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▇▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇▇ Pharmaceutical, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Teva Pharmaceuticals USA, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, of even date
herewith (the "Merger Agreement") among ▇▇▇▇▇▇ Pharmaceutical, Inc. (the
"Company"), Teva Pharmaceuticals USA, Inc. ("Parent") and Caribou Merger
Corporation ("Merger Sub"), and to the Stockholder Agreement, of even date
herewith (the "Stockholder Agreement"), among Hoechst Corporation ("HC"), Parent
and Merger Sub. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Merger Agreement.
As a condition and inducement to the Company's and Parent's willingness
to enter into the Merger Agreement, HC hereby represents, warrants and confirms
to the Company and Parent that:
(i) product liability claims based on injuries alleged to have been
caused by the Company's albuterol products are covered, and after the Offer and
the Merger will continue to be covered, under the insurance policies of HC and
its affiliated companies described on Schedule A hereto, subject to (a) the
conditions of such policies; (b) the existing letter agreements (the "Insurance
Agreements") among the Company, HC and certain of such insurers relating to the
albuterol settlement agreement; and (c) in the case of the coverage to which the
Insurance Agreements are not applicable (as described in Schedule A hereto), the
requirement that such injuries are alleged to have been caused after November
11, 1993 and prior to the consummation of the Offer;
(ii) the Company's co-insurance obligation with respect to albuterol
product liability claims under the Insurance Agreements is limited to the extent
described on Schedule A hereto;
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(iii) in connection with the Insurance Agreements, neither HC nor the
Company has, except as set forth in the Insurance Agreements, executed any
waiver of coverage under the policies described in Schedule A hereto relating to
injuries alleged to have been caused by the Company's albuterol products; and
(iv) following the consummation of the Offer, at the reasonable request
of the Company or Parent, HC shall (i) provide such information regarding the
insurance policies described on Schedule A and (ii) execute such documents, in
each case as may be reasonably necessary to permit the Company to obtain the
benefits of the coverage provided by such policies.
If Merger Sub shall not have purchased all Shares tendered pursuant to
the Offer, then this letter shall terminate and have no further force or effect
upon the occurrence of a Termination Event (as such term is defined (excluding
clause (i) of such definition) in the Stockholder Agreement).
Very truly yours,
Hoechst Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
President
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SCHEDULE A
▇▇▇▇▇▇ Co-
Limits Subject insurance Under Amount Paid
to Insurance Insurance Through 7/27/99
Insurer Policy Limits Agreements Agreements (Insurer & ▇▇▇▇▇▇)
--------------------------------------------------------------------------------------
Zurich $ 5,000,000 $ (1) $ 0 $ 5,000,000
--------------------------------------------------------------------------------------
Zurich 5,000,000 (1) 0 5,000,000
XS 5,000,000
--------------------------------------------------------------------------------------
Reliance 5,000,000 (1) 0 5,000,000
XS 10,000,000
--------------------------------------------------------------------------------------
HCIC 25,000,000 (2) 0 25,000,000
XS 15,000,000
--------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ 70,000,000 70,000,000 10,500,000 70,000,000
XS 40,000,000
--------------------------------------------------------------------------------------
London/HCIC 25,000,000 25,000,000 3,750,000 0(3)
XS 110,000,000
--------------------------------------------------------------------------------------
Tortuga 25,000,000 25,000,000 3,750,000 0
XS 135,000,000
--------------------------------------------------------------------------------------
XL 100,000,000 20,000,000(4) 8,000,000 0
XS 160,000,000
--------------------------------------------------------------------------------------
Tortuga 25,000,000 N/A N/A 0
XS 250,000,000
--------------------------------------------------------------------------------------
American 75,000,000 N/A N/A 0
Excess XS 285,000,000
--------------------------------------------------------------------------------------
ACE 150,000,000 N/A N/A 0
XS 380,000,000
--------------------------------------------------------------------------------------
Global/ 100,000,000 N/A N/A 0
Bowring XS 510,000,000
--------------------------------------------------------------------------------------
ACE 50,000,000 N/A N/A 0
XS 810,000,000
--------------------------------------------------------------------------------------
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1. Limits spent and/or reserved for defense and indemnity expense for
albuterol claims, but not part of ▇▇▇▇▇▇ Albuterol MDL settlement.
2. $16,000,000 paid to fund the ▇▇▇▇▇▇ Albuterol MDL settlement, balance of
$8,000,000 reserved and/or spent for defense and indemnity expense for
albuterol claims, but not part of ▇▇▇▇▇▇ Albuterol MDL settlement.
3. The Special Master supervising the settlement of the ▇▇▇▇▇▇ Albuterol MDL
is expected in the near future to request $20,000,000 from the London
layer.
4. The Insurance Agreement applies to the first $20,000,000 of XL's limits,
but not the remaining $80,000,000.
