such
Contributing Subsidiary, and which relates to the
Contributed Business of such Contributing Subsidiary or its
Affiliates; or
(k) declared, set aside or paid any dividend or
other distribution (whether in cash, stock, or property
or any combination thereof) in respect of its capital
stock.
3.08. Properties. (a) Schedule 3.08(a) correctly
describes all owned, leased or subleased real property included
in the Contributed Assets (collectively, the "Real Property" of
such Contributing Subsidiary), specifying in the case of leases
or subleases, the name of the lessor or sublessor, the lease term
and basic annual rent.
(b) Schedule 3.08(b) correctly describes all owned,
leased or subleased tangible Personal Property of such
Contributing Subsidiary with a book value in excess of $100,000,
and, in the case of owned personal property, any Liens thereon
other than Permitted Liens or Liens set forth on
Schedule 2.02(a), specifying in the case of leases or subleases,
the name of the lessor or sublessor, the lease term and basic
annual rent.
(c) (i) Such Contributing Subsidiary or its
Affiliates have good title (subject only to Permitted Liens
or Liens set forth on Schedule 2.02(a)) to all Contributed
Assets (whether personal, tangible or intangible) reflected
on its Third Quarter Balance Sheet or acquired after the
date of this Agreement, except for properties and assets
sold since the date of this Agreement in the ordinary course
of business consistent with past practice. Upon
consummation of the transactions contemplated by this
Agreement, Newco will have acquired good title in and to, or
a valid leasehold with respect to, each of the Contributed
Assets of such Contributing Subsidiary or its Affiliates
free and clear of all Liens, except for Permitted Liens or
Liens set forth on Schedule 2.02(a).
(ii) All Material Leases (as defined in
Section 3.12(a)(i)) are in good standing and are valid,
binding and enforceable against such Contributing Subsidiary
or its respective Subsidiaries (and, to the knowledge of
such Contributing Subsidiary, each other party thereto) in
accordance with their respective terms, and there does not
exist, under any lease of real property or personal
property, any material default or any event which, with
notice or lapse of time or both, would constitute a material
default by such Contributing Subsidiary or its Affiliates
or, to the knowledge of such Contributing Subsidiary, by any
other party thereto.
(iii) The buildings, facilities, structures and
equipment currently used in the Contributed Business of such
Contributing Subsidiary or its Affiliates are in reasonable
operating condition and repair and have been reasonably
maintained consistent with standards generally followed in
the industry (giving due account to the age and length of
use of same, ordinary wear and tear excepted), are
substantially suitable for their present uses and, to the
knowledge of such Contributing Subsidiary, have no material
defects.
(iv) The buildings, facilities, structures and
equipment included in the Contributed Assets of such
Contributing Subsidiary or its Affiliates currently have
access to (1) public roads or valid easements over private
streets or private property for such ingress to and egress
from all such plants, buildings and structures and (2) water
supply, storm and sanitary sewer facilities, telephone, gas
and electrical connections, fire protection, drainage and
other public utilities, as is necessary for the conduct of
the Contributed Business of such Contributing Subsidiary or
its Affiliates as currently or heretofore conducted.
(d) Schedule 3.08(d) sets forth all Liens securing
obligations for Debt that encumber any of the Contributed Assets.
(e) Except as set forth on Schedule 3.08(e), no
violation of any law, regulation, ordinance or Permit (including
without limitation laws, regulations, ordinances or Permits
relating to zoning, city planning or similar matters) relating to
the Contributed Business of such Contributing Subsidiary or its
Affiliates currently exists or has existed at any time since
January 1, 1995, except for (i) violations which have not had and
would not reasonably be expected to result, individually or in
the aggregate, in a Material Adverse Change, and (ii) matters
relating to Environmental Laws which are the subject of
Section 3.20. To the knowledge of such Contributing Subsidiary,
there are no developments affecting any of the Contributed Assets
of such Contributing Subsidiary or its Affiliates pending or
threatened which could reasonably be expected to detract
materially from the value of such Contributed Assets, materially
interfere with any present or intended use of any such
Contributed Assets or materially adversely affect the
marketability of such Contributed Assets;
(f) Such Contributing Subsidiary has delivered or
made available to the other Contributing Subsidiary, true and
complete copies of all records, title policies and reports,
leases, contracts and other materials referred to in this
Section 3.08 or described in Schedules 3.08(a) or (b).
3.09. Sufficiency of Assets. The Contributed Assets
contributed by such Contributing Subsidiary constitute all of the
assets (other than Excluded Assets) used or held for use by the
Contributing Subsidiary and its respective Subsidiaries in their
business, and no other assets (other than the Excluded Assets)
are required to operate the Contributed Business of such
Contributing Subsidiary or its Affiliates substantially as
currently or heretofore conducted.
3.10. No Undisclosed Liabilities. Except as set forth
on Schedule 3.10, there are no liabilities of the Contributed
Business of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than:
(i) liabilities disclosed or provided for in its
Third Quarter Balance Sheet; or
(ii) liabilities incurred in the ordinary course of
business consistent with past practice.
3.11. Litigation. Except as set forth on
Schedules 3.05, 3.11 or 3.18, there is no action, suit, or
proceeding (or, to the knowledge of such Contributing Subsidiary,
investigation) pending against, or to the knowledge of such
Contributing Subsidiary, threatened against or affecting, its
Contributed Business or any of its Contributed Assets before any
court or arbitrator or any governmental body, agency or official
(nor, to the knowledge of such Contributing Subsidiary, is there
any basis therefor) which, if determined or resolved adversely in
accordance with the plaintiff's demands, would reasonably be
expected to result in a Material Adverse Change or which in any
manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement.
3.12. Material Contracts. (a) Except for the
Contracts disclosed in Schedule 3.12(a), with respect to its
Contributed Business, such Contributing Subsidiary and its
respective Subsidiaries are not a party to or subject to:
(i) any lease providing for annual rentals or an
aggregate rental of $100,000 or more (each a "Material
Lease");
(ii) any Contract for the purchase of materials,
supplies, goods, services, equipment or other assets
(including the Contributed Assets) which either provides
payments by such Contributing Subsidiary of $100,000 or more
annually or extends for a term of greater than one year;
(iii) any Contract providing for annual payments of
$1,000,000 or more or extending beyond two years;
(iv) any sales, distribution or other similar
agreement providing for the sale by such Contributing
Subsidiary of materials, supplies, goods, services,
equipment or other assets that, for the period subsequent to
January 1, 1995, provided any revenue to such Contributing
Subsidiary or its respective Subsidiaries or any other such
agreements to be performed subsequent to the date of this
Agreement;
(v) any partnership, joint venture or other similar
contract arrangement or agreement;
(vi) any option agreement, license agreement,
franchise agreement or other agreement in respect of similar
rights granted to or held by such Contributing Subsidiary;
(vii) any agency, dealer, sales representative or
other similar agreement;
(viii) any agreement, contract or commitment that
substantially limits the freedom of such Contributing
Subsidiary or its respective Subsidiaries to compete in any
line of business or with any Person or in any area or to
own, operate, sell, transfer, pledge or otherwise dispose of
or encumber any of its Contributed Assets or which would so
limit the freedom of Newco after the Closing Date;
(ix) any agreement, contract or commitment which is
or relates to an agreement with or for the benefit of any
Affiliate of such Contributing Subsidiary;
(x) any labor union contract;
(xi) any agreement, contract or commitment with any
executive, director or officer of such Contributing
Subsidiary (other than those set forth on Schedule 3.28);
(xii) any agreement or commitment pursuant to which
such Contributing Subsidiary will make loans or advances, or
has or will have incurred debts or become a guarantor or
surety or pledged its credit on or otherwise become
responsible with respect to any undertaking of another
(except for the negotiation or collection of negotiable
instruments in the ordinary course of business);
(xiii) any indentures, credit agreements, loan
agreements, notes, mortgages, security agreements or other
agreements for financing; or
(xiv) Except as set forth on Schedule 3.28, any other
agreement, contract or commitment not made in the ordinary
course of business which is material to its Contributed
Business taken as a whole.
(b) Each of the Assumed Contracts of such
Contributing Subsidiary and each of the Contracts listed on
Schedule 3.12(a) relating to any of its respective Subsidiaries
(the "Subsidiary Contracts") is a valid and binding agreement of
such Contributing Subsidiary or its respective Subsidiaries and
is in full force and effect and, except as set forth on
Schedule 3.12(b), none of such Contributing Subsidiary, its
respective Subsidiary or, to the knowledge of such Contributing
Subsidiary, any other party to such Assumed Contract or
Subsidiary Contract is in default in any material respect under
the terms of any such Contract, nor, to the knowledge of such
Contributing Subsidiary, has any event or circumstance occurred
that, with notice or lapse of time or both, would constitute an
event of default thereunder. True and complete copies of each
such Assumed Contract and Subsidiary Contract have been delivered
or made available to the other Contributing Subsidiary.
3.13. Licenses and Permits. Schedule 3.13 correctly
describes each material license, franchise, permit or other
similar authorization affecting, or relating in any way to, such
Contributing Subsidiary's Contributed Business (which description
shall include whether such license, franchise, permit or
authorization can be transferred to Newco), together with the
name of the government agency or entity issuing such license or
permit (each a "Permit," and together the "Permits"). Except as
set forth in Schedule 3.13, such Permits are valid and in full
force and effect and, assuming the related Required Consents are
obtained, are transferable and none of the Permits (other than
Permits that are Excluded Assets) will, assuming the related
Required Consents have been obtained, be terminated or impaired
or become terminable as a result of the transactions contemplated
by this Agreement. Neither Contributing Subsidiary has any
reason to believe that any such Required Consent will not be
obtained within a reasonable time following the Closing Date.
Except as set forth on Schedule 3.13, upon obtaining all related
Required Consents and upon transfer of the appropriate Permits,
Newco will have all of the right, title and interest in all the
Permits. To the knowledge of such Contributing Subsidiary, no
license, franchise, permit or other similar authorization other
than those described on Schedule 3.13 is currently necessary for
the lawful operation of its Contributed Business in all material
respects as currently or heretofore conducted or the transfer of
its Contributed Business to Newco.
3.14. Insurance Coverage. Such Contributing
Subsidiary has furnished or made available to the other
Contributing Subsidiary a list of, and copies of, all insurance
policies covering its Contributed Business and its employees.
There is no claim relating to the Contributed Business by such
Contributing Subsidiary or its Affiliates pending under any of
such policies as to which coverage has been denied or disputed by
the underwriters of such policies. All premiums billed under all
such policies have been paid and such Contributing Subsidiary or
its Affiliates are otherwise in full compliance with the terms
and conditions of all such policies. Such policies of insurance
(or other policies providing substantially similar insurance
coverage) were in full force and effect for the period prior to
the Closing Date.
3.15. Compliance with Laws. Such Contributing
Subsidiary is not in violation of, has not since January 1, 1995
violated and/or, to such Contributing Subsidiary's knowledge is
not under investigation with respect to, and has not been
threatened to be charged with or given notice of any violation
of, any law, rule, ordinance or regulation, or judgment, order or
decree entered by any court, arbitrator or governmental
authority, domestic or foreign, applicable to the Contributed
Assets of such Contributing Subsidiary or its Affiliates or the
conduct of the Contributed Business of such Contributing
Subsidiary or its Affiliates, except for (i) violations that have
not had and would not reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Change and (ii)
matters relating to Environmental Laws, which are the subject of
Section 3.20.
3.16. Inventories. The inventories set forth in such
Contributing Subsidiary's Third Quarter Balance Sheet have been
properly stated at the lower of cost or fair market value
determined in accordance with GAAP consistently applied by such
Contributing Subsidiary. Since the date of such Third Quarter
Balance Sheet, the inventories related to the Contributed
Business of such Contributing Subsidiary or its Affiliates have
been maintained in the ordinary course of business. All of the
inventory recorded on its Third Quarter Balance Sheet consists of
items of a quality usable or saleable in the normal course of its
Contributed Business consistent with past practices and are and
will be in quantities sufficient for the normal operation of its
Contributed Business in accordance with past practice. Except as
set forth on Schedule 3.16, such Contributing Subsidiary has good
title to each item of inventory which is part of its Contributed
Business, free and clear of all Liens.
3.17. Receivables; Payables. All accounts, notes
receivable and other receivables reflected on the Third Quarter
Balance Sheet of such Contributing Subsidiary are, and all
accounts and notes receivable of such Contributing Subsidiary
arising from or otherwise relating to its Contributed Business
will be at the Closing Date, genuine and arise from bona fide
transactions. Since the date of its Third Quarter Balance Sheet,
such Contributing Subsidiary has not made any change in its
normal practices regarding the collection of accounts receivable
or the payment of accounts payable (including without limitation,
the acceleration of collections or the deferral of payments).
The aging of all accounts receivable for each Contributing
Subsidiary, held by such Contributing Subsidiary as of the date
of its Third Quarter Balance Sheet, is set forth in
Schedule 3.17.
3.18. Intellectual Property. Schedule 3.18 sets forth
a complete and correct list from each Contributing Subsidiary of
(i) all patent applications (including provisional applications)
and patents, and all continuation, divisional, continuation-in-
part, reissue and reexamination applications and patents based on
any of such patent applications and patents and all foreign
equivalents of any of such patent, applications and patents held
by such Contributing Subsidiary; (ii) all disclosures or
descriptions of any invention, whether active or not, that have
not been converted to a patent application; (iii) all registered
copyrights, trademarks, service marks, service names, trade names
used by such Contributing Subsidiary together with any
applications filed by such Contributing Subsidiary for
registration of any of them; and (iv) all license agreements
relating to any of subsections (i) through (iii) to which such
Contributing Subsidiary is a party, irrespective of whether a
particular license agreement pertains to rights granted by the
Contributing Subsidiary, received by the Contributing Subsidiary
or both. Schedule 3.18 also lists all pending and threatened
litigation relating to any one or more of subsections (i) through
(iv) and all actual litigation that has been finally settled
within three (3) years prior to the date of this Agreement.
Schedule 3.18 further identifies any Intellectual Property Rights
within subsections (i) through (iv) that is subject to any court
order, consent decree, agreement or other instrument that
restricts the use or licensing of such Intellectual Property
Rights by such Contributing Subsidiary or its Subsidiaries.
3.19. Finders' Fees. Except as set forth in
Section 4.06, there is no investment banker, broker, finder or
other intermediary which has been retained by, or is authorized
to act on behalf of, such Contributing Subsidiary who might be
entitled to any fee or commission from the other parties or any
of their respective Subsidiaries or Newco upon consummation of
the transactions contemplated by this Agreement.
3.20. Environmental Matters. (a) Except as disclosed
on Schedule 3.20, and to the knowledge of such Contributing
Subsidiary, with respect to the Contributed Business of such
Contributing Subsidiary or its Affiliates:
(i) within the preceding five years, no written
notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no
written complaint has been filed, no penalty has been
assessed and no investigation or review is pending or
threatened by any governmental entity or other Person with
respect to any (A) alleged violation by such Contributing
Subsidiary or its Affiliates of any Environmental Law or
liability thereunder, (B) alleged failure by such
Contributing Subsidiary to have any Environmental Permit,
(C) Regulated Environmental Activity or (D) Release of
Hazardous Substances;
(ii) the properties of such Contributing Subsidiary
or its Affiliates included as part of the Contributed Assets
are in compliance, in all material respects, with all
Environmental Laws and all Environmental Permits required
for operations have been obtained;
(iii) other than in material compliance with Environ-
mental Laws or Environmental Permits, no polychlorinated
biphenyls, radioactive material, urea formaldehyde, lead,
dioxins, furans, asbestos, asbestos-containing material or
underground storage tank (active or abandoned) is or has
been present within the past five years at any property
included as part of the Contributed Assets of such
Contributing Subsidiary or its Affiliates;
(iv) other than Releases in volumes immaterial to,
and in the normal course of the operations of, the
Contributed Business, no unpermitted Hazardous Substance has
been Released within the past five years (and no
notification of such Release has been filed or made within
the past five years) at, on or under any property included
as part of the Contributed Assets of such Contributing
Subsidiary or its Affiliates;
(v) no property included as part of the Contributed
Assets of such Contributing Subsidiary or its Affiliates or
any property to which such Contributing Subsidiary has,
directly or indirectly, transported, or arranged for the
transportation of, any Hazardous Substances is listed or
proposed for listing, on the National Priorities List
promulgated pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar federal, state or foreign list of
sites requiring investigation or clean-up;
(vi) there are no liens under Environmental Laws on
any of the Contributed Assets of such Contributing
Subsidiary or its Affiliates, no government actions have
been taken or are in process which could subject any of such
Contributed Assets to such liens and such Contributing
Subsidiary is not required to place any notice or
restriction relating to Hazardous Substances at any property
included as part of the Contributed Assets owned by it or
its Affiliates in any deed to such property; and
(vii) there are no Environmental Permits of such
Contributing Subsidiary that are nontransferable or require
consent, notification or other action to remain in full
force and effect following the Closing Date in which all
reasonable efforts will not have been made as soon as
practicable after the date of this Agreement to provide
notification to the appropriate government regulatory
authority or to provide, without limitation, any requested
applications, documents or correspondence to such regulatory
authority.
(b) With respect to the Contributed Business of such
Contributing Subsidiary or its Affiliates, there has been no
Environmental Investigation or Audit of which such Contributing
Subsidiary has knowledge in relation to any property included as
part of the Contributed Assets of such Contributing Subsidiary or
its Affiliates which has not been delivered to the other parties
prior to the date of this Agreement.
3.21. Warranties. Except as set forth in
Schedule 3.21, no material warranty or similar claims are
currently pending against such Contributing Subsidiary in
connection with its Contributed Business.
3.22. Customers and Suppliers. Except as set forth on
Schedule 3.22, such Contributing Subsidiary is not engaged in any
material disputes with any customers or suppliers, and to its
knowledge, no customer or supplier representing revenues or
expenses in excess of $250,000 per year to such Contributing
Subsidiary has indicated that it intends to terminate, not renew
any agreement which provides for automatic renewal or adversely
modify its arrangements with such Contributing Subsidiary or its
Contributed Business.
3.23. Books and Records. The Books and Records of
such Contributing Subsidiary with respect to its Contributed
Business (true and complete copies of which have been made
available to the other Contributing Subsidiary) are accurate and
complete in all material respects.
3.24. Taxes. Except as set forth in Schedule 3.24 or
reflected or accrued for in the Third Quarter Balance Sheet of
either Contributing Subsidiary or accrued by either Contributing
Subsidiary in the ordinary course of business after September 30,
1995, such Contributing Subsidiary and its Affiliates have timely
paid, or made provisions for the payment of, all Taxes (including
all interest and penalties thereon) which have accrued during the
Pre-Contribution Tax Period.
3.25. No Other Agreement. Except for sales or other
dispositions of assets in the ordinary course of business and
except as set forth in this Agreement or in Schedule 3.25,
neither Contributing Subsidiary has any contract, agreement,
arrangement or understanding with respect to the sale or other
disposition of any assets (including the Contributed Assets) of
such Contributing Subsidiary or its Affiliates.
3.26. Derivatives. Schedule 3.26 sets forth a
complete and correct list of all Derivative Financial Instruments
(including the face, contract or notional amount of and any open
position relating to such Derivative Financial Instruments and a
brief summary of the nature and terms thereof) as of December 31,
1995 to which such Contributing Subsidiary or any of its
Subsidiaries is a party or by which such Contributing Subsidiary
or any of its Subsidiaries is bound or any of their respective
Contributed Assets are subject or bound (including without
limitation funds of such Contributing Subsidiary or any of its
Subsidiaries invested by any other Person). For purposes of this
Agreement, "Derivative Financial Instrument" means any futures,
forward, swap, option or swaption contract, or any other
financial instrument with similar characteristics and/or
generally characterized by the financial community as a
"derivative" security. The definition of Derivative Financial
Instrument shall not include options or rights of first refusal
that relate to any Affiliate or any Material Equity Investment
Entity of such Contributing Subsidiary included in any agreement
to which any such Contributing Subsidiary is a party or by which
such Contributing Subsidiary is bound.
3.27. Material Equity Investment Entities. (a)
Schedule 3.27 sets forth a complete and correct list of all
Material Equity Investment Entities (as defined below) of such
Contributing Subsidiary, which list sets forth the amount of
capital stock of or other equity interests in such Material
Equity Investment Entities owned by the Contributing Subsidiary,
directly or indirectly. In addition, each Contributing
Subsidiary has furnished or made available to the other parties
copies of each such Material Equity Investment Entity's
certificate of incorporation and by-laws or equivalent
organizational documents. "Material Equity Investment Entity" or
"Material Equity Investment Entities" means any corporation,
partnership, limited liability company, association, trust, joint
venture or other entity or organization of which such
Contributing Subsidiary (either alone or through or together with
any other subsidiary), owns, directly or indirectly, more than
10% of the stock or other equity interests the holder of which is
generally entitled to vote for the election of the board of
directors or other governing body of such corporation,
partnership, limited liability company, association, trust, joint
venture or other entity or organization.
(b) Except, in the case of Radian, for Contracts or
instruments with respect to (i) Amoco Environmental Services
Company, Corporacion Radian, S.A. De C.V., Tecnologias Y
Servicios Ambientales Tesam S.A., ATOS S.A.R.L., Environment,
Transport and Planning, S.L., R.S.K. Environmental Limited,
Radian D-Tech Inc., or Cera Dynamics Limited or (ii) Subsidiaries
wholly owned by Radian (whether beneficially or of record),
neither Contributing Subsidiary nor, to the knowledge of such
Contributing Subsidiary, any of its Material Equity Investment
Entities has entered into any Contract or instrument which would
prohibit or impede the transfer of any of the capital stock and
other securities or other ownership interests of the Material
Equity Investment Entities included in the Contributed Assets of
such Contributing Subsidiary.
(c) Except, in the case of Radian, for (i) Contracts or
instruments with respect to ATOS S.A.R.L., Environment, Transport
and Planning, S.L., and R.S.K. Environmental Limited, (ii) the
Asset Transfer Agreement dated March 15, 1994 by and among
Schlumberger Technology Corporation, Schlumberger Holdings
Limited, Radian and Radian Limited, (iii) the Asset Transfer
Agreement dated December 21, 1992 between Automated Compliance
Systems, Inc. and Radian, and (iv) the following Contracts:
(a) Basic Order Agreement effective January 1, 1994 with ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Midland (Radian Project No. 635046); (b) Technical
Support for Regulatory Development for the Metal Products &
Machinery Manufacturing Industry, Phase I effective October 1,
1994 with the Environmental Protection Agency ("EPA") (Radian
Project No. 630046); (c) Technical Support for Regulatory
Development for the Metal Products & Machinery Manufacturing
Industry Phase 2 effective June 5, 1995 with the EPA (Radian
Project No. 630128); (d) Technical Support for Regulatory
Development for the Pulp & Paper Industry effective June 13, 1995
with the EPA (Radian Project No. 630134); (e) Technical Support
for Regulatory Development for the Pesticide Industry effective
May 31, 1995 with the EPA (Radian Project No. 630131);
(f) Technical Support for Regulatory Development for the
Pharmaceutical Industry effective May 23, 1995 with the EPA
(Radian Project No. 630127); (g) Technical Support for Regulatory
Development for the Industrial Laundry Industry effective
June 22, 1995 with the EPA (Radian Project No. 630135);
(h) Technical Support for Regulatory Development for the
Transportation Equipment Cleaning Industry effective June 19,
1995 with the EPA (Radian Project No. 630136); and (i) Technical
Support for RCRA Hazardous Waste Control Programs effective
December 1, 1992 with the EPA (Radian Project No. 285017),
neither Contributing Subsidiary nor, to the knowledge of such
Contributing Subsidiary, any of its Material Equity Investment
Entities has entered into any Contract or instrument which would
restrict the business activity of Newco, TDCC, HSB or any of
their Affiliates or contains any form of non-competition clause
(an "Anti-Competitive Contract").
3.28. Employment Plans and Benefit Arrangements.
Schedule 3.28 sets forth each Employee Plan and each Benefit
Arrangement that is maintained by, administered by or contributed
to by each Contributing Subsidiary for the benefit of employees
in the Contributed Business. With respect to each such Employee
Plan and Benefit Arrangement (except as disclosed on
Schedule 3.28):
(i) DEI shall provide or make available to Radian
true and correct copies of each Employee Plan and Benefit
Arrangement listed on Schedule 3.28 with respect to which DEI has
any liability (the "DEI Plans"). Radian shall provide or make
available to DEI true and correct copies of each Employee Plan
and Benefit Arrangement listed on Schedule 3.28 with respect to
which Radian has any liability (the "Radian Plans"). DEI has
supplied or made available to Radian, to the extent applicable, a
true and correct copy of the most recent annual report, actuarial
report, accountant's opinion of the plan's financial statements,
summary plan description and Internal Revenue Service ("IRS")
determination letter with respect to each DEI Plan. Radian has
supplied or made available to DEI, to the extent applicable, a
true and correct copy of the most recent annual report, actuarial
report, accountant's opinion of the plan's financial statements,
summary plan description and IRS determination letter with
respect to each Radian Plan.
(ii) Each DEI Plan and each Radian Plan complies and
has been administered in form and in operation in all material
respects with all applicable requirements of law, and no event
has occurred which will or could cause any such plan to fail to
comply with such requirements and no notice has been issued by
any governmental authority questioning or challenging such
compliance.
(iii) Each DEI Plan and each Radian Plan which is an
employee pension benefit plan (as defined in section 3(2) of
ERISA) and which is intended to be tax-qualified under
section 401(a) of the Code has received a favorable determination
letter from the IRS and there have been no amendments to such
plans which are not the subject of a favorable determination
letter issued with respect thereto by the IRS and no event has
occurred which will or could give rise to disqualification of any
such plan.
(iv) Except for The Hartford Steam Boiler Inspection
and Insurance Company Leveraged Employee Stock Ownership Plan
(the "HSB ESOP"), none of the assets of any DEI Plan or Radian
Plan is invested in employer securities or employer real
property.
(v) There have been no "prohibited transactions" (as
described in section 406 of ERISA or section 4975 of the Code)
with respect to any DEI Plan or any Radian Plan.
(vi) There are no actions, suits or claims (other
than routine claims for benefits) pending or threatened involving
any DEI Plan or any Radian Plan or the assets thereof.
(vii) None of the DEI Plans or the Radian Plans are
subject to Title IV of ERISA or are multiemployer plans (as
defined in section 3(37) of ERISA).
(viii) Except as set forth on Schedule 3.28, neither
DEI nor Radian has any liability or contingent liability for
providing, under any DEI Plan or Radian Plan or otherwise, any
post-retirement medical or life insurance benefits, other than
statutory liability for providing group health plan continuation
coverage under Part 6 of Title I of ERISA and section 4980B of
the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TDCC AND HSB
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
SPECIFICALLY PROVIDED FOR IN THIS AGREEMENT, ALL OF THE
CONTRIBUTED ASSETS ARE CONTRIBUTED TO NEWCO "AS IS" AND "WHERE
IS" WITHOUT IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR
INTENDED USE OR PARTICULAR PURPOSE OR OTHERWISE.
Each of TDCC and HSB hereby represents and warrants to
each other party and Newco as of the date of this Agreement that:
4.01. Existence. Such party is duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization.
4.02. Authorization. The execution, delivery and
performance by such party of this Agreement, the other
Transaction Documents to which it is a party and all other
documents, instruments and certificates executed and delivered by
such party in connection with this Agreement or with such other
documents, and the consummation by such party of the transactions
contemplated by this Agreement and by such other documents are
within such party's powers and have been duly authorized by all
necessary action on the part of such party. This Agreement and
each of the other Transaction Documents have been duly and
validly executed and delivered by such party and each constitutes
a valid and binding agreement of such party, enforceable in
accordance with its terms, except as (i) the enforceability of
this Agreement may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, moratorium or similar laws from
time to time in effect affecting creditors' rights generally and
(ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
4.03. Governmental Authorization. Except as set forth
on Schedule 4.03, the execution, delivery and performance by such
party of this Agreement, the other Transaction Documents to which
it is a party and all other documents, instruments and
certificates executed and delivered by such party in connection
with this Agreement or with such other documents, require no
action by or in respect of, or filing with, any governmental
body, agency, official or authority other than any filings
necessary to transfer or obtain any Permit.
4.04. Non-Contravention. The execution, delivery and
performance by such party of this Agreement, the other
Transaction Documents to which it is a party and all other
documents, instruments and certificates executed and delivered by
such party in connection with this Agreement or with such other
documents do not and will not (i) contravene or conflict with the
certificate of incorporation or bylaws of such party; (ii)
assuming compliance with the matters referred to in Section 4.03,
contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to such party or its
Contributed Business; (iii) conflict with, or result in the
breach or termination of any provision of or constitute a default
(with or without the giving of notice or the lapse of time or
both) under or give rise to any right of termination,
cancellation or acceleration of any right or obligation or to a
loss of any benefit to which such party is entitled under any
provision of any material agreement, contract, license or other
instrument binding upon such party or any of its properties, or
allow the acceleration of the performance of any obligation of
such party under any note, bond, mortgage, indenture, lease,
license, franchise, permit, agreement, contract or other
instrument or obligation binding upon such party or any of its
properties for which a written waiver has not been obtained as of
the date of this Agreement; (iv) result in the creation or
imposition of any Lien on any asset of such party, except in the
case of clauses (ii), (iii) and (iv), for any such
contraventions, conflicts, violations, breaches, terminations,
defaults, cancellations, losses, accelerations and Liens which,
individually or in the aggregate, would not reasonably be
expected to prevent such party from performing its obligations
under this Agreement.
4.05. Required Approval. The execution, delivery and
performance by such party of this Agreement, the Transaction
Documents to which it is a party and all other documents,
instruments and certificates executed and delivered by such party
in connection with this Agreement or with such other documents,
do not require the approval of such party's stockholders.
4.06. Finders' Fees. Except, in the case of TDCC, for
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, whose fees
will be paid by TDCC, and, in the case of HSB, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated, whose fees will be paid by HSB, there
is no investment banker, broker, finder or other intermediary
which has been retained by, or is authorized to act on behalf of,
such party who might be entitled to any fee or commission from
the other parties or any of their respective Affiliates or Newco
upon consummation of the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS
5.01. Conduct of the Business. (a) From the date of
this Agreement until the earlier of the Closing Date and the
termination of this Agreement (except as otherwise provided in
this Agreement or as TDCC or HSB, as the case may be, may consent
in writing), TDCC and DEI shall cause the Contributed Business of
DEI, and HSB and Radian shall cause the Contributed Business of
Radian, to be conducted in the ordinary course of business
consistent with past practice and shall use their commercially
reasonable efforts to:
(i) preserve intact the business organizations and
relationships with third parties relating to such
Contributed Business;
(ii) keep available the services of the present
employees connected with such Contributed Business;
(iii) continue making marketing, advertising,
promotional, and other similar expenditures relating to such
Contributed Business in the ordinary course of business
consistent with past practice;
(iv) duly comply in all material respects with all
laws, regulations or ordinances, including without
limitation all Environmental Laws, applicable to such
Contributed Business;
(v) maintain all of its Books and Records relating
to such Contributed Business in the ordinary course of
business consistent with past practice;
(vi) continue the maintenance and repair of the
Contributed Assets relating to such Contributed Business
(including the making of scheduled capital expenditures) in
the ordinary course of business consistent with past
practice;
(vii) maintain in effect insurance with respect to the
Contributed Assets related to such Contributed Business in
the ordinary course of business and against risks, with
carriers and in amounts (including deductibles) consistent
with past practice;
(viii) maintain inventory and equipment related to such
Contributed Business at levels consistent with past
practice; and
(ix) comply in all material respects with all
material contracts relating to such Contributed Business.
(b) Without limiting the generality of the
foregoing, without the prior written consent of TDCC, in the case
of Radian, or HSB, in the case of DEI, from the date of this
Agreement until the Closing Date or the earlier termination of
this Agreement, no Contributing Subsidiary will:
(i) merge or consolidate with any other Person;
(ii) acquire from any other Person, other than in the
ordinary course of business, assets relating to its
Contributed Business having a fair market value in excess of
an aggregate of $1,000,000;
(iii) sell, lease, license, pledge or otherwise
dispose of any Contributed Assets except (i) pursuant to
existing contracts or commitments and (ii) in the ordinary
course of business consistent with past practice; or
(iv) defer the payment of any amounts, or accelerate
the collection of any receivables, except in the ordinary
course of business consistent with past practice;
(v) create or suffer to exist any new Lien or
encumbrance on any of its Contributed Assets, other than
Permitted Liens;
(vi) enter into any material contract or agreement
(or, except for technical amendments to substitute the name
of Newco for the name of such party, any amendment,
modification or waiver of any existing contract or
agreement), that would be an Assumed Liability except in the
ordinary course of business consistent with past practice;
(vii) except in the ordinary course of business
consistent with past practice, accept, receive or allow any
customer to make any prepayment related to its Contributed
Business or its Assets;
(viii) except in the ordinary course of business
consistent with past practice, waive or release any right of
value relating to its Contributed Assets or its Contributed
Business;
(ix) declare, set aside or pay any dividend or other
distribution (whether in cash or stock, or property or any
combination thereof) in respect of its capital stock;
(x) purchase any Derivative Financial Instrument; or
(xi) agree or commit to do any of the foregoing.
5.02. Access to Information. From the date of this
Agreement until the Closing Date or the earlier termination of
this Agreement, and subject to each party's security and safety
practices, each party will (a) give each other party and its
counsel, financial advisors, auditors and other authorized
representatives such access to the offices, properties, books and
records of such party relating to the Contributed Business of
such Contributing Subsidiary, upon reasonable notice and during
normal business hours, as such other party may reasonably
request, (b) furnish to the counsel, financial advisors, auditors
and other authorized representatives of the other party such
financial and operating data and other information relating to
its Contributed Business as such Persons may reasonably request
and (c) instruct the employees, counsel and financial advisors of
such Contributing Subsidiary to cooperate with the other party in
its investigation of its Contributed Business; provided that no
investigation pursuant to this Section shall affect any represen-
tation or warranty given by such party under this Agreement; and
provided further that any investigation pursuant to this Section
shall be conducted in such manner as not to interfere unreason-
ably with the conduct of the Contributed Business of such
Contributing Subsidiary. Notwithstanding the foregoing, no party
shall have access to personnel records of the other party
relating to individual performance or evaluation records, medical
histories or other information which, in such party's good faith
opinion, is sensitive or the disclosure of which could subject
such party to risk of liability. All information, documents and
other materials provided pursuant to this Section shall be held
and dealt with by the Persons receiving the same in accordance
with the Confidentiality Agreement.
5.03. Notices of Certain Events. From the date of
this Agreement until the Closing Date (or the earlier termination
of this Agreement) each of TDCC or HSB shall promptly notify the
other party of:
(i) any notice or other communication from any
Person alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by
this Agreement or any other Transaction Document;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in connection
with the transactions contemplated by this Agreement or any
other Transaction Document; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge
threatened against, relating to or involving or otherwise
affecting such Contributing Subsidiary or its Contributed
Business that, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to
Section 3.11 or Section 3.20(a) or that relate to the
consummation of the transactions contemplated by this
Agreement or any other Transaction Document.
5.04. Reasonable Efforts; Further Assurances. Subject
to the terms and conditions of this Agreement, each party will
use all commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things
necessary or desirable under applicable laws and regulations and
any applicable contractual obligations to consummate the
transactions contemplated by this Agreement and the other
Transaction Documents. Each party agrees to execute and deliver
such other documents, certificates, agreements and other writings
and to take such other actions as may be necessary or desirable
in order to consummate or implement expeditiously the
transactions contemplated by this Agreement and the other
Transaction Documents and to vest in Newco good title to the
Contributed Assets of such party (including without limitation in
accordance with Section 2.07, the Restricted Assets), subject
only to Permitted Liens or Liens set forth on Schedule 2.02(a).
5.05. Certain Filings. From the date of this
Agreement until the Closing Date, or such later date as is
reasonably required to obtain all material Permits and to
transfer all Restricted Assets necessary for the operation of the
Contributed Business (or the earlier termination of this
Agreement), the parties shall cooperate with one another (a) in
determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is
required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions
contemplated by this Agreement or any Transaction Document and
(b) in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely
to obtain any such actions, consents, approvals or waivers.
5.06. Public Announcements. From the date of this
Agreement until the Closing Date (or the earlier termination of
this Agreement), except as may be required by applicable law or
any listing agreement with any national securities exchange, any
press release or any public statement with respect to this
Agreement, any Transaction Document or the transactions
contemplated by this Agreement or by such other documents will
require the prior written consent of TDCC and HSB.
5.07. Stockholder Approval. Each of TDCC and HSB, as
sole stockholders of DEI and Radian, respectively, agrees to
execute and deliver its written consent as may be required to
approve the transactions contemplated by this Agreement, to
authorize the execution and delivery by DEI or Radian, as the
case may be, of this Agreement and the other Transaction
Documents and the performance by DEI or Radian, as the case may
be, of its obligations under this Agreement and under the other
Transaction Documents.
5.08. WARN. Each party agrees to comply with all
applicable provisions of the Worker Adjustment, Retraining and
Notification Act and any similar state law applicable to the
transactions contemplated by this Agreement.
5.09. Intentionally Omitted.
5.10. Impairment of Assets. In the event that after
the date of this Agreement, but prior to the Closing Date, a
fire, explosion, flood, confiscation, earthquake or other similar
or dissimilar event impairs any of the Contributed Assets (each
such Contributed Asset is an "Impaired Asset") to be contributed
to Newco, the parties agree to negotiate in good faith to ensure
that, to the extent commercially reasonable, assets (such as
insurance proceeds) which, when taken together with any remaining
value of the Impaired Asset, have a value equal to the value of
the Contributed Asset without the impairment, shall be trans-
ferred to Newco. This provision shall in no way limit either
party's rights under Section 7.01.
5.11. Covenant of Parent. (a) Each of TDCC and HSB,
as the case may be, will cause its respective Contributing
Subsidiary to perform and will be responsible for and guarantee
the timely performance of all of the respective Contributing
Subsidiary's obligations under this Agreement and the LLC
Agreement.
(b) If a dissolution of Newco is caused by the
Bankruptcy of DEI pursuant to Section 9.1 of the LLC Agreement,
Radian shall have the right to require TDCC to purchase all, but
not less than all, of Radian's Company Interest at the price and
upon the terms set forth in Section 8.3 of the LLC Agreement;
provided, however, that such price shall be discounted at a rate
of 4% per year or portion thereof if such purchase shall occur
prior to December 31, 1997.
(c) If DEI shall fail to purchase Radian's Company
Interest at the price and upon the terms and subject to the
conditions set forth in Section 8.3 of the LLC Agreement then,
upon notice of such failure, TDCC shall, within two (2) business
days of such notice, purchase Radian's Company Interest at the
price and upon the terms set forth in Section 8.3 of the LLC
Agreement.
5.12. Covenants Not to Compete. Subject to the
provisions of this Section 5.12, each of TDCC and HSB agrees
that, from the Closing until one year after it has ceased to have
a direct or indirect ownership interest in Newco, neither it nor
its Affiliates (other than DEI with respect to its ownership
interest in Newco or any Restricted Asset in the case of TDCC and
Radian with respect to its ownership interest in Newco or any
Restricted Asset in the case of HSB) will engage in businesses
anywhere in the world that are in direct competition with the
Newco Protected Business, it being understood that these
covenants not to compete shall not at any time prevent each of
TDCC and HSB, and each of their Affiliates, from engaging in (i)
Excluded Businesses, even if such Excluded Businesses compete
with the Newco Protected Business, (ii) in any other businesses
(including without limitation businesses that neither TDCC and
its Affiliates nor HSB and its Affiliates were engaged in as of
the date of this Agreement) that are not directly in competition
with the Newco Protected Business or (iii) maintaining passive
investments of less than 5% of the aggregate equity interests of
any Person that is in direct competition with the Newco Protected
Business. Without limiting the generality of the foregoing,
nothing in this Agreement shall at any time prevent (w) TDCC or
any of its Affiliates from providing systems or services to any
of their Affiliates or to TDCC (including without limitation the
transfer to Buna Sow Leuna Olefinerbund GmbH in Germany ("BSL")
of environmental technology and environmental services as a
result of TDCC's acquisition of a controlling interest in BSL),
(x) HSB or any of its Affiliates from providing systems or
services to any of their Affiliates or to HSB, (y) each of TDCC
and its Affiliates and each of HSB and its Affiliates from
providing services or systems in conjunction with the sale of a
product, or (z) each of TDCC and its Affiliates and each of HSB
and its Affiliates from providing services or systems in
connection with a contract manufacturing relationship or from
entering into a technology license for or relating to the
manufacture, distribution and/or sale of chemical products.
5.13. Liens on Interests in Newco. Each of TDCC and
HSB agrees that it will not create or permit to exist, directly
or indirectly, any Lien on its interest in Newco or any portion
thereof (except (i) Liens for Taxes being contested in good faith
and by appropriate proceedings, (ii) Liens arising in the
ordinary course of business for sums not due or sums being
contested in good faith and by appropriate proceedings and (iii)
Liens pursuant to bona fide credit arrangements provided that a
Person providing credit pursuant to such arrangements shall
acknowledge that, if such Person acquires ownership of any such
interest, such interest shall nevertheless be subject to all the
terms of this Agreement and the LLC Agreement). Any attempt by
either party to create or permit to exist, directly or
indirectly, any Lien (other than the Liens described in the
parenthetical in the immediately preceding sentence) on its
interest in Newco or any portion thereof shall be null, void ab
initio and of no force and effect.
5.14 Covenants Not to File Involuntary Bankruptcy.
Each of TDCC and HSB agrees, to the fullest extent permitted by
law, not to file, or cause any other Person or entity (including
without limitation, any of such Person's shareholders,
subsidiaries or Affiliates) to file, an involuntary bankruptcy
petition against Newco under any state or federal insolvency law,
including without limitation the Federal Bankruptcy Code, or any
amended or successor version thereof.
5.15 Intentionally Omitted.
5.16 Intentionally Omitted.
5.17 Transfers of Capital Stock of Contributing
Subsidiary. (a) Each of TDCC and HSB agrees that it will not
sell any of the capital stock of its Contributing Subsidiary
unless such transfer is (i) pursuant to a written agreement
pursuant to which the transferee agrees to be bound by all of the
terms of this Agreement and the other Transaction Documents as if
it were originally a party to those Agreements and to such other
documents and (ii) in compliance with Section 5.17(b). In
addition to the requirements set forth in the first sentence of
this Section 5.17, HSB agrees that it shall not make such
transfer to any company engaged in a significant way in the
manufacture or sale of primary chemical products without the
consent of TDCC (which consent shall not be unreasonably
withheld).
(b) Neither TDCC nor HSB will, without the consent of the
other, sell the capital stock of its respective Contributing
Subsidiary prior to the third anniversary of the Closing Date.
If, subsequent to the third anniversary of the Closing Date, a
third party with sufficient financial resources (an "Acquiror")
which is not an Affiliate of either TDCC or HSB makes a written
proposal to purchase, at a defined price and pursuant to defined
terms and conditions, from either TDCC or HSB all of the capital
stock of its Contributing Subsidiary, in a bona fide, arm's-
length transaction (a "Acquiror Proposal"), and if such party
desires to enter into negotiations with respect to such Acquiror
Proposal, such party (the "Offeror") shall give written notice to
the other party (the "Offeree") of a desire to so dispose of the
capital stock of the Offeror's Contributing Subsidiary (with
respect to such Offeror, the "Shares"), which proposed
disposition is subject to the following provisions:
(i) The Offeror shall first offer to the Offeree the
right to buy the Offeror's Shares from the Offeror at the
same price and upon the same terms and conditions as (or, if
any such terms and conditions cannot be duplicated, on terms
and conditions financially equivalent to) those the Offeror
has been offered by, and is willing to accept from, the
Acquiror;
(ii) The offer by the Offeror to the Offeree shall
(x) provide written disclosure of all of the details
pertaining to any such Acquiror Proposal, including the
price, terms and conditions and the name and address of the
Acquiror to whom the Offeror is prepared to sell the
Offeror's Shares (such disclosure shall be deemed sufficient
pursuant to this Section 5.17(b) if such disclosure includes
all terms and conditions known to such Offeror), and (y)
provide to the Offeree a written statement of the Acquiror
which sets forth the agreement of the Acquiror, upon the
closing of a purchase pursuant to this Section 5.17(b), to
be bound by all of the terms of this Agreement and the other
Transaction Documents as if it were originally a party to
this Agreement and other Transaction Documents. If the
Offeree elects to exercise its right to purchase the
Offeror's Shares, it shall give written notice thereof to
the Offeror within thirty (30) days after receipt of such
offer from the Offeror (with all required information) and
the purchase of such Shares shall be closed at the offices
of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at any other mutually agreeable place)
within ninety (90) days after the Offeree's notice of such
election to the Offeror and any necessary governmental
reviews, consents or approvals have occurred (or at any
other mutually agreeable time);
(iii) If, within thirty (30) days after giving the
notice to the Offeree required in this Section 5.17(b), the
Offeree shall not have elected to exercise its right to
purchase the Offeror's Shares, then negotiations may proceed
as if the Offeree shall have approved the sale to the
Acquiror;
(iv) If the Offeree shall approve the sale to the
Acquiror, then the sale of the Shares of the Offeror may be
consummated; provided, however, that such sale must be
closed within one-hundred twenty (120) days after the
expiration of the thirty (30) day period referred to in
subsection (iii) above, at a price and upon terms and
conditions not more favorable, in any material respect, to
the Acquiror than those which were first disclosed to the
Offeree;
(v) At or prior to the consummation of any such sale
to the Acquiror, the Offeror shall furnish to the Offeree
and to Newco (A) an agreement of the Acquiror agreeing to be
bound by the terms of this Agreement and any other
Transaction Documents to which the Offeror is a party and
acknowledging that the Acquiror shall be bound by, and
entitled to the benefits of, those documents, and (B) an
affidavit of the Offeror setting forth: the name and address
of the Acquiror to whom any Shares were sold; the price and
terms and conditions upon which such Shares were sold; and a
statement that the Acquiror is not an Affiliate of the
Offeror; and
(vi) Notwithstanding the foregoing, no party shall be
permitted to present an Acquiror Proposal regarding the
exercise of its right to dispose of the capital stock of its
Contributing Subsidiary pursuant to this Section 5.17(b) in
excess of six times during the previous 60 month period.
5.18 Technology Access. TDCC will provide to Newco,
upon Newco's request, access to, and licenses under, any
technology that (a) is either owned by or licensed to TDCC, (b)
TDCC is authorized to either sublicense or permit the use of by
Newco, and (c) that is reasonably useable in the Newco Services
Business, including without limitation the technology described
in Exhibit A; provided, however, that (i) TDCC shall not be
required to provide access to (x) technology predominantly
applicable to the production or manufacture of chemical products
or (y) MOD series process control technology, including without
limitation software and hardware and (ii) TDCC shall not be
required to incur any costs to develop or obtain technology for
Newco's use. The provision of access to, and licenses under,
technology to Newco pursuant to this Section 5.18 shall be
without cost to Newco, except that Newco shall reimburse TDCC (i)
for any payments TDCC must make to a third party in order to
provide such access and/or license and (ii) for any Taxes borne
by TDCC as a result of the provision of such access and/or
license. Such licenses and, where permitted, such sublicenses
shall be of sufficient scope so as to permit Newco to conduct the
Newco Services Business and shall permit Newco to grant site
licenses to use TDCC technology that is relevant to the Newco
Services Business. If site licenses are not appropriate for a
certain portion of TDCC technology, TDCC and Newco will attempt
to develop an alternate licensing procedure. During the term of
the LLC Agreement, there will be an agreement in place which
provides the mechanism for Newco's access to the technology
granted above.
5.19 Certain Radian Property. If TDCC or DEI
determines that, pursuant to an environmental assessment to be
completed within thirty (30) days from the Closing Date, the
property owned by Radian located in (i) El Dorado County
California and (ii) City of Durham, Durham County, North
Carolina, each as more specifically described in Radian's
Schedule 3.08(a), may subject Newco to any Environmental
Liability or that such property is in breach of the
representations and warranties set forth in Section 3.20, then,
upon notice to Radian and HSB and without any further action by
either TDCC or DEI, such property shall be treated for all
purposes of this Agreement as if it had been an Excluded Asset as
of the Closing Date.
ARTICLE VI
EMPLOYEES AND EMPLOYEE BENEFITS
6.01. Leased Employees. Immediately following the
Closing Date and until such time as provided under and in
accordance with the terms of the Employee Seconding Agreements
(the "Employment Transfer Date"), the Leased Employees will
continue to be employed by the Contributing Subsidiaries or TDCC,
as applicable, and will be leased from the Contributing
Subsidiaries or TDCC, as applicable, to Newco. For the period
following the Closing Date until the Employment Transfer Date,
the DEI Leased Employees shall continue to be treated for
purposes of all of DEI Plans as employees of DEI and the Radian
Leased Employees shall continue to be treated for purposes of the
Radian Plans as employees of Radian. Nothing in this Article VI
shall require TDCC or any Contributing Subsidiary to continue to
employ any person.
6.02. Employment by Newco. Effective as of the
Employment Transfer Date, the DEI Leased Employees and Radian
Leased Employees shall be transferred from employment with the
Contributing Subsidiaries to employment with Newco and Newco
agrees to employ all such Leased Employees as employees-at-will,
except to the extent provided in any employment agreement.
Except as otherwise specifically provided in this Article VI, for
periods after the Employment Transfer Date, the Leased Employees
shall not be eligible to participate in employee benefit plans
and arrangements maintained by the Contributing Subsidiaries.
Nothing in this Article VI shall require Newco to continue to
employ any employee after the Employment Transfer Date.
6.03. Newco Plans. Newco and the Contributing
Subsidiaries shall take the following actions:
(i) On or prior to the Closing Date, each
Contributing Subsidiary shall make all contributions to, in
the case of DEI, the DEI Plans, and, in the case of Radian,
the Radian Plans which are required under the terms thereof
or by applicable law for periods prior to the Closing Date
or which relate to periods prior to the Closing Date.
(ii) Effective as of the Employment Transfer Date,
Newco shall establish and adopt such employee benefit plans,
arrangements, policies and programs (the "Newco Plans") as
DEI and Radian shall mutually agree. The Newco Plans may
be, but shall not be required to be, substantially similar
to the DEI Plans, the Radian Plans or a combination thereof.
(iii) All Leased Employees who become employed by
Newco on the Employment Transfer Date, to the extent
applicable, shall be given credit for all purposes under
each of the Newco Plans for their service with DEI or
Radian, as applicable, including but not limited to the
following purposes: eligibility for participation, vesting,
satisfying any waiting periods, evidence of insurability
requirements, or the application of any pre-existing
condition limitations and determining benefits based on
length of service (such as vacation and severance), and to
the extent applicable, shall be given credit under each of
the Newco Plans which is an employee welfare benefit plan
(as that term is defined in section 3(1) of ERISA) for
amounts paid under a corresponding DEI Plan or Radian Plan,
as applicable, during the same period for purposes of
applying deductibles, copayments and out-of-pocket maximums
as though such amounts had been paid in accordance with the
terms and conditions of Newco Plans.
(iv) On or as soon as practicable after the
Employment Transfer Date, the Dow Environmental Inc.
Retirement Savings Plan (the "DEI 401(k) Plan") and the
Radian Corporation 401(k) Thrift Plan shall be merged with
and into a new defined contribution plan established by
Newco (the "Newco 401(k) Plan"). Prior to such merger, DEI
and Radian, as applicable, shall provide Newco with copies
of a favorable determination letter issued by the IRS that
the DEI 401(k) Plan and the Radian 401(k) Plan, as
applicable, meet the requirements of section 401(a) of the
Code and Newco shall provide DEI and Radian with a copy of a
favorable determination letter issued by the IRS that the
Newco 401(k) Plan meets the requirements of section 401(a)
of the Code. The merger of the DEI 401(k) Plan and the
Radian 401(k) Plan with and into the Newco 401(k) Plan shall
comply in all respects with sections 411(d)(6) and 414(l) of
the Code. Newco, Radian and DEI shall use their reasonable
best efforts to accomplish the mergers described above,
including adoption of plan amendments (including, if
necessary, amendments to the Newco 401(k) Plan to provide
for continuation of outstanding loans that will be
transferred to the Newco 401(k) Plan in connection with the
merger of the DEI 401(k) Plan with and into the Newco 401(k)
Plan) and completion of any required filings with any
governmental agency.
(v) In the event any TDCC Leased Employee becomes an
employee of Newco after the Closing Date, the account
balance of such TDCC Leased Employee (including, to the
extent applicable, any promissory note evidencing a loan to
any such TDCC Leased Employee) shall be transferred to the
Newco 401(k) Plan from The Dow Chemical Company Salaried
Employees' Savings Plan (the "TDCC 401(k) Plan"). Such
transfer shall comply in all respects with section 411(d)(6)
and 414(l) of the Code. Prior to such transfer, TDCC shall
provide Newco with a copy of a favorable determination
letter issued by the IRS that the TDCC 401(k) Plan meets the
requirements of section 401(a) of the Code and Newco shall
provide TDCC with a copy of a favorable determination letter
issued by the IRS that the Newco 401(k) Plan meets the
requirements of section 401(a) of the Code. Newco and TDCC
shall use their reasonable best efforts to accomplish the
transfer described above, including adoption of plan
amendments and completion of any required filings with any
governmental agency.
(vi) On or as soon as practicable after the
Employment Transfer Date, the shares of HSB common stock
("HSB Stock") and any cash balance allocated under the HSB
ESOP to the account of any Radian Leased Employee who
becomes an employee of Newco on the Employment Transfer Date
shall be transferred to the Newco 401(k) Plan from the HSB
ESOP. Such transfer shall comply in all respects with
section 411(d)96) and 414(l) of the Code. Prior to such
transfer, HSB shall provide Newco with a copy of a favorable
determination letter issued by the IRS that the HSB ESOP
meets the requirements of section 401(a) of the Code and
Newco shall provide HSB with a copy of a favorable
determination letter issued by the IRS that the Newco 401(k)
Plan meets the requirements of section 401(a) of the Code.
Newco and HSB shall use their reasonable best efforts to
accomplish the transfer described above, including adoption
of plan amendments and completion of any required filings
with any governmental agency and including, in the case of
Newco, the inclusion in the Newco 401(k) Plan of such
restrictions on the ability of a participant to sell or
dispose of HSB Stock credited to such participant's account
as HSB may reasonably require.
6.04. Relocation. DEI, Radian and Newco acknowledge that
certain Leased Employees who become employees of Newco may need
to relocate physically in order to perform their employment
responsibilities for Newco. Newco agrees to develop as one of
the Newco Plans a policy to cover reasonable relocation costs of
such employees.
ARTICLE VII
CONDITIONS TO CLOSING
7.01. Conditions to the Closing. The obligations of
TDCC and DEI, on the one hand, and HSB and Radian, on the other
hand, to consummate the Closing are subject to the satisfaction
or waiver, at or prior to the Closing, of the following
conditions:
(a) No provision of any applicable law or regulation
and no judgment, injunction, or other similar order or decree
shall prohibit the consummation of the Closing.
(b) (i) The other parties shall have performed in
all material respects all of their obligations under this
Agreement required to be performed by them at or prior to the
Closing Date and (ii) the representations and warranties of the
other parties contained in this Agreement and in any certificate
or other writing delivered by the other parties pursuant to this
Agreement which are qualified as to materiality shall be true and
correct and the representations and warranties of the other
parties contained in this Agreement and in any certificate or
other writing delivered by the other parties pursuant to this
Agreement which are not so qualified shall be true and correct in
all material respects, in each case as of the date when made and
(except in the case of any representation and warranty made as of
specified date) as of the Closing Date, as if made at and as of
such date.
(c) Each of the Transaction Documents shall have
been duly executed by each of the parties to such agreements, and
shall be in full force and effect.
(d) Each Contributing Subsidiary and Newco shall
have provided or executed all certificates, notices or other
documents and taken all other actions reasonably required to
minimize the applicability of transfer taxes on the transfer of
Assets to Newco as contemplated by this Agreement.
(e) Each Contributing Subsidiary shall have been
provided and approved the preliminary business plan of Newco with
respect to the first year of operations of Newco after the
Closing Date.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.01. Survival. The representations and warranties of
the parties contained in this Agreement shall not be limited or
affected by any investigation undertaken by any party, and shall
survive the Closing until the second anniversary of the Closing
Date or (i) in the case of Sections 3.01 and 3.02, indefinitely,
or (ii) in the case of the representations and warranties
relating to Taxes, until expiration of the applicable statutory
period of limitations (giving effect to any waiver, mitigation or
extension thereof), if later, and shall thereafter terminate,
together with any associated right of indemnification pursuant to
Section 8.02. Notwithstanding the preceding sentence, any
representation or warranty in respect of which indemnity may be
sought under Section 8.02, and the associated right of
indemnification under Section 8.02, shall survive the time at
which it would otherwise terminate pursuant to the preceding
sentence, with respect to any matter identified in a notice
(which notice shall identify the representation or warranty
claimed to have been breached or to have been inaccurate, and
shall state with reasonable particularity the nature of the
asserted breach or inaccuracy) given prior to such time to the
party against whom such indemnity may be sought.
8.02. Indemnification. (a) Each of TDCC and DEI, on
the one hand, and HSB and Radian, on the other hand, (each pair,
an "Indemnifying Party") hereby indemnifies each other (the
indemnified pair, an "Indemnified Party") and their Affiliates,
and their respective directors, officers, employees and agents
(collectively, the "Indemnified Parties") against and agrees to
hold each of them harmless from and to defend each of them from
and against any and all Loss incurred or suffered by them,
arising out of or resulting from:
(i) any breach of any representation or warranty in
this Agreement by such Indemnifying Party; or
(ii) any failure by the Indemnifying Party or any of
its Affiliates to perform any of its covenants or agreements
contained in this Agreement (other than those in
Sections 8.02(b) through (k), which are covered in those
sections) or the other Transaction Documents;
provided that such Indemnifying Party shall not be liable under
Section 8.02(a) unless the aggregate amount of Loss with respect
to all matters referred to in Section 8.02(a) exceeds $500,000
(provided, that if such loss does exceed $500,000, the
Indemnifying Party shall only be responsible for the amount of
such loss that exceeds $500,000).
(b) TDCC hereby agrees to indemnify HSB, Radian and
Newco against and to hold HSB, Radian and Newco harmless from any
breach, default or non-performance by TDCC or any of its
Affiliates relating to any or all of the Assumed Contracts
contributed by TDCC or any of its Affiliates where the act,
omission, event or cause of action giving rise to the same arose,
occurred or accrued prior to September 30, 1995. HSB hereby
agrees to indemnify TDCC, DEI and Newco against and to hold TDCC,
DEI and Newco harmless from any breach, default or non-
performance by HSB or any of its Affiliates relating to any or
all of the Assumed Contracts contributed by HSB or any of its
Affiliates where the act, omission, event or cause of action
giving rise to the same arose, occurred or accrued prior to
September 30, 1995.
(c) TDCC and HSB hereby agree to cause Newco to
indemnify each party and its Affiliates against and to cause
Newco to hold each of them harmless from all Assumed Liabilities
and any and all Loss incurred or suffered by such party or any of
its Affiliates arising out of or in connection with any Assumed
Liability.
(d) TDCC hereby agrees to indemnify HSB, Radian and
Newco against and to hold HSB, Radian and Newco harmless from (i)
Excluded Liabilities retained by TDCC or any of its Affiliates
and (ii) any and all Loss incurred or suffered by HSB, Radian or
Newco arising out of or in connection with any such Excluded
Liabilities. HSB hereby agrees to indemnify TDCC, DEI and Newco
against and to hold TDCC, DEI and Newco harmless from (i)
Excluded Liabilities retained by HSB or any of its Affiliates and
(ii) any and all Loss incurred or suffered by TDCC, DEI or Newco
arising out of or in connection with any such Excluded
Liabilities.
(e) TDCC and HSB hereby agree to cause Newco to
indemnify each party and its Affiliates against and to cause
Newco to hold each of them harmless from out-of-pocket losses any
of them incurs because (i) a Restricted Asset cannot be
transferred or by virtue of their efforts to transfer any
Restricted Asset to Newco or (ii), in the case of any Restricted
Asset that is a Special Foreign Asset, by virtue of their efforts
to dissolve, sell or dispose of any such Special Foreign Asset,
including without limitation, in each such case, out-of-pocket
losses paid for a breach of contract claim made by a third party
asserting that TDCC, DEI, HSB or Radian, as the case may be,
cannot perform its obligations under a Contract that is a
Restricted Asset in light of the formation of Newco; provided,
however, that the indemnity in this Section 8.02(e) shall not
cover lost revenues that any of TDCC, DEI, HSB or Radian do not
receive because a third party cancels or refuses to perform under
a Contract that is a Restricted Asset; provided further, however,
that the indemnity in this Section 8.02(e) shall not cover any
and all Loss incurred or suffered with respect to an Anti-
Competitive Contract that was not set forth in Section 3.27(c) of
this Agreement.
(f) TDCC and HSB hereby agree to cause Newco to
indemnify each party to this Agreement and its Affiliates against
and to cause Newco to hold each party to this Agreement and its
Affiliates harmless from any liability for actions by Newco
subsequent to the Closing that result in a final judgment of (i)
infringement of any right relating to intellectual property owned
by an entity that is not a party to this Agreement or an
Affiliate of a party to this Agreement, (ii) misuse of any of the
Intellectual Property listed in Schedule 3.18 or (iii) an
antitrust violation involving any of the Intellectual Property
listed in Schedule 3.18 or a settlement in lieu of any such final
judgment.
(g) TDCC and HSB hereby agree to cause Newco to
indemnify TDCC, HSB and their Affiliates against and to cause
Newco to hold TDCC, HSB and their Affiliates harmless from all
liabilities related to foreign, U.S. Federal and state income
taxes incurred by DEI and Radian during the 1995 fiscal year;
provided, however, that Newco shall not be liable under this
Section 8.02(g) for aggregate amounts exceeding the amount set
forth in Schedule 8.02(g) relating to foreign, U.S. Federal and
state income taxes incurred by DEI and Radian during the 1995
fiscal year.
(h) TDCC and HSB hereby agree to cause Newco to
indemnify against and to cause Newco to hold DEI and its
Affiliates harmless from all costs, expenses, liabilities,
obligations, losses, damages, penalties, proceedings, actions,
suits, or claims of whatever kind or nature ("Claims") which may
be imposed upon, incurred by or asserted against DEI or its
Affiliates after the Closing Date with respect to, relating to,
or arising under or in connection with any DEI Plan and for all
Claims which may be imposed upon, incurred by or asserted against
DEI or its Affiliates with respect to, relating to, or arising
under or in connection with any Newco Plan.
(i) TDCC and HSB hereby agree to cause Newco to
indemnify and to cause Newco to hold Radian and its Affiliates
harmless from all Claims which may be imposed upon, incurred by
or asserted against Radian or its Affiliates after the Closing
Date with respect to, relating to, or arising under or in
connection with any Radian Plan and for all Claims which may be
imposed upon, incurred by or asserted against Radian or its
Affiliates with respect to, relating to or arising under or in
connection with any Newco Plan.
(j) DEI and Radian hereby agree to cause Newco to
indemnify TDCC and its Affiliates against and to cause Newco to
hold TDCC and its Affiliates harmless for all Claims which may be
imposed upon, incurred by or asserted against TDCC or its
Affiliates relating to or arising under or in connection with any
Newco Plan.
(k) DEI and Radian hereby agree to cause Newco to
indemnify HSB and its Affiliates against and to cause Newco to
hold HSB and its Affiliates harmless for all Claims which may be
imposed upon, incurred by or asserted against HSB or its
Affiliates relating to or arising under or in connection with any
Newco Plan.
8.03. Notice of Third Party Claims; Assumption of
Defense. For purposes of this Section 8.03, the term
"Indemnifying Party" shall mean any party responsible for
indemnifying another party pursuant to this Article VIII and
"Indemnified Party" shall mean any party entitled to indemnifica-
tion pursuant to this Article VIII. The Indemnified Party shall
give prompt notice to the Indemnifying Party against whom
indemnity is sought, in accordance with the terms of
Section 10.01, of the assertion of any claim, or the commencement
of any suit, action or proceeding by any third party in respect
of which indemnity may be sought under this Agreement and of any
Losses which the Indemnified Party deems to be within the ambit
of this Article VIII, specifying with reasonable particularity
the basis therefor, and shall give the Indemnifying Party such
information with respect thereto as the Indemnifying Party may
reasonably request (but the prompt giving of such notice shall
not be a condition precedent to indemnification under this
Agreement except to the extent that the Indemnifying Party is
materially prejudiced by any delay in receiving such notice).
The Indemnifying Party may, at its own expense, (a) participate
in and, (b) upon notice to the Indemnified Party and the
Indemnifying Party's written agreement that the Indemnified Party
is entitled to indemnification pursuant to Section 8.02 for Loss
arising out of such claim, suit, action or proceeding, at any
time during the course of any such claim, suit, action or
proceeding, assume the defense thereof; provided that (x) the
Indemnifying Party's counsel is reasonably satisfactory to the
Indemnified Party; and (y) the Indemnifying Party shall there-
after consult with the Indemnified Party upon the Indemnified
Party's reasonable request for such consultation from time to
time with respect to such claim, suit, action or proceeding. If
the Indemnifying Party assumes such defense, the Indemnified
Party shall have the right (but not the duty) to participate in
the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Party.
If, however, the Indemnified Party reasonably determines in its
judgment that representation by the Indemnifying Party's counsel
of both the Indemnifying Party and the Indemnified Party would
present such counsel with a conflict of interest, then such
Indemnified Party may employ separate counsel to represent or
defend it in any such claim, action, suit or proceeding and the
Indemnifying Party shall pay, as incurred, the reasonable fees
and other charges of such separate counsel. Whether or not the
Indemnifying Party chooses to defend or prosecute any such claim,
suit, action or proceeding, the parties to this Agreement shall
cooperate in the defense or prosecution of such claim, suit,
action or proceeding.
8.04. Settlements or Compromises. Any settlement or
compromise made or caused to be made by the Indemnified Party or
the Indemnifying Party, as the case may be, of any such claim,
suit, action or proceeding of the kind referred to in
Section 8.03 shall also be binding upon, and be for the benefit
of, the Indemnifying Party or the Indemnified Party, as the case
may be, in the same manner as if a final judgment or decree had
been entered by a court of competent jurisdiction in the amount
of such settlement or compromise; provided that:
(x) no settlement or compromise shall be
entered into by the Indemnifying Party without the
Indemnified Party's express written consent (which
consent shall not be unreasonably withheld) unless (i)
contained in this Agreement is an unconditional release
by the claimant or the plaintiff of all liability of
the Indemnified Party with respect to such claim or
demand, and (ii) the Indemnifying Party has agreed in
writing that such claim is the subject of indemnity
under Section 8.02; and
(y) no settlement or compromise shall be
entered into by the Indemnified Party without the
Indemnifying Party's express written consent unless the
Indemnified Party shall have given the Indemnifying
Party at least 10 days' notice of any such proposed
settlement or compromise, during which time the
Indemnifying Party may assume the defense of such
claim, suit, action or proceeding (but only if it
provides for security for or payment of any
indemnification obligations in a manner reasonably
satisfactory to the Indemnified Party); provided,
however, that if the Indemnifying Party assumes the
defense of a claim, suit, action or proceeding, the
Indemnified Party may not settle or compromise such
claim, suit, action or proceeding.
8.05. Failure of Indemnifying Party to Act. If the
Indemnifying Party does not elect to assume the defense of any
claim, suit, action or proceeding, then any failure of the
Indemnified Party to defend or to participate in the defense of
any such claim, suit, action or proceeding or to cause the same
to be done, shall not relieve the Indemnifying Party of its
obligations under this Agreement; provided that the Indemnified
Party gives the Indemnifying Party at least 10 days' notice of
its proposed failure to defend or participate and affords the
Indemnifying Party the opportunity to assume the defense thereof.
ARTICLE IX
TERMINATION
9.01. Grounds for Termination. This Agreement may be
terminated prior to the Closing as follows:
(i) by mutual written agreement of TDCC and HSB;
(ii) by either TDCC or HSB if there shall be any law
or regulation that makes the consummation of the
transactions contemplated by this Agreement illegal or
otherwise prohibited or if consummation of the transactions
contemplated by this Agreement would violate any
nonappealable final order, decree or judgment of any court
or governmental body having competent jurisdiction; or
(iii) by either TDCC or HSB if the Closing shall not
have been consummated on or before the date ninety days
after the date of this Agreement; provided that the right to
terminate this Agreement under this Section 9.01(iii) shall
not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to have been
consummated on or before such date.
9.02. Effect of Termination. If this Agreement is
terminated as permitted by Section 9.01, such termination shall
be without liability of either TDCC, HSB, DEI or Radian (or any
shareholder, director, officer, partner, employee, agent,
consultant or representative of such party) to any other party,
and following such termination no party shall have any liability
to any other party; provided that no such termination shall
relieve any party that has breached any provision of this
Agreement from liability for such breach, and any such breaching
party shall remain fully liable for any and all Loss incurred or
suffered by another party to this Agreement as a result of such
breach. The provisions of Section 10.03 and the Confidentiality
Agreement shall survive any termination of this Agreement
pursuant to Section 9.01.
ARTICLE X
MISCELLANEOUS
10.01. Notices. All notices, requests and other
communications under this Agreement shall be in writing and
deemed to have been duly given (i) when sent by telecopy or
facsimile transmission during normal business hours at the
location of receipt, (ii) upon actual receipt if deposited with a
nationally recognized overnight courier service, all charges
prepaid, for delivery to the addressee, or (iii) three days
following deposit with the United States mail by certified first
class mail, postage prepaid, return receipt requested, to such
party at the following addresses:
if to HSB or Radian, to:
The Hartford Steam Boiler Inspection
and Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
if to TDCC or DEI, to:
The Dow Chemical Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either TDCC or HSB shall furnish to
the other by notice given in accordance with this Section.
10.02. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an
amendment, by the parties, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by either party in
exercising any right, power or privilege under this Agreement
shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The
rights and remedies provided in this Agreement shall be
cumulative and not exclusive of any rights or remedies provided
by law.
10.03. Expenses. Except as otherwise provided in this
Agreement, if this Agreement is terminated pursuant to
Section 9.01, all costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or
expense. If this Agreement is not terminated pursuant to
Section 9.01, the costs set forth on Schedule 10.03 shall be
shared equally between the parties, and each party will bear all
other costs and expenses incurred by it, including without
limitation the cost of its legal, accounting and investment
banking fees and out-of-pocket expenses incurred in connection
with Agreement.
10.04. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns; provided
that no party may assign, delegate or otherwise transfer any of
its rights or obligations under this Agreement without the
consent of the other parties.
10.05. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State
of Delaware without regard to the conflicts of law rules of such
State.
10.06. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were
upon the same instrument.
10.07. Entire Agreement. This Agreement and the other
Transaction Documents constitute the entire agreement among the
parties with respect to the subject matter of this Agreement and
supersede all prior agreements, understandings and negotiations,
both written and oral, among the parties with respect to the
subject matter of this Agreement. No representation, inducement,
promise, understanding, condition or warranty not set forth in
this Agreement or in the other documents described above has been
made or relied upon by any of the party to this Agreement.
10.08. Captions. The captions in this Agreement are
included for convenience of reference only and shall be ignored
in the construction or interpretation of this Agreement.
10.09. Specific Performance. Each party to this
Agreement acknowledges that the other parties will be irreparably
harmed and will have no adequate remedy at law if such party
fails to perform any of its obligations under this Agreement. It
is accordingly agreed that, in addition to any other remedies
which may be available, the parties have the right to obtain
injunctive relief to restrain a breach or threatened breach of,
or otherwise obtain specific performance of, the covenants and
other agreements of the parties contained in this Agreement and
the Confidentiality Agreement.
10.10. Severability. Any term or provision of this
Agreement which is invalid or unenforceable shall be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement.
10.11. No Third Party Beneficiaries. The parties
agree that, except as expressly provided in Section 8.02, there
are no third party beneficiaries of this Agreement (other than,
as provided in this Agreement, Newco) for and none of the
provisions of this Agreement shall be deemed to inure to the
benefit of any Person, including any employee or former employee
of DEI or Radian (including any beneficiary or dependent thereof)
not a party to this Agreement.
The parties have caused this Agreement to be duly
executed.
THE DOW CHEMICAL COMPANY
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: President and CEO
DOW ENVIRONMENTAL INC.
By:/s/ ▇.▇. ▇▇▇▇▇▇▇▇
Name: ▇.▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
THE HARTFORD STEAM BOILER
INSPECTION AND INSURANCE COMPANY
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and General
Counsel
RADIAN CORPORATION
By:/s/ ▇.▇. ▇▇▇▇▇▇
Name: ▇.▇. ▇▇▇▇▇▇
Title: Senior Vice President
EXHIBIT A
1. Water Effluents - technologies to monitor, reduce, and treat
wastewater and treatment residues, such as:
A. separation of suspended solids by methods such as
coagulation, clarification, flotation, centrifugation
and filtration;
B. separation/conversion of inorganics by methods such as
precipitation, ion exchange and reverse osmosis;
C. separation of organics by methods such as adsorption,
membranes, stripping, and extraction;
D. biological treatment via aerobic, anaerobic, and anozic
methods;
E. conversion/destruction of organics via wet air
oxidation, hydrolysis, ozonation, and chlorination
methods;
F. auxiliary unit operations for pH adjustment and nutrient
addition; and
G. sludge dewatering, reduction, and treatment.
2. Thermal Treatment - various forms of thermal treatment for
solids, liquids, and vapors including but not limited to
rotary kilns, fluid-bed incinerators, process rotary kilns,
halogenated acid furnaces, process boilers/furnaces, ground
flares, catalytic combustion, recuperative combustion,
burner management, characterization and feeds to combustion
units, small solid waste incinerators, multiple-hearth
incinerators, molten-bath incinerators, retorting liquid-
injection incinerators, flares, fume incinerators
regenerative combustion, electric heated combustion, feed
atomization, and PICs formation and control.
3. Soil/groundwater - investigation, characterization,
protection, management, and remediation technologies
including:
A. assessment and monitoring of soil/groundwater;
B. geophysical testing;
C. modeling;
D. containment and/or recovery of contaminated groundwater;
E. remediation of contaminated soil/groundwater;
F. design and operation of landfills and surface
impoundments;
G. landfarming and composting;
H. spill containment;
I. leak detection methods;
J. sewers, sumps, foundations, and other civil engineering
structures;
K. concrete quality; and
L. solidification/fixation of sludges and other wastes.
4. Air Quality - technologies to monitor, prevent, capture,
and/or treat emissions, as well as regulatory compliance,
including:
A. monitoring combustion products;
B. sampling and analysis;
C. modeling;
D. emission calculation methods;
E. quenching/absorption;
F. wet and dry scrubbing;
G. adsorption (carbon and other);
H. particulate removal systems;
I. fugitive emissions management including work on pumps,
valves, gaskets, etc. to reduce emissions;
J. chemical oxidation;
K. VOC monitoring;
L. biological vent treatment;
M. pressure swing adsorption;
N. gas/vapor containment;
O. NOx control;
P. filtering; and
Q. condensation.