Document GKJZkwagq4eL7qZ1JxjnrLNnV

IN THE UNITED STATES DISTRICT COURT DISTRICT OF SOUTH CAROLINA ANDERSON DIVISION Dale and Emily Owen, ) Plaintiffs, ) ) ) vs. ) ) The Dow Chemical Company,) Defendant. ) ) ) ) CA No. 8:96-360-3 MOTION FOR SUMMARY JUDGMENT Pursuant to Federal Rule of Civil Procedure 56, defendant The Dow Chemical Company ("Dow") moves the Court for summary judgment on the grounds that there are no genuine issues as to any material facts and that Dow is entitled to judgment as a matter of law. This motion is based on the pleadings, depositions, answers to discovery, together with the enclosed memorandum, affidavits and exhibits. SINKLER & BOYD, P.A. July 22, 1996 Columbia, South Carolina Robert W. Burlington Fed. ID No. 1563 1426 Main Street, Suite 1200 Post Office Box 11889 Columbia, South Carolina 29211 (803) 779-3080 Attorneys for Defendant The Dow Chemical Company IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA ANDERSON DIVISION Dale and Emily Owen, Plaintiffs, v. Dow Chemical Company, Defendant. ) CASE NUMBER: 8:96-360-3 ) ) ) ) MEMORANDUM IN SUPPORT ) OF DEFENDANT'S SUMMARY ) JUDGMENT MOTION ) ) ) ) INTRODUCTION Defendant the Dow Chemical Company ("Dow*1') submits the following memorandum in support of its Motion for Summary Judgment. STATEMENT OF FACTS 1. Plaintiffs filed the present action against defendant The Dow Chemical Company ("Dow") on May 25, 1995 in the Anderson County Court of Common Pleas and served Dow on June 7, 1995. Plaintiffs Complaint alleges several causes of action against Dow, including, negligence, strict liability, trespass, nuisance, negligence per se and for injunctive relief. Plaintiffs seek actual and punitive damages, as well as medical monitoring costs and injunctive relief arising out of waste materials allegedly existing on their property located in Anderson, South Carolina (the "Site") (Complaint, Exhibit A). 2. Dow removed the present case to federal District Court for the District of South Carolina, Anderson Division on February 9, 1996. 3. On January 22, 1996, in response to plaintiffs' discovery, Dow produced numerous documents in its possession which referenced "Dow-Badische." These records constitute all records in Dow's possession responsive to plaintiffs' Interrogatories and Document Production Requests located after a diligent search of Dow's corporate records conducted by or on behalf of Dow's in-house counsel (See attached Exhibit B, Affidavit of Michael T. Kay). 4. Attached as Exhibit C are excerpts of true and correct copies of Dow's Board of Director and Executive Committee meeting minutes produced to plaintiffs on January 22, 1994. 5. In their Complaint, plaintiffs do not allege that Dow deposited any waste on the Site. Rather, plaintiffs allege that Dow's "predecessors in interest wrongfully disposed of certain industrial waste substances on [the Site]." (Exh. A, 1 9). According to their Complaint, this alleged predecessor in interest was Dow-Badische Company (hereinafter referred to as "Dow- Badische"), a chemical company which operated a synthetic fiber manufacturing plant from 1966 to 1978 in Anderson (Exh. A, I 2). 6. Dow-Badische Chemical Company (changed in 1966 to "Dow- Badische Company") was duly incorporated under the laws of Delaware on or about May 16, 1958, with Dow and BASF Overzee N.V. ("BASF") owning equal shares of its stock. (Exhibit D, Certificate of Incorporation of Dow Badische Chemical Company). 7. Dow-Badische's operations expanded from one manufacturing site located in Freeport, Texas in 1958 to numerous manufacturing facilities located in Williamsburg, Virginia, Anderson, South Carolina, Europe and various subsidiaries by 1978. (See Exh. C., 2 Bates # Dow 201-2U4, 307, 311). 8. Dow-Badische was formed and incorporated pursuant to an agreement dated April 2, 1958 between Dow and BASF (the "Formation Agreement," attached hereto as Exhibit E) . See also, Exh. C, Bates # Dow 25-26. The initial purpose of forming this new, independent company was to engage in the manufacture and sale of acrylic products, primarily based upon technology provided by its BASF parent (See Exh. E, Article VI; and the Affidavit of Earle B. Barnes, 5 5, attached hereto as Exhibit F) . Dow and BASF, as equal shareholders, were required to have equal representation on Dow- Badische's Board of Directors (Exh. E, Art. V). 9. Pursuant to the Formation Agreement, Dow-Badische was not restricted in the scope of its operations or business, but instead was permitted to engage in any business enterprise its Board of Directors saw fit (Exh. E, Art. VI; See also Exh. D, Art. III). Moreover, the Formation Agreement specifically contemplated and authorized Dow-Badische to engage in business endeavors that would compete with those of its parents, Dow and BASF (Exh. E, Art. XII). 10. Among other things, the Formation Agreement called for Dow to enter into contracts with Dow-Badische for the provision of materials, supplies and services required for the operation of Dow- Badische's plant at "market prices prevailing from time to time..." (Exh. E, Art. X) . In addition, the Formation Agreement contemplated that Dow would provide marketing services to Dow- Badische and licensing for patent rights and certain technical information, all for adequate compensation (Exh. E, Art. VIII, IX). 3 11. From 1958 - 1978, Dow and Dow-Badische entered into a number of contracts with one another for Dow to supply to DowBadische numerous services, raw materials, technology licenses and real property at then prevailing market rates. Copies of contracts and related correspondence between Dow and Dow-Badische in Dow's possession and produced to plaintiffs on January 22, 1996 are attached as Exhibit G. (See also. Exh. C, Bates # 46-49,63,69,7577, 101-102, 110-121, 135-137, 138-140, 142-144, 152-153, 165-166, 168-169, 173-177, 181-183, 191-193, 207, 209, 211-216, 288-289). 12. Throughout its corporate existence as "Dow-Badische," Dow-Badische held and kept minutes of regular quarterly Board of Director meetings and annual Shareholder meetings. (See. Exh. F, 1 7, and Affidavit of William A. Groening, 1 3, attached hereto as Exhibit H). 13. According to Dow-Badische's Chairman of the Board from 1958 to 1978, Earle B. Barnes, Dow-Badische maintained its own accounting and financial records, held bank accounts in its own name, prepared and filed its own annual tax returns and generally observed all requisite corporate formalities during its entire corporate life (Exh. F, 18). 14. Dow-Badische paid reasonable dividends to its shareholders in at least three years during its life. In addition, consistent with Dow-Badische's existence as a separate and independent company, Dow-Badische was not fully consolidated into Dow for financial purposes, but instead was consolidated on the equity method of accounting. Exhibit I, Dow's Documentation of 4 Final Consolidation Entries for 1973. 15. On or about May 8, 1978, Dow sold all of its shares of Dow-Badische stock to Luchem Corporation, a BASF affiliated company. Under the Dow/Luchem Stock Purchase Agreement, attached hereto as Exhibit J, Dow neither assumed nor retained any liabilities of Dow-Badische. BASF currently owns and operates the former Dow-Badische Anderson, South Carolina facility whose alleged disposals on plaintiffs' property give rise to the instant suit. 16. Plaintiffs purchased the Site in 1976 from James and Effie Nix. "Several months" prior to October 1991, while owing the fields at the Site, plaintiffs discovered "a lot of fiber, large chunks of plastic, drums of plastic, fabric and many other items" buried on the Site. These other items included a 55 gallon drum containing a "liquid with a strong odor." Plaintiffs subsequently contacted Owens-Coming Fiberglass and Mr. Larry Walker, BASF's Safety and Ecology Manager for BASF's Anderson, South Carolina plant on September 30, 1991 to discuss their findings. Mr. Walker visited the Site on October 1, 1991 and contemporaneously reported his observations and the substance of his conversation with plaintiffs in a letter to BASF corporate environmental counsel. Mr. Walker's letter is attached hereto as Exhibit K. Among other things, Mr. Walker reported that he observed "two drums . . . that were partially exposed and full of a white solid plastic," as well as "two pirn caps with 'Dow- Badische' imprinted on them." (Exh. K). 17. Plaintiffs contacted the South Carolina Department of 5 Health and Environmental Control ("DHEC") in October 1991 to report the apparent disposals on the Site. DHEC personnel visited the site and recorded their findings in a DHEC Site Discovery Form (See attached Exhibits L and M, the Site Discovery Form and internal DHEC memos dated May 1, 1992, and April 4, 1995 respectively). Among other things, DHEC reported that they observed while at the Site, "five drums...full of a hardened white resin material...[and]...waste such as nylon fibers and fiberglass." (Exh. M). Following the initial visits, DHEC apparently evaluated the Site for inclusi i in the federal Comprehensive Environmental Response, Compensation and Liability Act, 42 USCA 9601 et. seq. ("CERCLA," or more commonly known as "Superfund") program (Exh. M) . 18. Mr. James Nix was deposed during discovery in a related suit filed by the plaintiffs against the Nixes and BASF in the South Carolina State Anderson County Court of Common Pleas Court, entitled Dale and Emily Owens v. BASF, et al.. 39-CP-04-1302.1 Excerpts of Mr. Nix's deposition are attached hereto as Exhibit N. In his deposition, Mr. Nix testified that sometime in 1968 he was contacted by an unidentified man who requested permission from him to place "mostly cafe stuff. ..stuff [that] will rot" in a gully located on Mr. Nix's property. Mr. Nix consented to the man's request. Approximately two weeks later, the man began dumping loads of waste on the Site (Exh. N, p. 11). Mr. Nix stated that the unidentified man did not identify himself as an employee of ^his suit is still currently pending in State Court against BASF. Plaintiffs have made similar allegations against BASF as they have asserted against Dow in this litigation. 6 Dow-Badische, nor did the truck the man used for his disposals at the Site bear any markings or other indications that Dow-Badische owned the vehicle (Exh. N, pp. 60,61). 19. In his deposition, Mr. Nix also testified that he personally observed these disposals on three or four occasions (Exh. N, p. 22) , and that the disposals continued for approximately six months in 1968 (Exh. N, p. 56) . Mr. Nix stated that he knew that the disposals took place in 1968 because that was the time that his son was away in military service (Exh. N, p. 26) and because he recalled that the disposals took place prior to his purchasing a new 1968 car (Exh. N, p. 35) . 20. To date, no hazardous, dangerous, unhealthy or unsafe materials have been found on the Site. On February 13, 1996, DHEC completed a detailed Site investigation, which included "a review of available file information, a site reconnaissance, and environmental sampling, and a thorough target survey." See Site investigation report attached hereto as Exhibit 0, hereinafter referred to as "DHEC Study." The DHEC Study found a "lack of detected contamination" and observed no release into the environment. Sampling revealed no organic compounds on the property, and only low levels of a few metals were detected (Exh. 0, p. 6) . However, all metals detected were "at levels below their established health-based benchmark." (Exh. O, p. 3). LEGAL ARGUMENT 1. PLAINTIFFS' COMPLAINT DOES NOT ALLEGE AND THERE IS NO EVIDENCE DEMONSTRATING A FACTUAL BASIS JUSTIFYING PIERCING DOW 7 BADISCHE'S CORPORATE VEIL TO HOLD DOW, A SEPARATE, INDEPENDENT CORPORATION, LIABLE FOR THE ALLEGED ACTS OR OMISSIONS OF DOW BADISCHE. Plaintiffs' claims do not allege injury as a result of any action of Dow. Rather, the plaintiffs allege that Dow, "by and through their predecessors in interest, [Dow-Badische] wrongfully disposed of certain industrial waste substances on Plaintiffs' property." (Exhibit A, Plaintiffs' Complaint, 1 9). Plaintiffs' complaint asserts that Dow is a responsible predecessor because "Dow previously owned a major interest in Dow-Badische, the corporation which caused most of the damage complained of herein." (Exh. A, \ 2) . Dow's ownership of shares of Dow-Badische does not make Dow liable for Dow-Badische's acts or debts. Delaware Corp. Laws Ann. 102(b)(6), 282. Any liability of Dow-Badische can be imputed to Dow only by disregarding Dow-Badische's corporate form. After over one year of discovery in this case, which included Dow's responses to Plaintiffs' Interrogatories and Request for Production of Documents, as well as numerous depositions of fact witnesses, plaintiffs have produced not one thread of evidence that would tend to support, let alone justify, piercing Dow-Badische's corporate veil to hold one of its shareholders, Dow, responsible for Dow-Badische's alleged waste disposal on plaintiff's property.2 Moreover, it is clear that plaintiffs do not seriously contend that Dow is responsible for Dow-Badische's alleged past acts. With less than one month before the trial term which includes this matter begins, plaintiffs have only served Dow with several interrogatories and Document Production Requests seeking information potentially relevant to a corporate veil analysis. In November 1995, in an effort to inform plaintiffs that in suing Dow, they perhaps mistakenly sued the wrong party, Dow provided plaintiffs with a number of Dow-Badische corporate documents and 8 Based on the evidence there is r.o genuine issue of any material fact with respect to the adequacy of Dow-Badische7s corporate veil. Therefore, as a matter of law, Dow is entitled to summary judgment on all of plaintiffs7 asserted causes of action. A. Standard of Review Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, admissions and affidavits, if any, demonstrate that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.Proc. 56. The rule mandates the entry of summary judgment when a party fails to make a showing sufficient to establish the existence of an essential element of that party's case, and on which that party will bear the burden of proof at trial. Celotex Coro, v. Catrett. 477 U.S. 317, 323 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). To create a genuine issue of material fact, the party opposing the motion must raise more than metaphysical doubt as to the material facts. When the record taken as a whole could not lead a rational person to find for the non-moving party, there is no genuine issue for trial. Matsushita Elec. Indus. Co. Ltd, v. Zenith Radio Core.. 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Federal Rule of Civil Procedure 56(b) provides that "a party the affidavit of Dow-Badische7s Chairman of the Board of Directors, Earle Barnes (Exh. F) (See Affidavit of Michael Kay, Exh. B) . These documents, as well as the documents produced pursuant to plaintiffs7 discovery requests identify a number of individuals who may have information relevant to the formation and operations of Dow-Badische, as well as its dealings with Dow. Plaintiffs have not contacted or attempted to depose any of these individuals. 9 against whom claim ... is asserted . . . may, at any time, move . . . for summary judgment in his favor as to all or any part thereof." Indeed, the plain language of Rule 56 requires that summary judgment "shall be rendered" if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Rule 56(e) then specifies that when a summary judgment motion is made and properly supported, the burden of proof shifts to the opposing party; and that in shouldering his burden, [he] may not rest upon mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. The Fourth Circuit has not hesitated to uphold summary judgment under these provisions where a defendant specifically established the legal insufficiency of the allegations against him. See, e.q.. Hester v. Hartindale-Hubbell. Inc.. 659 F.2d 433 (4th Cir. 1981), cert, denied. 455 U.S. 981 (1982); Principle v. McDonald/s Coro.. 631 F.2d 303 (4th Cir. 1980). The burden upon the party opposing the motion is not a light one: [He] simply cannot make a secret of his evidence until the trial, for in doing so he risks the possibility that there will be no trial. A summary judgment motion is intended to "smoke out" the facts so that the judge can decide if anything remains for trial. Donnelly v. Guion. 467 F.2d 290, 293 (2d Cir. 1972) . The Fourth Circuit has recognized in a similar vein that the, [opposing] party must provide specific facts showing that there is a genuine issue for trial, rather than resting upon bald 10 assertions of pleading; genuine, issue means that evidence must create a fair doubt, and wholly speculative assertions will not suffice. Ross v. Communications Satellite Core. . 759 F.2d 355 (4th Cir. 1985). Failure of the opposing party to come forward with "significant probative evidence that a genuine issue of (material) fact exists . . will necessitate the entry of judgment against him. Joe Reoueira, inc. v. American Distilling Co.. Inc.. 642 F.2d 826 (5th Cir. 1981) (emphasis added). B. Plaintiffs Bear the Burden of Proving That Dow-Badische's Corporate Identity Should be Disregarded in Order to Impose Liability on Dow. Dow-Badische's corporate records, as well as Dow Board of Directors and Executive Committee Meetings minutes and other various documents produced in this litigation which reference Dow- Badische, show that, at all times pertinent to these proceedings, Dow-Badische was a corporation duly formed and in good standing under the laws of Delaware, with power to own its assets and carry on its businesses. To prevail in its effort to hold Dow liable for the acts of Dow-Badische, plaintiff must persuade the court to disregard Dow-Badische's jural personality -- i.e. "pierce the corporate veil." Plaintiff has the burden of proving that Dow-Badische's corporate identity should be disregarded in order to impose liability on Dow. Ball v. Canadian American Express Company, Inc.. 314 S.C. 272, 442 S.E.2d 620, 623 (Ct. App. 1994), citing Sturkie v. Siflv. 280 S.C. 453, 313 S.E.2d 316 (Ct. App. 1984). Because the plaintiff is asking the court to disregard a legal 11 construct and ignore the shareholder's statutory protection from personal liability, "it is settled authority that the doctrine of piercing the corporate veil is not to be applied without substantial reflection." Sturkie. supra at 318, citing Baker v. Equitable Leasing Corp.. 275 S.C. 359, 271 S.E.2d 596 (1980). The power to pierce the corporate veil is exercised "reluctantly" and "cautiously." DeWitt Truck Brokers v. W. Rav Flemming Fruit Co.. 540 F.2d 681, 683 (4th Cir. 1976). In order to carry its burden, plaintiff must meet a two pronged test derived from DeWitt and adopted by the South Carolina Court of Appeals in Sturkie. The Sturkie test has been cited with approval by the South Carolina Supreme Court. Multimedia Publishing of South Carolina. Inc, v. Mullins. 314 S.C. 551, 431 S.E.2d 569, 571 (1993).3 3 For purposes of this Summary Judgment Motion only, we assume that South Carolina law applies to assess Dow-Badische's corporate veil. However, because Dow-Badische was duly incorporated under the laws of the State of Delaware, Delaware's substantive law arguably applies to the issue of whether Dow- Badische' s corporate veil can be pierced to hold one of its shareholders, Dow, responsible for the past acts or omissions of Dow-Badische (see, e.q.. Restatement 2(d) Conflict of Laws 307 (1971) - "law of the state of incorporation will be applied to determine the existence and extent of the shareholder's liability"). However, both state's laws in this regard are substantially similar and the result of applying either to the facts at hand is the same, i.e., Dow-Badische' s corporate veil cannot be pierced to hold Dow liable for plaintiffs' claims. See e.q. Harco National Insurance Co. v. Green Farms. Inc.. 15 Del. J. Corp. L. 1030, 1989 WL 110537 (Del. Ch. 1989) (reciting relevant factors in undertaking veil piercing analysis under an alter ego theory: "These factors include whether the corporation was adequately capitalized for the corporate undertaking; whether the corporation was solvent; whether dividends were paid, corporate records kept, officer sand directors functioned properly, and other corporate formalities were observed; whether the dominant shareholder siphoned corporate funds; and whether, in general the 12 The first prong of the Sturkie test is an eight factor analysis of the defendant/shareholder's relationship to the corporation: (1) whether the corporation was grossly undercapitalized; (2) failure to observe corporate formalities; (3) non-payment of dividends; (4) insolvency of the corporation; (5) siphoning of funds of the corporation by the dominant stockholder; (6) non-functioning of officers or directors other than the dominant shareholder; (7) absence of records; and (8) whether the corporation was merely a facade for the operations of the dominant stockholder. Cumberland Wood Products. Inc., v. Bennett. 3f S.C. 268, 417 S.E.2d 617 (S.C. App. 1992). As discussed below, plaintiff does not allege any of these factors, and the evidence produced after over one year of discovery does not even support one of these factors. The second prong requires plaintiff to demonstrate that fundamental unfairness will result from recognition of the corporate form. Sturkie at 457; See Dewitt, 540 F.2d at 687. Sturkie provides a two-step test to establish the requisite unfairness; First, the defendant must have been aware of the plaintiffs' claim against the corporation and, second, the defendant must have acted in a self-serving manner with regard to the property of the corporation and in disregard of the plaintiffs' corporation simply functioned as a facade for the dominant shareholder."). Delaware law also requires a showing of fraud or inequity. This fraud or inequity must directly result from the shareholder's purposeful manipulation of the corporate form. See e.g. . Mobil Oil Com, v. Linear Films, Inc.. 718 F.Supp. 260, 267269 (D.Del 1989) and Alberto v. Diversified Group. Inc.. 55 F.2d201 (5th Cir. 1995) . 13 claim in the property. 280 S.C. 453, 459, 313 S.E.2d 316, 319. Again, neither do plaintiffs allege any unfairness will result from recognizing Dow-Badische's corporate form nor does the evidence support any such unfairness. C. Plaintiffs Have Produced No Evidence Justifying Piercing the Corporate Veil. Nor Can They. In order to meet the first prong of Sturkie, not all eight factors must be present, but "a number" must be involved. Dumas v. InfoSafe Com. . ____ S.C. ____, _____, 463 S.E.2d 641, 644 (Ct. App. 1995). See also, r itt540 F.2d at 687. In the present case, plaintiffs have not alleged and the evidence indicates not even one of the elements can be satisfied. 1. Dow-Badische was not a mere instrumentality or alter ego of Dow, or a facade for Dow's operations. The gist of the first prong of the corporate veil piercing test under Sturkie requires plaintiffs to demonstrate that Dow completely dominated and controlled Dow-Badische such that the latter has no~independent existence separate and apart from Dow. Here, Dow owned 50% of Dow-Badische and had the power attendant upon such a shareholder interest. But such powers, inherent as they are in shareholder status, do not forfeit the protection of limited shareholder liability. To the contrary, as on leading treatise has explained. "The control necessary to invoke the rule is not majority or even complete stock control but such domination of finances, policies, and practices that the controlled corporation has, so to speak, no separate mind, will, or existence of its own, and is but a conduit for its principal." 14 Fletcher. Cyclopedia of Private Corporations 43.10, at 748 (1990) . Nearly all jurisdictions have made it clear that the control inherent in the parent-subsidiary relationship is not sufficient grounds to disregard the corporate veil. Trualia v. RFC Corn.. 692 F. Supp 231, 275 (S.D. N.Y. 1988); aff'd. 875 F.2d 308 (2nd Ct. 1989); In Re; Silicon Gel Breast Implant Products Liability Litigation 837 F. Supp. 1128 (N.D. Ala 1993); Hargrave v. Fiberboard Core.. 710 F.2d 1154, 1162 (5th Cir. 1983). The very notion that Dow-Badische is the alter ego or mere instrumentality of its former 50% shareholder, Dow, does not make conceptual sense on the facts of this case. The alter ego doctrine requires a showing that a parent corporation totally "absorbs" the subsidiary into its own enterprise. That is, control must be exercised so that there is a unity of interest between the parent and subsidiary and the subsidiary's separate corporate form is a "sham." The logical underpinning of this doctrine is that if two seemingly separate corporations are actually one, they forfeit the right to be treated as separate for liability purposes. But, there could not be a "unity of interest" between Dow and Dow-Badische such that Dow-Badische was a mere conduit or alter ego of Dow because 50% of Dow-Badische's shares during its corporate life were held by BASF, a wholly separate, publicly owned corporation. And, indeed, the Complaint here does not even allege that Dow and Dow-Badische were alter egos of one another or that there was a unity of interest between them. For related reasons, neither Dow nor BASF could have treated 15 Dow-Badische as its mere instrumentality. Similarly, Dow-Badische could not have been a facade for Dow's operations. The economic realities of a corporation with two equal and wholly separate shareholders are that neither shareholder could treat the subsidiary as its own without incurring the wrath of the other. If, for example, Dow used Dow-Badische's employees, facilities, or assets for its own purposes without providing adequate consideration, it would do so directly at the expense of BASF. The Complaint does not allege, nor does the evidence even suggest that Dow engaged in such conduct, it *rould be economically irrational for BASF to acquiesce in the plundering of its investment by an unrelated co-investor; and the courts are not constrained to assume that corporations act in economically irrational ways.4 2. Dow-Badische was adequately capitalized. Under the mere instrumentality or alter ego veil piercing doctrines, whether a corporation is grossly undercapitalized is one of the factors considered that is universally given substantial weight. DeWitt Truck Brokers. Inc, v. Rav Flemming Fruit Company. 540 F.2d 681, 684 (4th Cir. 1976) .5 See. e.q, , Anderson v. Abbott. 321 U.S. 349, 362 (1944). Plaintiff does not allege, and records produced to plaintiffs 4See, e.g. DeLeo v. Ernst & Young. 901 F.2d 624, 629 (7th Cir.) cert, denied. Ill S.Ct. 347 (1990); Matsushita Elec. Indus. Co. v. Zenith Radio Com. . 475 U.S. 574, 587 (1986). 5"0ne fact which all the authorities consider significant ..., and particularly so in the case of the one-man or closely-held corporation, is whether the corporation was grossly undercapitalized for the purposes of the corporate undertaking.,J DeWitt at 684. 16 do not suggest, that Dow-Badische was undercapitalized. To the contrary, it is crystal clear that Dow-Badische7s shareholders, Dow and BASF, contributed equal and substantial capital to Dow-Badische throughout the corporation's life. The formation agreement indicates that both BASF and Dow were required to each initially purchase $2 million worth of shares in Dow-Badische (Exh. E, Art. Ill)6 7 Thereafter, Dow alone contributed staggering sums to ensure that Dow-Badische was adequately capitalized, through the purchase of stock as well as by contributing physical assets, such as Dow's Williamsburg, Virginia based synthetic fibers business (Exh. C, Bates # Dow 201-202). By way of example, between 1958 and 1978, Dow's corporate records indicate that Dow's Board of Directors authorized Dow's purchase of Dow-Badische stock in an amount exceeding $68 million (Exh. C, Bates # Dow 68-72, 228-230, 322, 328-329, 296). In order to comply with the formation agreement and maintain a 50:50 investors balance, BASF was required to purchase an equal number of shares. In addition, Dow's corporate records indicate that Dow made substantial loans to Dow-Badische throughout its life. Again, by way of example, by 197 0 Dow had made loans and advances to Dow- Badische in the amount of $38.3 million (Exh. C, Bates # Dow 288) .7 6Dow's Board of Director Meeting minutes of September 9, 1950 indicate that Dow and BASH's initial capital contributions were actually in the amount of $1 million each (Exh. C, Bates # Dow 2931) . 7In addition, Dow's records reflect that Dow's Board authorized a subsequent loan to Dow-Badische of $10 million in 3974 (Exh. C, Bates # Dow 3 31-3 32) . The records indicate that Dow's loans to Dow-Badische were made at then prevailing market rates 17 Taken with the amount of capital Dow and BASF had contributed to Dow-Badische, it simply defies credulity to suggest that Dow- Badische was undercapitalized.8 Moreover, Dow-Badische developed from a single acrylic products manufacturing facility in Freeport, Texas in 1958, to an international multi-product business with facilities located in Williamsburg, Virginia; Anderson, South Carolina; Europe, and various subsidiary companies (Exh. C, Bates # Dow 208-209, 307, 389). It is difficult to fathom that this type of expansion could have occurred over Dow-Badische's 20 year life while at the same time being "grossly undercapitalized." 3. Dow-Badische observed all requisite corporate formalities. Plaintiffs do not allege that Dow-Badische did not observe corporate formalities, nor could such an allegation be sustained. Dow-Badische held and kept minutes of regular quarterly board of Director meetings and annual Shareholder meetings, as described in the Groening Affidavit (Exh. H, 53) and the Barnes Affidavit (Exh. F, 57) . In addition, the Chairman of Dow-Badische's Board of Directors from 1958-1978 stated in his sworn affidavit that Dow- Badische maintained its own accounting and financial records, (1967 $30 million loan authorization - annual interest rate of 6^% payable quarterly on unpaid balance; 1974 $10 million authorization - 90 day notes at a fixed interest rate equal to prime + 1%). aSee Terrv Apartments Assocs. v. Associated-East Mortgage Co.. 337 A.2d 585 (Del. Ch. 1977) (noting that corporate veil between parent and subsidiary companies will not be ignored solely because the parent loaned the subsidiary money.) 18 maintained bank accounts in its own name and files its own tax returns (Barnes Aff. , Exh. F, ?8).9,10 * In addition, Dow-Badische managed its own affairs, and dealt at arm's length with Dow. As the formation agreement makes clear, and Dow's records support, all of Dow-Badische's dealings with Dow were done on terms consistent with the prevailing market rates. Throughout its corporate existence, Dow-Badische entered into a number of contracts and contract amendments with Dow for various materials and services. Dow was compensated for these products and services at prevailing rates. (Exh. E, Exh. G) 4. Dow-Badische paid dividends when appropriate. Again, Plaintiffs do not allege that Dow-Badische did not pay dividends. Dow's records indicate that Dow-Badische did, in fact, pay reasonable dividends to its shareholders, when appropriate. One Dow record located and produced to plaintiffs, excerpts from Dow's "Documentation of Final Consolidation Entries For 1973" (Exh. I, Bates #Dow 790-794), indicates that Dow-Badische paid out moderate dividends in three separate years between 1958-1973 (1964 - $105,000; 1965 - $1,005,000 and 1973 - $750,000).11 9See. also, the minutes of Dow-Badische's First Board of Director's meeting, which indicates that the company opened a bank account in its own name with First National City Bank of New York (Exh. P). 10In addition, Dow-Badische was not fully consolidated on Dow's books, but rather was consolidated on the equity method of accounting (See Exh. I, Bates #792). uThese dividend payments are consistent with the state of DowBadische' s business operations at the respective times. Like most fledgling businesses, there is a time gap between the operation's start up period and the generation of sufficient profits to justify 19 5. Dow-Badische was a solvent, thriving business throughout its corporate life. Plaintiffs do not allege the Dow-Badische was insolvent at the time of the acts complained or at any time thereafter. The present record holds no hint that it was. To the contrary, as indicated above, Dow-Badische continually thrived and expanded from its inception in 1958 until 1978 when BASF assumed 100% ownership of its stock. In fact, any assertion to the contrary is belied by the fact that Dow-Badische's Anderson facility continues in operation today as BASF, Inc. 6. Dow did not siphon off funds from Dow-Badische. nor could it. Plaintiff does not allege that Dow siphoned funds from Dow- Badische. Again, there is no hint in the record that Dow did so or could have done so if it desired. The records reflect, as noted above, that Dow, in fact, contributed enormous capital to Dow- Badische while at the same time recovered little of its investment through dividends. In addition, it defies common sense to suggest that one shareholder could raid the corporation's assets while an equal co-investor idly stands by. 7. Non-functional of officers or directors. paying out dividends to its shareholders. Dow-Badische incurred significant costs in initially constructing and starting its Freeport, Texas manufacturing facilities beginning in 1958. Dow's records reflect that 6 years passed before Dow-Badische declared its first dividends. Similarly, Dow-Badische began construction and start-up of its Anderson, South Carolina fibers operations in 1966, as well as improvements to the Williamsburg facility during the same period. Dow-Badische then declared a dividend seven years later in 1973. 20 This factor relates to domination by a controlling sharenolder so complete that the nominal officers and directors of the corporation cease to function. See. e.q.. C.T. Lowndes & Co. v. Suburban Gas & Appliance Co.. Inc.. 307 S.C. 394, 415 S.E.2d 404 (Ct. App. 1991) . Plaintiff does not allege this measure of domination by Dow, nor would the record sustain such an allegation. Dow-Badische conducted substantial operations at more than one location under the direction of its officers and directors.12 Dow- Badische' s Chairman of the Board stated in his affidavit that Dow- Badische operated as a completely independent corporation e . was not controlled or otherwise excessively influenced by Dow (Barnes Aff. , Exh. F, 59). Moreover, according to the formation agreement between Dow and BASF, both shareholders were required to have equal representation on Dow-Badische's Board of Directors (Exh. E, Art. V).13 Again, it is beyond comprehension to imagine that Dow could have dominated Dow-Badische so completely to justify piercing the 12Dow-Badische's Certificate of Incorporation sets forth in Article IX the powers of Dow-Badische's Board: "In furtherance, and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized ... [to] ... have and exercise . . . [their' powers ... in the management of the business and affairs of the Company ..." Exh. D, Art. IX, Bates #Dow 366. 13A1though Dow and Dow-Badische did, from time to time share a few directors and officers, this fact alone does not warrant piercing Dow-Badische's corporate veil. Courts have generally recognized this business reality and consider it a "practice frequently found in parent subsidiary relationships." In Re Silicone Gel Breast Implant Products Litigation. 837 F.Supp. 1128, 1135 (N.D. Ala. 1993). But itself, some overlapping directors and officers is not sufficient to justify piercing the corporate veil. CM Com, v. Oberer Development Co. . 631 F.2d 536, 539 (7th Cir. 1980); Bendix Home Systems, Inc, v. Hurston Enterprises. Inc.. 566 F.2d 1039, 1042 (5th Cir. 1978). 21 veil without objection from Dow-Badische's other equal shareholder, BASF, or its representatives on the Dow-Badische Board. Given the substantial stake which BASF undoubtedly maintained in Dow- Badische, in terms of capital and the technology which BASF contributed to Dow-Badische, Dow could not have "controlled" or otherwise used Dow-Badische for its own benefit. (See Barnes Aff., Exh. F, 15).14 8. There is no evidence that Dow-Badische did not maintain corporate records. Plaintiffs do not allege, nor does the evidence generated in over c year of discovery in this matter suggest, any failure by Dow-Badxsche to maintain appropriate corporate records. To the contrary, Dow's former general counsel stated that he received copies of Dow-Badische's regular board and shareholder meeting minutes. Even if plaintiffs could establish that the first prong of Sturkie was satisfied, which they cannot, that would only establish that inquiry into the second prong is warranted. Cumberland Wood Products. supra. The second prong requires plaintiff to demonstrate that fundamental unfairness will result from recognition of the corporate form. Sturkie at 457-58; see Dewitt. 540 F.2d at 687. Sturkie provides a two-step test to establish the requisite unfairness: First, the defendant must have been aware of the plaintiff's claim against the corporation and, second, the 14The formation agreement also specified that Dow, BASF and Dow-Badische could sell products and compete against one another in any market (Exh. E, Art. XII). This further undercuts any hypothetical argument that Dow controlled or excessively influenced Dow-Badische. 22 defendant must have acted in a self-serving manner with regard to the property of the corporation and in disregard of the plaintiff's claim in the property. 280 S.C. 453, 459, 313 S.E.2d 316, 319. This second-prong fairness test links the first-prong factors to the plaintiff's claim. This link is illustrated by DeWitt and the South Carolina cases. For example, in DeWitt. the shareholder/defendant siphoned all cash out of his wholly-owned corporation, assuring that the corporation would have no assets with which to pay the known obligations to the plaintiff which were the basis of the lawsuit. Similarly, in Dumas, the shareholder/defendant siphoned the corporation's funds off to his personal use, despite being aware that the plaintiff was not being paid his salary. By contrast, nothing in the record in the present case in any way suggests that Dow somehow manipulated Dow-Badische's corporate form in a way to advantage itself while making Dow-Badische unable to perform on a known liability to plaintiff.15 Taking the reported cases as a whole, the present circumstances are clearly outside the pattern which has justified piercing the veil. In the words of one United States District Court, [T]he corporate entity may be ignored only where a third party 15To be sure, the events allegedly giving rise to plaintiffs' claims in this case occurred ten years after Dow-Badische was formed and incorporated. See Exh. N, p. 56. It defies logic, then, to suggest that any inequity or fraud worked on plaintiffs (which there was none) is a result of Dow's purposeful manipulation of Dow-Badische's corporate form which could have only occurred ten years prior. 23 has been led to take action to his detriment by reason of actions of the corporation and its sole or majority shareholders and equity demands that the corporate entity be ignored. Crabtree Investments v. Aztec Enterprises. 479 F.Supp. 448, 451 (M.D. La. 1979). Dow was neither a majority nor dominant shareholder; its ownership in Dow-Badische was balanced by BASF's. At the time of Dow's half ownership, Dow-Badische was a properly formed, free-standing corporation observing corporate formalities. Dow no longer owns anv part of Dow-Badische; Dow-Badische continues in business, evidently able to answer for its obligations as they arise in the ordinary course. There is no basis in equity for making Dow liable for Dow-Badische's acts. In summary, where "a number" of factors from the Sturkie eight-factor test must be shown as a first step in piercing the veil, plaintiff has alleged none, and the record holds no evidence that any could be shown. Even were the first prong of Sturkie to be met, plaintiff would not be able to show fundamental unfairness in the sense of the two-step, second prong of Sturkie. Plaintiffs' request to pierce the corporate veil can appropriately be dismissed. Sturkie itself affirmed dismissal of an action based upon piercing the veil. Indeed, Sturkie was a weaker case for dismissal than is the present case, as a sufficient number of first-prong factors were present to justify piercing the veil; the matter was dismissed based on failure to meet fundamental unfairness prong. 280 S.C. 453, 313 S.E.2d 316. The United States District Court in Crabtree also granted a dismissal motion. 24 II. PLAINTIFFS' CLAIMS ARE BARRED BY THE STATUTE OF LIMITATIONS Notwithstanding that Dow cannot be held responsible for the alleged past disposal activities of Dow-Badische for the reasons set forth above in Section I, Dow is also entitled to Summary Judgment on all of plaintiffs' claims because plaintiffs' suit was filed after the applicable statute of limitations expired; more than three years after they knew or reasonably should have known of the causes of action included in their complaint filed and served upon Dow June 7, 1995. Plaintiffs filed this lawsuit on May 25, 1995 in the Anderson County Court of Common Pleas and served The Dow Chemical Company on June 7, 1995. Pursuant to South Carolina Rule of Civil Procedure 3(a) this action was commenced for statute of limitation purposes on June 7, 1995. The applicable statute of limitations is set forth in S.C. Code 15-3-535 which requires that all actions be commenced within three years after the person knew or by the exercise of reasonable diligence should have known that he had a cause of action.16 Under 15-3-535, the standard as to when the limitations period begins to run is objective rather than subjective and, therefore, the statutory period of limitations begins to run when a person could or should have known, through the exercise of reasonable diligence, that a cause of action might exist in his or her favor, rather than when a person obtains actual knowledge of 16 Except as to actions initiated under Section 15-3-545, all actions initiated under Section 15-3-530(5) must be commenced within three years after the person knew or by the exercise of reasonable diligence should have known that he had a cause of action. 25 either the potential claim or of the facts giving rise thereto. Buraess v. American Cancer Soc.. South Carolina Div.. Inc. 300 S.C. 182, 386 S.E.2d 798 (Ct. App. 1989). Exercise of reasonable diligence means that injured party must act with some promptness where the facts and circumstances of injury would put a person of common knowledge and experience on notice that some right of his has been invaded or that some claim against another party might exist. The statute of limitations begins to run from this point, and not when advice of counsel is sought or full-blown theory of recovery is developed. Snell v. Columbia Gun Exchange. Inc. 276 S.C. 301, 278 S.E.2d 333 (1981). Thus, if plaintiffs knew or, through the exercise of reasonable diligence, should have known that they had a cause of action against Dow-Badische prior to June 7, 1992, then their claims in the present action are time barred. All of the evidence clearly demonstrates that plaintiffs actually had knowledge of the basis for their claims asserted in the instant suit (i.e., their alleged property damage) and, further, knew the cause of their alleged damages; i.e., the identity of the entity which allegedly "produced wastes that were buried in and upon the plaintiffs' real property" (Exh. A, 1 3) no later than December 12, 1991. These admissions by the plaintiffs and the undisputed evidence clearly shows that the plaintiffs knew or reasonably should have known several months prior to October 1991 of their claimed alleged damages, i.e. that certain solid wastes existed on their property. In addition, the record shows that Plaintiffs had reason to know 26 that Dow-Badische was allegedly responsible for those damages. The plaintiffs' discovery and knowledge of waste materials on their property, i.e., the damages which they seek from Dow in the instant action, in 1991 is not in dispute. The record shows that plaintiffs discovered waste materials on their property no later than 1991. Plaintiffs contacted DHEC, BASF and Owens-Corning, and representatives from each of these entities visited the Site in October 1991 and observed the waste at the Site, about which plaintiffs complain in the instant action. Since plaintiffs clearly had actual knowledge of the presence of waste at their property, their alleged damages and the identity of companies, including Dow-Badische, who allegedly caused damage to their property greater than three years before filing and serving this case against Dow, plaintiffs' claims are barred by the applicable three year statute of limitations. Attached hereto as Exhibit K is an October 3, 1991 letter of Larry Walker, who worked for Dow-Badische at the Anderson, South Carolina Plant for ten years and then BASF, after 1978, for an additional 18 years. Mr. Walker's letter, which he drafted to BASF's in-house counsel, Carlos Leal immediately following his conversation with Ms. Owen, states that he received a telephone call from plaintiff Emily Owen on September 30, 1991. During their conversation, Ms. Owen indicated to Mr. Walker that she and her husband had found fiber and plastic and some items with "Dow- Badische" printed on them. Mr. Walker's letter also reflects he spoke with Dale Owen on September 30, 1991 and arranged a visit to 27 plaintiffs' property on October 1, 1991. During ciiic visit, Mr. Walker observed what he characterized as appearing to be an "old industrial solid waste landfill" approximately 75 yards behind the plaintiffs' residence. This area had been tilled and worked extensively revealing "a lot of material." This material including "two drums . . . that were partially exposed and full of white solid plastic." Mr. Owens conveyed to Mr. Walker during this visit that earlier in the year he had uncovered a drum that "contained a liquid with a strong odor." He also observed with Mr. Owens "two pirn caps with 'Dow-Badische' imprinted on them" at the site (a pirn cap is a plastic bobbin cap). Significantly, Mr. Owen told Mr. Walker during this visit that nothing had ever grown on about 1.5 acres of his property where the material appeared to be buried and that "several months ago he decided to plow [the area] and plant some grass . . . [and that is] . . . when he began uncovering a lot of fiber, large chunks of plastic, drums of plastic, fabric and many other items." Mr. Owen also had several of these pirn caps in his possession. Exh. K. Attached hereto as Exhibit Q are the interrogatory responses answered by Dale and Emily Owen in a state court case entitled Dale and Emily Owen v. BASF, et al.. 93-CP-04-1302 which is currently pending in the Anderson County Court of Common Pleas.17 In those responses, the Owens admit that waste materials were found on their property on September 17, 1991. See Exh. Q. 17 This action arises out of the same facts, and allGge*; substantially similar claims against BASF, as are present in the instant case. 28 Finally, documents obtained irom the South Carolina Department of Health and Environmental Control ("DHEC") indicate that plaintiffs were concerned enough about the condition of their property in 1991 that they contacted DHEC, and DHEC visited the Site on October 1, 1991 (Exh. M). DHEC memorialized their initial findings in a document entitled "Site Discovery Form," dated November 13, 1991. This document states under the "Site Description" section of the form: "Old open dump with industrial wastes, some from former Dow-Badische plant, now BASF..." In addition, the form describes some of the waste at the Site, "Some solvent waste, ny' i, fiberglass, Dow-Badische wastes, observed by landowner." (Exh. L). In addition, Mark Harvley, DHEC's representative who initially visited the Site on October 1, 1991, reported that plaintiffs indicated to him during this visit that: (1) they had found a 55 gallon drum "about 1 year ago," (2) a neighbor recalled that solid wastes from Dow-Badische7s Anderson plant were dumped on plaintiffs' property' (3) a drum which plaintiff found on the Site contained "dark brown or black liquid that looked like a thin syrup and had a strong solvent-like odor" and (4) plaintiff was afraid that his cow might drink the chemical, so he punctured the drum, allowed the contents to spill onto the ground, and covered it up. (Exh. M, DHEC memorandum dated April 4, 1995.) By October 1991, the plaintiffs unquestionably knew that some right of theirs had been invaded or that some claim against another party might exist. The statute of limitations began "to run from 29 this point and not when advice of counsel is sought or full blown theory of recovery is developed." Snell v. Columbia Gun Exchange. Inc. . 276 S.C. 301, 278 S.E.2d 333 (1981). See also, Hinson v. Owens-Illinois. Inc.. 677 F.Supp. 406, 412 (D.S.C. 1987). Therefore, to be timely, plaintiffs' claims against Dow in this action must have been brought prior to October 1994. Because plaintiffs delayed and filed their claim and served Dow on June 7, 1995, all of their claims in this suit are barred by the applicable 3 year statute of limitations and Dow is entitled to summary j udgment. In 1991, the plaintiffs discovered material with the words "Dow-Badische" on them; they discovered fiber and plastic; they discovered drums of plastic; they discovered a drum that contained a dark liquid with a solvent-like odor (in paragraph ending "...they discovered a drum that contained a dark liquid with solvent-like odor.) . They were concerned enough by these findings and informed enough to call DHEC, Owens-Corning and BASF (successor to Dow-Badische). DHEC subsequently, and prior to June 1992, began investigating the plaintiffs' property and assessing it for inclusion in the federal Comprehensive Environmental Response, Compensation and Liability Act, "CERCLA" (more commonly referred to as "Superfund") program (Exh. M). Plaintiffs then filed suit on August 13, 1993 in State court against BASF, the prior property owners, the Nixes, and True Temper (and several of its alleged successors). However, plaintiffs delayed in filing and serving the instant suit against Dow until June 7, 1995, nearly two years 30 later. Perhaps this delay was due to their inability to extract acceptable settlements from the named defendants in the State action. Regardless, this inordinate delay is lethal to their claims here. For these reasons, plaintiffs7 case is barred by the applicable three year statute of limitations. III. DOW IS ENTITLED TO SUMMARY JUDGMENT ON PLAINTIFFS7 TRESPASS CLAIMS BECAUSE THE PRIOR OWNERS OF PLAINTIFFS 7 PROPERTY AT THE TIME THE WASTE MATERIALS WERE PLACED ON THE PROPERTY CONSENTED TO THE DISPOSALS Plaintiffs were not the ow ;ers of the property when the waste materials were placed on the property in 1968. The property was owned by the Nixes. Mr. Nix gave an unnamed waste hauler permission to come onto his property and dump waste material to fill in a gully: Q. And during the entire time that the gully was being filled in, did the waste hauler have your permission to come onto your property and dispose of waste materials? A. Yes, Sir. Exh. N, Deposition of James Nix, p. 50-51. Mr. Nix testified that he told the unidentified man that he did not want "nothing out in there that's going to be a damage to the land or nobody.. ." He was assured that the waste would consist of "mostly cafe stuff...[and]... that stuff I'm putting in there will rot." (Exh. N, p. 11). This was the essence of their agreement. However, Mr. Nix also testified that he subsequently 31 saw big boxes and big cans of "cafe stuff" and rod and reels and 55 gallon barrels. Mr. Nix testified that he inspected the material dumped in the gully from time to time and removed and used for his own personal use some materials that could not reasonably be defined as cafe waste. Exh. N, p. 12. The alleged disposals on Mr. Nixes' land were not done in secret, nor was it a case of "midnight dumping"; it was performed openly during daylight hours for anyone to see. Exh. N, p. 14. Mr. Nix clearly had knowledge that other than cafe and degradable wastes were being deposited on his property pursuant to his agreement with the unidentified hauler. He had adequate opportunity to object to these disposals or revoke his prior permission, yet he did not. There is no evidence that this unidentified man was an employee of Dow-Badische. Depo of Nix at p. 60. There is no evidence that the truck that brought the waste was owned, operated or controlled by Dow-Badische. Depo of Nix at p. 61. All of the dumping at the Nix's property was done with the consent of Mr. Nix, the then owner of the property.18 This consent was both express and implied, since Mr. Nix never took any action once he saw that material other than "cafe wastes" were being 18 In the Owens suit against BASF, the complaint of which is attached as Exhibit R, the Owens affirmatively allege that the Nixes "provided and arranged for" the alleged dumping prior to the time they sold the property to the Owens. Complaint, para. 6. The Owens, with this admission, cannot now say there was no consent. A genuine issue of material fact cannot be created by a plaiiitjff's conflicting testimony. Barwick v. Celotex. 736 F.2d 946, 960 (4th Cir. 1984) . 32 placed on the property. This undisputed consent constitutes an absolute defense to each of plaintiffs7 theories of recovery. Ravan. 315 S.C. 447, 434 S.E.2d 296 (Ct. App. 1993) ("The essence of trespass is the unauthorized entry onto the land of another. *** Here respondent's entry into the landfill property was authorized by Putnam, its owner") . See, also Snow v. City of Columbia. 305 S.C. 544, 409 S.E.2d 797,800-03 (Ct. App. 1991). This consent by Mr. Nix further operates to bar any causes of action relating to the waste from accruing to the Owens when they purchased the property. If the Nixes had a cause of action for the activities of the unknown waste hauler, it arose when Mr. Nix observed materials being dumped which he says he did not authorize. Further, the plaintiffs have not identified any substance from the Dow-Badische plant which is anything other than harmless inert garbage, all of which would have fallen within the Nixes' express and implied consent. See. Exh. O. For the reasons of consent, plaintiff's suit is barred. IV. Strict Liability Plaintiffs' second cause of action is for strict liability. This cause of action fails for two reasons. First, it is premised on "suspected hazardous waste substances;" and "potentially abnormally activities." Exh. A, Complaint, J 21 and 22. No such substances have been found on the plaintiffs' property.19 No organic compounds, no contamination, 19 Even if such substances were found, there is no evidence that creates a genuine issue of fact that Dow-Badische produced or deposited the substances. 33 and no threat to human health and the environment exists on the plaintiffs7 property. See page 5 infra relating to the DHEC Study which is attached hereto as Exhibit 0. Second, if chemicals were found on the property. South Carolina has not "declared that one engaged in handling dangerous chemicals is strictly liable for damages caused by those activities." Ravan v. Greenville Countv. 315 S.C. 447, 434 S.E.2d 296 (Ct. App. 1993). A scholarly discussion of this issue is set forth in Snow v. City of Columbia. 305 S.C. 944, 409 S.E.2d 797 (Ct. App. 1991). Judge Bell's opinion holds that the rule in Rvlands v. Fletcher forms no part of the common law of South Carolina and the "fault principle underlies civil liability from the early history to modern times." Snow. 409 S.E.2d at 799. The Fourth Circuit Court of Appeals has addressed the issue and reached the same conclusion in an unpublished opinion: In South Carolina, the strict liability doctrine for the most part has been confined to a small number of ultrahazardous activities. See Snow, 409 S.E.2d at 800; Wallace v. A.H. Guion & Co., 237 S.C. 349, 117 S.E.2d 359, 361 (21960) (adopting view of Restatement of Torts that blasting is ultrahazardous and subject to strict liability? decision limited to blasting). The state's courts or legislature have not extended the doctrine to cover either the disposal or reprocessing of hazardous chemical waste. . . . While chemical waste is undoubtedly dangerous, it is unclear whether disposal of such waste is inherently as ultrahazardous an activity as is, for example, blasting. . . . Accordingly, we hold that, because the law of South Carolina currently does not recognize strict liability for damages caused by hazardous waste disposal or reclamation, the damages caused by hazardous waste disposal or reclamation, the district 34 court erred in denying appellant's JNOV motions Shockley v. Hoechst Celanese Corp. , No. 92-1521 (4th Cir. June 28, 1993), Slip Op. at 13. (Copy attached hereto as Exhibit R). Conclusion For the reasons set forth above, Dow is entitled to summary judgment. SINKLER & BOYD, P July 22, 1996 Robert w. Buffingoihl Federal I.D. No. VS63 The Palmetto Center, Suite 1200 1426 Main Street Post Office Box 11889 Columbia, South Carolina 29211 (803) 779-3080 Attorneys for The Dow Chemical Company 35 CERTIFICATE OF SERVICE I do hereby certify that I have this day of July 1996, X caused to be shipped via Federal Express, prepaid/ caused to be hand delivered, a true and correct copy of Motion For Summary Judgment and Memorandum In Support Of Motion For Summary Judgment properly addressed to all known counsel of record, shown below, as follows: ioW MU- Beverly B. PottirV u Secretary to Robe*rrt W. Buffington Mailed To: Joseph S. Lyles, Esquire Howard, Howard, Francis & Reid 111 Pettigru Street Greenville, South Carolina 29601 f. & i . \ CERTIFICATE OF INCORPORATION of DOW BADISCHE CHEMICAL COMPANY ' v . vt . l;/V.% . . _Jr, ^ v' > I ARTICLE I Tv<? name of the corporation (which is hereinafter referred. ` as the "Company") is: DOW BADISCHE CHEMICAL COMPANY. ARTICLE II The principal office of the Company shall be loca-; ted at No. 100 West Tenth Street, in the'City of Wilmington^'; County of New Castle, State of Delaware. The nane' of its-*.. resident agent in charge thereof is The Corporation Trust....\ -V *'v. Company, whose address is No. 100 West Tenth Street," in th City of Wilmington, County of New Castle, State of Delaware*-' SJ- ; v*.'^ ' * ". * , .*. ir . * ARTICLE III' \T- . f\ ,-v " OiL'.-.&ZT The nature of the business of the Company and the; 1 . iv : t' v - . -,-..v objects and purposes proposed-to.b*d'transacted^'promot8dJ'/_.or'V^^-^w^'' carried on by it, are as follows, to-wi/:^ v (a) To manufacture, produce,, buy,'..seil':Ahd'jt}^J7S^ deal In chemicals of every description,"organic inorganic, natural or synthetic, in the form.of*.ratfs&. i ' ?r V ... '. Y:V.;.V:-?r 361 .'7. vj *l ; v. materials. Intermediates, or finished products and any other related products whatsoever and by-products derived from the manufacture thereof and products to be made therefrom and to do all ,, things Incident thereto. >r . .: .*/,L ;*<' > 74 "#'/.V.t*I| * '* - < (b) To engage in research, exploration, laboratory and development work relating to any substance, compound or mixture, now known or which may hereafter be known, discovered or developed, and to perfect, develop, manufacture, use, apply and generally deal in any such sub stance, compound or mixture. --'Wm (c) To erect, purchase, sell, lease, manage, occupy and improve buildings and to do ana perform all things needful and lawful for the holding, development and improvement of the same for resi dence, trade and busine:s purposes; to buy, own, operate, improve, lease and occupy lands and buildings for hotels, restaurants, apartment houses, dwelling houses, hospitals and ..business structures of all kinds, for the accommodation .of the public and of'individuals. r>/` (d) To transact any manufacturing business, and to purchase and sell goodj, wares and merchan dise used for such business. < . . Y.4v' .\ r . - (e) To purchase or otherwise acquire, leasej w assign, mortgage, pledge or otherwise dispose of v any trade names, trade marks, concessions, inven tions, formulae, improvements, processes of any' nature whatsoev< of the United to accept and (f)To subscribe or cause to be subscribed ' vj"'1\' lor, and to purchase or otherwise acquire, hold '-;.V. for investment, sell, assign, transfer, mortgage, pledge, exchange, distribute or otherwise dispose of the whole or any part of the shares of the capital stock, bonds, coupons, mortgages, deeds :ofV trust, debentures, securities, obligations,-noteS^Va and other evidences of indebtedness of 'any, corpora-';V'%'ijjf tion, stock company or association, now-op/here* aw; .... ' DOW 362 after existing, and whether created by or under the laws of the State of Delaware, or otherwise; and while owners of any of said shares of capi tal stock or bonds or other property to exercise all the rights, powers and privileges of owner ship of every kind and description, including the right to vote thereon, with power to desig nate some person for that purpose from time to time to the same extent as natural persons might or could do. (g) To purchase, hold, sell and reissue the shares of its own capital stock. (h) To endorse ' guarantee and secure j:he payment and satisfac ion of bonds,'coupons," mortgages, deeds of ;rust, debentures, securi ties, obligations and evidences of indebtedness, and also to guarantee and secure the payment or satisfaction of interest on obligations and of dividends on shares of the capital stock of other corporations; also to assume the whole or any part of the liabilities, existing or prospective, of any person, corporation, firm or association; and to aid in any manner any other person or cor poration with which it has business dealings, or whose stocks, bonds, or other obligations are held or are in any maimer guaranteed by the Com pany, and to do any other acts and things for the preservation, protection, improvement, or enhance ments of the values of such stocks, bonds, or other obligations.(i) (i) Without in any particular limiting any of the objects and powers of the Company, it is hereby expressly declared and provided that .theCompany shall have power to do all things herein before enumerated, and also to issue or exchange stocks, bonds and other obligations in payment for property purchased or acquired by it, or for any other object in or about its business; .to borrow money without limit; to mortgage or pledge its franchises, real or personal property, income ana profits accruing to it, any stocks, bondoor other obligations, or any property which may.be acquired by it, and to secure any ."bonds or other /, l; obligations by it issued or incurred.'.  'i 'v. * x' . . ' * .. *^/. 4..hW I . | (J) To carry on any business whatsoever . . . \I which the Company may deem proper or. convenient in connection with any of the foregoing pur- ' . &$}*' k poses or directly otherwise, or which may be-calculated. or indirectly, to promote the interests . of the Company or to enhance the value of its 1w-- 1 property; to conduct its business, in this State, in other States, in the District of Columbia, in * the Territories and Colonies of the. United -. t , States, and in foreign countries; and to hold, . . \ * 4 . .* A I .*}. r.*.x' II purchase, mortgage and ccnvey real and.personal V-!*V *.v. property, either in or out of the State of: Delaware, and to have and to exercise all the - * (* \l.V>':V*. ',VJV'.|| powers conferred by the laws of Delaware upon .corporations formed under the act pursuant to and under which this Company is formed.;,. ': The objects and purposes specified., in the fore- ; < . <.i; r.'. ' * going clauses shall, except when otherwise expressed,-be :>V'"' .' " .v.v--' in no wise limited or restricted by reference to. or infer--?i.':,,M '-.v ence from, th. e t. erms o.f any o.t.hor c.lause in this .: yii&s cate, but the objects and purposes specified in .each of- the.^;^J^r*-ru;.vI v :>I foregoing clauses of this Article shall, be regarddeedd,.as dependent objects and purposes. ARTICLE IY The number of.shares into which the Capital Stock is divided is 6,000,000 shares of Common'I of the par value of SI each. > . v. . -V '-.-`'x. * *. I The holders of share a. of the Company1 s^atockj*, '/ shall at all times have the right to sub scribe,;;<rntably^j|| to any and all shares of stock (whether now. or. hereafters authorized) which may at any time be iSauedV:'and'i^?^^^ " ' **? . '.'--L.* 'li* V'-v- DOW 364 i\ ' l` hrrl -w ? . i s. \ ..v,-v5^.y/}^| bonds, debentures, notes or other securities into shares of stock which may be issued. ARTICLE V The minimum amount of capital with which the V ... Company w.i1l1l commence business is $1,000.00. V . / _ :1 ARTICLE VI The name and place of residence of each of the r .. . incorporators are as follows: V-. ' i'**- _7rf v- : -V * - .';- Name Residence ,. ' f- ' -t' v\ f . I V*' ' ` I H. K. Webb H. C. Broadt S. E. Manuel Wilmington* Del aware-.>; ' . r ' A-' ~, r >-?/; .* 4.1; j .1**. ' 'r.; Wilmington, ^Delaware^';-';'*' * *`c^:v;v-r ` \ .. x*. i **/ , . Wilmingtont--:Deiaware.^^,^S'"-''-k ,, , \r! L'l V*L ARTICLE VII V ' : >TM. ' .v . X,T-:'>- ,;VySfLfeMIV; I The Company Is to have perpetual 'existence^'^ ARTICLE VIII . - -v..' .i *.*& The private property of.1 the;st'ocfcholders'shaii^^ifc^ be subject to the paymeinnt.. ;of corporate "debts '^o' rwj^exfcaft whatever " j"' \ * .**, ' - . " "Vi '.it -v.v>'v: ARTICLE IX Re* At all elections of directors of the Company,^each': stockholder entitled to vote shall be entitled to as many .' V'J.'I votes as shall equal the number of shares held 'by him nuitifr,,'. plied by the number of directors.to be elected1-and may dast . `; all of such votes for a single director or may distribute '.*?? . J'V them among the number to be voted for, or any. two *or morer';'. of them as he may see fit. . -.*** , " V' - * V\"-` The number of the directors of the Company shall . , * be fixed from time to time by the By-Laws and the number may.:, . .v be increased or decreased as therein provided. Directors . - v. need not be stockholders. - .* r.iir i. In furtherance, and not in limitation of the powers .... ' > y conferred by law, the Board of Directors iLss expressly autho-v^'::1^.! rlzeds .. (a) To make, alter, amend or ' repeal^the.:;.':<: K By-Laws of the Company. (b) To remove at any time any . ______ or appointed by the Board of Directors but; only-by J;,: ' the affirmative vote of a majority of - the. whole * v Board of Directors. - . ; .. (c) To designate, by resolution passed by a.r-";rSara**1 jorityIQg J Q j, J of VthLme wholea rlt rtl n DBoard, Vt*wo otr MmM Wor4%e."-Mo^f.fthMe4 ir - * iC'JU Tl T> nummbbeeir to constitute an Executive Committee to thhee. UeAxWteV.ntWt proWvT i.dMeWd- --in** MsaWi-d.- resolution' W"W ' yWWK By-Laws of the Compaanny, shall have .and--eexerxcisee.rtthcei2ss|e^.f ' powers of the Board1 of Directors in thee;'.mmaannaaggeemmeehhttith^{^ai^^^gjj of the business andl affairs of the. Company, ^and>>.i:<;^^y i :vS.:::*2'ZhkiS& V.'V. nDOowW 366 ,>v* shall have power to authorize the soal of the Company to be affixed to all papers which nay quire It. ' ` "''ri To designate any other standing commit-.,* * .4^!' ''::'?. \ tees by the affirmative vote of a majority of the-"- ` (d) From .time to time to fix and to vary' the sum to .be reserved over and. above its Capital;;^ Stock paid in .before declaring.any dividends*, direct and-determine the use and disposition, any surplus or net profits over and above.the . Capital Stock paid in; to fix the .time- of declar- *> may be applied from time to time to the. acquisi-.1'1,. -. tion or purchase of its bonds or other obligations or shares of --------e*--u----------------------- --------------- *&**?%<&*}* & erty to such such terms as expedient and neither the stocks',' bonds or.,.other\ property so acquired shall be regarded ;-as accumu*** lated profits for the purpose of declaring.or ing dividends unless otherwise determined by-'t__ Board of Directors, but' shares, of . such.Capital'''^r^>#jfr^4^ti*> Stock so purchased or acquired may .be res less such shares shall have been retired purpose of decreasing the Company! s Capital as provided by law. - v y ,y. V:*- (e) To authorizze, and cause to be executed^,;I mortgages and liens upon the real and personal property of the Compaany. - 'ARTICLE X No contract or'other transaction:.betweeli.;'tiii( pany and one or more of . its directors, offiOars^ortffltofc' x/;jVJaJCiVicVl `. u-J". "'yj.'teir , * .*')t r n ' : -V' '-c DOW 367 .. - ''v,;.'rr r&s i -:'5S 3^ holders, or between the Company and any other corporation, firm or association, in which o/'rn,e" o'>--r mo--re of its dir. e.'*c. `'ji*Tt' 'ioMIOr<sT-- ,I1 officers or stockholders are oiffffilceeerrss,, directors or stock- holdors, shall be ing of the Board of ratifying the contract persons not so interested in the contract or other transac!V tion, and such contract or other transaction is approved by ... V:"I '* *'A a majority of such quorum, or (2) If the contract or' other'.-', . -X A"-*'. ' ' 1 transaction is ratified at an annual or special'meeting oif V:v'v,'.'a.^ d stockholders, or (3) if a 4>V - A am . 4 A wV!& -. . _ 'V'Jr JI Just and reasonable to authorized or ratified i ARTICLE XI Each officer,-, director, or member-'.or any-.coimit't^C^^^j designated by the Board of Directors 8hall,:in the perform-;-.I ance of his duties 1 ^` ` "" faith upon the books pany by any of Its officials or by-an independentjpubli^.ia'c-^ countant or by an appraiser selected with reasonable care^hy^ the Board of Directors or by any such committee-or .in;roly<jn^s^g^jg In good faith upon other rocords of the Company; ARTICLE XII '* i - -.--J ' TO Each director and each offlcer (ahd'his.heir'fl-i^vSr^ y * *r -;ls;,.`9 <: :-vb*V/- ' oV:~ >: oo 368. executors and administrators) shall he indemnified by; Company against expenses reasonably incurred by him . - nection with any action, suit or proceeding to which he may' '; 1'v ' be made a party by reason of his being or/haring been^a 'di'- 3>V?4 ' rector or officer of the Comippaany or, at its requeissit.,V^of -'any other corporation of which i.tt is a stockholder; or 'creditor , ^ . ** ;&'./.'# . .*-.**''** '*** ' * and from which he is not entitled to be indemnified (whether./ ^*.7* * ` or not he continues to be a director or officer at the 'time .... of incurring such expenses),, except in respect of matters i; .'^5^ ' as to which he shall be finally adjudged in .such action, ` ::' ' v ' > suit or proceeding to be liable for negligence or misconduct ' V /' * C ` j,- in the event of a settlement' of any such action, suit .or,-pro- ; '7 ceeding, indemnification shall be provided only in. connection i** --. with such matters covered by the settlement as to which the Company is advised by counsel that the person to be inde'an'K*?^.#*: < . ` - * .* '*"'*vv"''**'* 4* ^' fled did not commit a breach of duty. The foregoing right-o^/'-'^'V'. .17^- indemnification- shall.not.be. excluaive of'other, rights-! to.*,*7 ; . 'v ' . which he may be entitled. j:'i' ' ` ~ * . - 7/ V.* *-* * ARTICLE*XIII J v.' : / t.` . . j . *. /*;*_ . * * -v Both the stockhloolldders and the directors of ..tthhee!! Cloomo--'h;- pany may hold their meetings and the Company.: [>/- flee or offices in such place or places outside 'c_N.________ 'U * of Delaware as the By-Laws may provide and'the>Coopany.fiay5? keep its books outside of the Sttatee. of ;DelaUare'lexceFpVftftf^? otherwise provided by law. . -, 7. -!J- . \ * DOW 369 /r ARTICLE XTY The Company hereby reserves the '** jrW .' . .J,, ' alter, change or repea1l 'any provision contained in'lts -Cer--7/f tiflcate of Incorporation I4nm t*hv,e" m"-a"n"n-err now "oorr;`hertaeaafftteerrV`; ; prescribed by the laws of the State of1 DelawarV/and-raii^r#/^ I rights conferred on stockholders therein are granted.sub- *' Ject to this reservation. - v.'- y.- ^ IN WITNESS WHEREOF, we, the undersigned,' inborp. ^ v'-zv1'' &?.VV< >;" . rators , have hereunto set our hands and seals this- 16th . /;/.f w>f'v: day of H*r, 1958. w In the presence of: ..... ' t;1- V]j -.'-I- ' -V ^ MM r,` S , . . -- yy. Sri V-Wii v.v. atow-. - ' i '. '.*> ' V: -AV^Wv**}t7 ' v- . -.<'** i -V /x-i*.' T4; - W r ,.vi V -`r/ 370 STATE OF DELAWARE ),, ) COUNTY OF NEW CASTLE ) BE IT REMEMBERED, that on the 16th day of May, 1958, personally came before me, M. Ruth Mannering/ a notary public In and for the State and County, aforesaid K. K. Webb K. C. Broadt and S. E. Manuel , being all of the parties to the forego ; Certificate of Incorporation, known to me personally t;. such, and severally acknowledged the Cer tificate of Incorporation to be the act and deed of the signers, respectively, and that the facts therein stated are truly set forth. GIVEN under my hand and seal of office the day and year aforesaid. :ec. 5. 1 395 3:23PM No. 3005 STATE OF SOUTH CAROLINA COUNTY OF ANDERSON Dale and Emily Owen, Plaintiffs, v. The Dow Chemical Company and Waste Management of South Carolina, Inc., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) AFFIDAVIT OF EARLE B. BARNES Case No. 95-CP-04-888 AFFIDAVIT OF EAJ IJEB. BARNES IN SUPPORT OF THE DOW CHEMICAL COMPANY'S MOTION FOR SUMMARY JUDGMENT Earle B. Bames, being first duly sworn, states as follows: 1. My current mailing address is P.O'. Box 1021, Jackson, Wyoming 83001 2. I was employed by The Dow Chemical Company in various capacities from 1940 until 1982, at which time I retired. To the best of my recollection, I was first elected to serve on Dow's Board of Directors in 1966, and I first became an officer of The Dow Chemical Company in 1971. 3. I served on the Dow-Badische Company's Board of Directors as Chairman * from its inception in 1958 until J978, at which ume I resigned. 4. Sometime prior to 1958, representatives of the German company Badischc Anilin- & Soda-Fabik Akliengesellschaft ('`BASF') approached representatives of The Dow Chemical Company ("Dow") with a proposal to form a new company in the United [095 23 PM No. 3005 ?. 3/4 States for the purpose of manufacturing certain chemicals, in which Dow and BASF would be equal shareholders. 5. To the best of my recollection, Dow-Badische Company was initially organized and its production centered around technology provided solely by BASF. From its inception until at least 1978, when I resigned from Dow-Badische's Board of Directors, Dow-Badische's business was based upon technology primarily provided by BASF. It is my best recollection that during this twenty (20) year period, Dow provided very little technology to Dow-Badischc pursuant to the 1958 Dow-BASF agreement to form Dow-Badischc. 6. Pursuant to the terms of the agreement between Dow and BASF organizing Dow-Badische, Dow provided marketing services for compensation to DowBadischc at its inception until approximately 1965, at which time Dow-Badische took over i its product marketing operations 7. From 1958 until 1978,1 personally attended or was otherwise aware of regular meetings of the Dow-Badische Board of Directors. Dow-Badische also held regular shareholder meetings. 8. It is my best recollection that Dow-Badische, from 1958 until 1978, maintained its own accounting and financial records, held bank accounts in its own name, prepared and filed its own annual tax returns, and generally observed corporate formalities and operated as a independent company, separate from both Dow and BASF. 9. Based on my experience as a Dow-Badischc Director, I can state thai Dow did not have any right or ability to, and in fact did not exercise, control or otherwise No. 0005 ?. excessively influence Dow-Badisebe's actions or business during its period as a shareholder of Dow-Badischc. 10. The statements contained in this Affidavit are based upon my own personal knowledge. If called as a witness, I will be able to testify as to the factual statements contained therein. Further affiant saith not. STATE OF WYOMING COUNTY OF TstoJ. ) (SS. 1 Subscribed to me this of N<vwimhat, 1995 JUL- ,-JUL : i~ro 17 '96 any i i 02 ui :20PM nDnOoWuurLvEGjALcu7oTtiH FL JU. 17 "9fi ia--34n dou lG. 7th fl FAX SO. 14072430038 p,.H'3 p.zn IN THE UNITED STATES DISTRICT COURT DISTRICT OF SOUTH CAROLINA ANDERSON DIVISION Dale and Emily Owen* ) CA. No: 8:96*360*3 Plaintiffs, ) ) : )i ) ) ____ AFFIDAVIT OF WILLIAM A. j! Tbs Dow Chemical Company. DrfeadaaL ) ) ) GRQENING, JR. I I ] ,,1 AFFDAVIT OF WILLIAM A- GROEPflNG, 3SL I 1 L William A. Groeamg. Jr.. being swom. state (be following: i j i 1. My Dame is William A. Groaning, Jr. I am older dun 18 yean of age and I apL in all t ways, qualified to testify. 1 am testifying from my own personal knowledge.; 2. I was employed by The Dow Chemical Company ("Dow") and worried in Dow's Legal Department as an attorney continuously from January 4. 1937 unto I retired on November 30,1977.1 served as Dow's General Counsel from January 1968 until May 1977. 3. Id 1958, in my capacity as Dow's Assistant General Counsel, I participated in drafting the agreement between Dow and BASF Overzce N.V. ('BASF') to form The Dow-Badische Chemical Company. Inc. C'Dow-Badische'7). From 1958 until I retired i is 1977,1 received and was responsible for maintaining for Dow copies of Diow- Badische's Board of Director and Shareholder meeting minuter. To (he best of my I will-': i o rtCi/ i i *ui ' unuwuu w ui/wi. ju. 1? f9S :a:>wn ecu legsl tth fl r recollection, troughout this pcciod Dow-Badiach held regular quarterly Board of Director meetings and regular amuul Shareholder meetings. Further affiant sayeth not. Dated this 17th day of July 1996. William A. Grocning. Jr. STATE OF FLORIDA COUNTY OF PALM BEACH ) (S3. ) Subscribed and Sworn Before Me this 17* day ofJnly 1996 \I I i j ll Notary Public PSSOLLAA. FCPEfl MY CQMMS8BN f CC 4B0BS OfflRESS Ju* 14, QB itaNMnrtafeuafcMMn i I STOCK PURCHASE AGREEMENT between LUCHEM CORPORATION and THE DOW CHEMICAL COMPANY Dated as of May 8, 1978 TABLE OF CONTENTS Page Section 1. Section 2. Section 3. Sale and Purchase of the Shares................... Representations and Warranties of the Seller........................................................................ Representations and Warranties of the Purchaser............................................................... 1 3 5 Section 4. Conditions to Purchase of Shares.................. 7 Section 5. Section 6. Section 7. Condition to Sal j of Shares............................... 11 Expenses.................................................................................... 12 Survival of Covenants, Representations and Warranties............................................................ 12 Section 8. Section 9. No Assignment; Successors..................................... 12 Communications................................................................... 13 Section 10. Section 11. No Finders or Brokers................................................ 14 Modification of Agreement..................................... 14 Section 12. Section and Paragraph Headings....................... 14 Section 13. Delaware Contract........................................................... 14 Section 14. Counterparts......................................................................... IS Exhibit 1 Exhibit 2 Exhibit 3 Exhibit 4 Material and Service Contract Ammonia Swap Agreement Trade Name Agreement Joint Venture Termination Agreement STOCK PURCHASE AGREEMENT THIS AGREEMENT, dated as of May 8, 1978, between THE DOW CHEMICAL COMPANY, a corporation organized and existing under the laws of the State of Delaware (the "Seller") , and LUCHEM CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the "Purchaser") . WITNESSETH WHEREAS, the Seller has agreed to sell to the Purchaser all of the shares of the authorized, issued and outstanding common stock ($100 par value) of Dow Badische Company, a Delaware corporation (the "Company"), owned by the Seller on the Closing Date (as such term is hereinafter defined) (the "Shares"), constituting as of the date hereof 614,$23 shares, and the Purchaser has agreed to purchase the Shares in accordance with the terms of this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual and dependent promises hereinafter set forth, the parties hereto agree as follows: 1. Sale and Purchase of the Shares. Subject to the terms and provisions of this Agreement, the Seller hereby 2 agrees to sell the Shares to the Purchaser and the Purchaser hereby agrees to purchase the Shares from the Seller. Certificates representing the Shares as hereinbelow provided shall be delivered and paid for at a closing (the "Closing") to take place at 10:00 A.M., New York City time (3:00 P.M., Germany time) , on May 8, 1978 or on such other date and at such other time as may be mutually agreed upon between the Seller and the Purchaser (the date and time of the Closing being hereinafter referred to as the "Closing Date"). The Seller will make delivery of the Shares to the Purchaser on the Closing Date by delivering to the Purchaser or its authorized representative at the offices of Messrs. Shearman & Sterling, 53 Wall Street, New York, New York 10005 one or more certificates representing the Shares which certificates shall be duly endorsed for transfer or accompanied by properly executed stock powers and accompanied by any requisite transfer tax stamps against payment therefor from the Purchaser in the aggregate amount of $49,500,000. Payment shall be made in Federal Funds by wire transfer into United States dollar account M-11-236-7720 maintained by the Seller at the Europe an-American Bank and Trust Company, 10 Hanover Square, New York, New York. 3 2. Representations and Warranties of the Seller. The Seller represents and warrants to the Purchaser that: (a) The Seller has, and at the Closing Date will have, good and marketable title to the Shares, free and clear of all mortgages, pledges, liens, claims or other encumbrances other than any mortgage, pledge, lien, claim or other encumbrance under this Agreement and has, and at the Closing Date will have, full right, power and authority to sell, transfer and deliver the Shares hereunder; and upon delivery of the Shares and payment of the purchase price therefor as herein contemplated the Purchaser will receive good and marketable title to the Shares free and clear of any mortgage, pledge, lien, claim or other encumbrance. (b) This Agreement has been duly authorized by all necessary corporate action of the Seller and has been duly executed and delivered and is a valid and legally binding agreement of the Seller in accordance with its terms. The Material and Service Contract, the Ammonia Swap Agreement, the Trade Name Agreement and the Joint Venture Termination Agreement (as such terms are defined in subsections (c), (d), (e) and (f) of Section 4 4) have been duly authorized by all necessary corporate action of the Seller and, when duly executed and delivered by the Seller, will be valid and legally binding agreements of the Seller in accordance with their respective terms. The sale of the Shares to the Purchaser as contemplated by this Agreement, the execution and delivery of this Agreement, the Material and Service Contract, the Ammonia Swap Agreement, the Trade Name Agreement and the Joint Venture Termination Agreement and the compliance with the terms of this Agreement, the Material and Service Contract, the Ammonia Swap Agreement, the Trade Name Agreement and the Joint Venture Termination Agreement do not and will not conflict with or result in a violation or breach of any of the terms of provisions of, or constitute a default under, the Restated Certificate of Incorporation, as amended, or the By-laws of the Seller, or any indenture, mortgage or other agreement or instrument to which it is a party or by which m it or its property is bound, or any applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court having jurisdiction over the Seller or any of its properties or business. 5 (c) No authorizations, approvals or consents of any governmental department, commission, bureau or agency or other public body or authority are required for the execution and delivery by the Seller of this Agreement, the Material and Service Contract, the Ammonia Swap Agreement, the Trade Name Agreement and the Joint Venture Termination Agreement, the compliance by the Seller with the terms of this Agreement, the Material and Service Contract, the Ammonia Swap Agreement, the Trade Name Agreement and the Joint Venture Termination Agreement or for the sale of the Shares by the Seller to the Purchaser as contemplated by this Agreement. 3. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Seller that: (a) It is aware that the Shares have not been registered under the Securities Act of 1933, as amended. (b) It is knowledgeable about "the affairs of the Company. `c (c) It is, and at the Closing Date will purchasing the Shares for its own account for 6 investment and not with, a present view to the distribution or resale thereof or any interest therein (except to an affiliate of the Purchaser as such term is defined in Section 8) and it has no present intention of distributing or reselling any thereof or any interest therein (except to an affiliate of the Purchaser); provided, however, that the disposition of the property of the Purchaser will at all _mes be within its control, subject to the applicable requirements of the Securities Act of 1933, as amended. (d) This Agreement has been duly authorized by all necessary action of the Purchaser and has been duly executed and delivered and is a valid and legally binding agreement of the Purchaser in accordance with its terms. The purchase of and payment for the Shares as contemplated by this Agreement, the execution and delivery of this Agreement and the compliance with the terms hereof do not and will not conflict with or# result in a violation or breach of any of the terms or provisions of, or constitute a default under, the Certificate of Incorporation, as amended, or the By-Laws of the Purchaser, or any indenture, mortgage or other 7 agreement or instrument to which it is a party or by which it or its property is bound, or any applicable law, rule, regulation, judgment, order, or decree of any governmental instrumentality or court having jurisdiction over the Purchaser or any of its properties or business. (e) No authorizations, approvals or consents of any governmental department, commission, bureau or agency or other public body or authority are required for the execution and delivery of this Agreement by the Purchaser or for the purchase of the Shares or payment therefor by the Purchaser as contemplated by this Agreement. 4. Conditions to Purchase of Shares. The obligation of the Purchaser to purchase and pay for the Shares on the Closing Date shall be subject to the following conditions: (a) The Purchaser shall have received from I.F. Harlow, General Counsel of the #Seller, an opinion, dated the Closing Date, to the effect that: (i) This Agreement, the Material Service Contract Agreement, the Ammonia Swap Agreement, the Trade Name Agreement and the 8 Joint Venture Termination Agreement have been duly authorized by all necessary corporate action of the Seller and have been duly executed and delivered and are valid and legally binding agreements of the Seller in accordance with their respective terms. The sale of the Shares to the Purchaser as contemplated by this Agreement, the execution and delivery of this Agreement, the Mate ial and Service Contract, the Ammonia Swap Agreement, the Trade Name Agreement and the Joint Venture Termination Agreement and the compliance with the terms of this Agreement, the Material and Service Contract, the Ammonia Swap Agreement, the Trade Name Agreement and the Joint Venture Termination Agreement do not and will not conflict with or result in a violation or breach of any of the terms or provisions of, or constitute a default under, the Restated Certificate of Incorporation, as amended, or the By-laws of the Seller, or any indenture, mortgage or other agreement or instrument to which it is a party or by which it or its property is bound, -r any applicable law, rule, regulation, judgment, order or decree of any government, governmental 9 instrumentality, or court having jurisdiction over the Seller, its business or any of its properties. (ii) No authorizations, approvals or consents of any governmental department, commission, bureau or agency or other public body or authority are required for the execution and delivery by the Seller of this Agreement, the Material and Service Contract, the Ammonia Swap Agreement, the Trade Name Agreement and the Joint Venture Termination Agreement, the compliance by Seller with the terms of this Agreement, the Material and Service Contract, the Ammonia Swap Agreement, the Trade Name Agreement and the Joint Venture Termination Agreement or the sale of the Shares by the Seller to the Purchaser as contemplated by this Agreement. (iii) Upon the delivery of and payment for the Shares to be sold by the Seller as herein contemplated, the Purchaser will receive good and marketable title to such Shares purchased by it, free and clear of any mortgage, pledge, lien, claim or other encumbrance. 10 (b) There shall have been delivered to the Purchaser the written resignations, dated as of the Closing Date, of such officers and directors of the Ccop any as the Purchaser shall have requested prior to the Closing Date. (c) The Company and the Seller shall have entered into an extension and amendment of that certain Material and Service Contract, dated September 1, 1975, between the Company and the Seller, as amended, substantially in the form attached hereto as Exhibit 1 (the "Material and Service Contract") , and shall have delivered a true and correct copy thereof to the Purchaser. (d) The Company and the Seller shall have entered into the Ammonia Swap Agreement, substantially in the form attached hereto as Exhibit 2 (the "Ammonia Swap Agreement"), and shall have delivered a true and correct copy thereof to the Purchaser. (e) The Company and the Seller shall have entered into the Trade Name Agreement, substr^ in the form attached hereto as Exhibit 3 (the "Trade Name Agreement"), and shall have delivered an 11 executed counterpart thereof to the Purchaser. (f) The Seller shall have entered into an agreement with BASF Overzee N.V. ("Overzee") terminating the Joint Venture Agreement, dated April 2, 1958, between Overzee and the Seller, substantially in the form attached hereto as Exhibit 4 (the "Joint Venture Termination Agreement"), and shall have delivered an executed counterpart thereof to the Purchaser. (g) The representations and warranties of the Seller hereunder shall be deemed to have been made again at and as of the time of the Closing and shall be true and correct as of the Closing Date. 5. Condition to Sale of Shares. The obligation of the Seller to sell the Shares to the Purchaser on the Closing Date shall be subject to the following condition: (a) The representations and warranties of the Purchaser hereunder shall be deemed to have been made again at and as of the Closing and shall be true and correct as of the Closing Date. 12 6. Expenses. The Seller and the Purchaser agree that, whether or not the transactions hereby contemplated shall be consummated, each such party will pay the expenses incurred by it in connection with the transactions contemplated by this Agreement. 7. Survival of Covenants, Representations and Warranties. The representations and warranties of the Seller and the Purchaser made in this Agreement shall, regardless of any investigation made by or on behalf of any party, survive the execution and delivery of this Agreement and the delivery by the Seller to the Purchaser of the Shares and shall continue in full force and effect. 8. No Assignment; Successors. Neither party may assign this Agreement without the written consent of the other, except that the Purchaser shall have the unrestricted right to assign this Agreement and its rights hereunder to any affiliate of the Purchaser without the consent of the Seller. For purposes of this Agreement, "affiliate of the Purchaser" means any party, at the date hereof or at any time hereafter, directly or indirectly controlling or controlled by or under direct or indirect common control with BASF Aktiengesellschaft or the Purchaser. 13 9. Canmuni cat ions. All communications provided for herein shall be delivered, mailed or telexed, addressed as follows: To the Seller: The Dow Chemical Company 2030 Dow Center Midland, Michigan 4864Q Attention: Dr. Earle B. Barnes To the Purchaser: Luchem Corporation c/o Shearman & Sterling 53 Wall Street New York, New York 10005 Attention: Gilbert Kerlin, Esq. With copies to: BASF Aktiengesellschaft 6700 Ludwigshafen Federal Republic of Germany Attention: Dr. Erich Henkel Dr. Volker Langbein Shearman & Sterling 53 Wall Street New York, New York 10005 Attention: Gilbert Kerlin, Esq. or addressed to either party at such other address as such party shall hereafter furnish to the other party in writing. Such communications shall be deemed to have been duuy when so delivered or, if mailed, by certified mail, return 14 receipt requested, with first-class mail postage prepaid. 10. No Finders or Brokers. The parties hereto represent to each other that all negotiations relative to this Agreement and the transactions contemplated hereby have been carried on directly by the Seller and the Purchaser and their respective representatives without the intervention of any person, as the result of any act of either party, in such manner as to ive rise to any valid claim against either of the parties hereto for a brokerage commission, finder's fee or other like payment. 11. Modification of Agreement. This Agreement cannot be changed, discharged or terminated orally, but only by an agreement in writing signed by the party against whom enforcement of any change, discharge or termination is sought. 12. Section and Paragraph Headings. The Section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 13. Delaware Contract. This 'Agreement and all rights arising hereunder shall be construed and determined in accordance with the laws of the State of Delaware rind the performance hereof shall be governed and enforced in accordance with such laws. 15 14. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed am original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. THE DOW, IICAL COMPANY / EXECUTIVE VICE PRESIDENT LUCHEM CORPORATION By. 1 EXHIBIT B DOW 3AD1SCHE CHEMICAL COMPANY Minutes of the First Meeting of the Board of Directors field September 4, 195% The First Meeting of the Board of Directors of DOW BADISCHE CHEMICAL COMPANY was held on September 4, 1958, at 9:15 o'clock A.M., in Room No. 117, Building B-1210, Freeport, Texas, pursuant to waiver. Present: Messrs. E. B. Barnes J. T. Faubion Gilbert Kerlin David J. Landsborough Tim H. Toepel Absent: Mr. Richard E. Metz Upon motion duly seconded and unanimously carried, Mr. E. B. Barnes was chosen Chairman, and Mr. Gilbert Kerlin was chosen Secretary of the Meeting. The Secretary of the Meeting presented and read waiver of notice signed by all of the directors fixing the place and time of the meeting, which was as follows: DOW BADISCHE CHEMICAL COMPANY Waiver of Notice of First Meeting of the Board of Directors to be held September 4, 1958 The undersigned, being all the directors of DOW BADISCHE CHEMICAL COMPANY, a Delaware corporation, hereby waive all notice of the time, place and purpose of the First Meeting of the Board of Directors of the said Corpora tion, and do hereby designate September 4, 1958, at 9:15 A.M as the time, and Room No. 117, Building B-1210, Freeport, Texas, as the place for holding said meeting, for the transaction of such business as may be brought before said meeting, and any adjournment or adjournments thereof, including, without limitation, the amendment of the By-Laws of this Corporation adopted by the Incorporators thereof on May 23, 1958, by deleting the title "Executive VicePresident" in Section 3-1 of Article III and in Sections 5*1 5.6 and 5*7 of Article V, and substituting therefor in each such Section the title "Vice-President and General Manager". Dated: September 4, 1958. /s/ E. B. BARNES Earl Barnes /s/ J. T. FAUBION J. T. Fadbion /s/ GILBERT KERLIN Gilbert Kerlin /s/ DAVID J. LANDSBOROtTOH David J. Landsboroafc. /s/ RICHARD E. METZ___ Richard E. Metz /s/ TIM H. TOEPEL Tim H. Toepel The Chairman announced that a quorum was present and that the meeting was duly organized. The minutes of the meeting of incorporators held May 23, 1958, were read and approved, as were the By-Laws adopted by the incorporators. The Chairman then stated that the first order of business was the amendment of the By-Laws of the Corporation by deleting the title "Executive Vice-President", and sub stituting therefor the title "Vice-President and General Manager", in Section 3*1 of Article III and in Sections 51 5.6 and 5*7 of Article V of said By-Laws. After discussion, on motion duly seconded and unanimously carried, it was RESOLVED, that the By-Laws of this Corpora tion adopted by the incorporators on May 23, 1958, be and the same hereby are amended by deleting the title "Executive Vice-President" from Section 3-1 of Article III and from Sections 5*1, 5*6 and 5*7 of Article V thereof, and substituting therefor the title "Vice-President and General Manager" in each of said Section 31 of Article III and Sections 5.6 and 57 of Article V, and that said By-Laws, as so amended, are in all other respects ratified, ap proved and confirmed. The Chairman stated that it was in order to elect officers of the Corporation to serve until their successors have been duly elected and qualified. The following persons were thereupon nominated as officers of the Corporation to serve until their respective successors are duly elected and qualified: President - E. B. Barnes Vice-President and General Manager - Tim H. Toepel Treasurer and AssistantSecretary - David J. Landsborough Secretary - Gilbert Kerlin All the directors present having voted and ballots cast, the Chairman announced that the aforesaid persons had been unanimously elected to the offices set before their re spective names to asstime the duties and responsibilities fixed by the By-Laws. The Secretary presented a form of corporate seal, and, upon motion duly seconded and unanimously carried, it was RESOLVED, that the corporate seal, the impression of which is affixed in the margin hereof, be and the same shall be the corporate seal of this Corpora tion. The Chairman then stated that this Corporation had been formed by The Dow Chemical Company and BASF Overzee N.V. to carry out the terms of an Agreement between these Companies (the Partners), dated April 2, 1958. A copy of the Agreement was submitted to the meeting and ordered*filed with the records of this Corporation. The Chairman stated that the Partners had agreed to finance the operations of this Corporation as follows: The issuance to each Partner pari passu of: 1,000,000 shares of Capital Stock of this Corpo ration of the par value of $1 per share against payment at par, and $2,000,000 face amount of 4 1/2$ Promissory Notes of this Corporation due December 31? I960. A form of the stock certificate and specimen of the 4 1/2$ Promissory Note were submitted to the meeting and ordered filed with the minutes thereof. After discussion, on motion duly seconded and unanimously carried, it was RESOLVED, that the form of certificate for the Capital Stock of this Corporation of the par value of $1 per share as presented to this meeting be and the same hereby is approved and adopted, and the Secretary of this Corporation is hereby authorized and directed to attach a specimen of such certificate to the minutes of this meeting. RESOLVED, that the 4 1/2$ Promissory Notes, due December 31? I960, to be issued in an aggre gate authorized principal amount of $4,000,000, in the form of the 4 1/2$ Promissory Note presen ted to this meeting, be and the same hereby are approved and adopted, and the Secretary of this Corporation is hereby authorized and directed to attach a specimen of such Promissory Note to the minutes of this meeting. RESOLVED, that the proper officers of this Corporation be and they hereby are authorized and directed for and on behalf of this Corporation, on written instructions from the President and Vice-President and General Manager of this Corpo ration, to issue from time to time pari passu to each of The Dow Chemical Company and BASF Overzee N.V., against payment as follows, the followin'securities of this Corporation: Not to exceed 1,000,000 shares of Capital Stock of the par value of $1 per share at par thereof, and after completion of the issuance thereof, Not to exceed $2,000,000 face amount of 4 1/2# Promissory Notes due December 31? I960; the aggregate of 2,000,000 shares of Capital Stock to be issued pari passu to the said The Dow Chemical Company and BASF Overzee N.V. in their entirety prior to the issuance of any of the said 4 1/2# Promissory Notes due December 31? I960. The Ch rman recommended that consideration be given to the opening of bank accounts of this Corporation and that provision be made for the operation thereof. .Thereupon, on motion duly seconded and unanimously carried, it was RESOLVED : 1. That THE FIRST NATIONAL CITY BANK OF NEW YORK, 55 Wall Street, New York 15? N. Y., (hereinafter called the "Bank") be and hereby is designated a depository of the funds of this Corporation, and either E. B. BARNES or DAVID J. LANDSBOROUGH jointly with either TIM H. TOEPEL or GILBERT KERLIN is/are hereby authorized to sign, for and on behalf of this Corporation, any and all checks, drafts or other orders with re spect to any funds at any time(s) to the credit of this Corporation with the Bank and/or against any account(s) of this Corporation maintained at any time(s) with the Bank, inclusive of any such checks, drafts or other orders in favor of any of the above-designated officer(s) and/or other person(s), and that the Bank be and hereby is authorized (a) to pay the same to the debit of any account(s) of this Corporation then main tained with it; (b) to receive for deposit to the credit of this Corporation, and/or for col lection for the account of this Corporation, any and all checks, drafts, notes or other instru ments for the payment of money, whether or not endorsed by this Corporation, which may be sub mitted to it for such deposit and/or collection, it being understood that each such item shall be deemed to have been unqualifiedly endorsed by this Corporation, and (c) to receive, as the act of this Corporation, any and all stop-payment instructions (inclusive of any relative agree ment) with respect to any such checks, drafts or other orders as aforesaid and reconcilement(s) of account when signed by any one or more of the officer(s) and/or other person(s) as hereinbefore designated. 2. That either E. B. BARNES or DAVID J. LANDSBOROUGH jointly with either TIM H. TOEPEL or GILBERT KERLIN is/are hereby authorized, for and on behalf of this Corporation, to transact any and all other business with or through the Bank which at any time(s) may be deemed by the said officer(s) and/or other person(s) trans acting the same to be advisable (EXCEPT the bor rowing of money, or the obtaining of any form of credit, from the Bank, either directly or indi rectly, with or without security), and, in refer ence to any of the business or transactions here inbefore in this subdivision "2" authorized, to make, enter into, execute and deliver to the Bank such instruments as may be deemed by the offi cers) and/or other person(s) so acting to be necessary or desirable. 3- That any and all withdrawals of money and/or other transactions heretofore had in be half of this Corporation with the Bank are hereby ratified, confirmed and approved, and that the Bank (and any interested third party) may rely upon the authority conferred by this entire resolution until the receipt by the Bank of a certified copy of a resolution of this Board re voking or modifying the same. RESOLVED: That FIRST CITY NATIONAL BANK OF HOUSTON, HOUSTON, TEXAS, be and it is hereby selected as a depository for the funds of this Corporation; that said funds shall be withdrawn from said depository on the check of this Corpora tion signed by any one of the following officers of this Corporation: that any of them are autho rized to endorse and cash checks and drafts for and on behalf of this Corporation: Name Name Name Name E. 3. BARNESTitle President Vice-President and TIM H. TOEPSLTitle General Manager Treasurer and DAVID J. LANDSBOROPGH Title Assistant Secretary GILBERT KERLINTitle Secretary It is further rescued that any of the above named officers shall be authorized to individually sign for and receive the statements and cancelled vouchers of this Corporation, or to appoint, in writing, agents to so sign for and receive such documents, and any of the above named officers are hereby further authorized to stop payment against checks of this Corporation and to bind the Corpora tion thereto. It is further resolved that any in debtedness created in connection with this account by any of the signing officers of the Corporation, whose signatures shall be required on checks or drafts or other orders of payment or fund transfers shall be the debt of this Corporation. It is further resolved that the said Bank is hereby authorized to receive such drafts, checks, notes or orders so executed for the credit of, or in payment from, the payee or any other holder without inquiry in any case as to the circum stances of their issue or the disposition of their proceeds, whether drawn to the individual order of, or tendered in payment of any individual obliga tions of, any of the officers above named, or other officers of this Company or otherwise. That said authority hereby conferred shall _ main in force until written notice of the revoca tion thereof shall be received by said Bank; and that the certification of the Secretary of this Corporation as to the election and appointment of the officers so authorized to sign such checks and endorsements, and as to the signa tures of such officers, shall be binding upon this Corporation. Be It Resolved, that FREEPORT NATIONAL BANK, Freeport, Texas, be, and it Is hereby, designated a depository of this Corporation and that funds so deposited may be withdrawn upon a check, draft, note or order of the Corporation. Be It Further Resolved, that all checks, drafts, notes or orders drawn against said account be signed by any one of the following: NAME TITLE E. B. BARNES President TIM H. TOEPEL Vice-President and General Manager DAVID J. LANDSBOROUGH Treasurer and Assistant Secretary GILBERT KERLIN Secretary whose signatures shall be duly certified to said Bank, and that no checks, drafts, notes or orders drawn against said Bank shall be valid unless so signed. Be It Further Resolved, that said Bank is hereby authorized and directed to honor and pay any checks, drafts, notes or orders so drawn, whether such checks, drafts, notes or orders be payable to the order of any such person signing and/or countersigning said checks, drafts, notes or orders, or any of such persons in their indiv idual capacities or not, and whether such checks drafts, notes or orders are deposited to the in dividual credit of the person so signing and/or countersigning said checks, drafts, notes or orders, or to the individual credit of any of the other officers or not. This resolution shall continue in force and said Bank nay consider the facts concern ing the holders of said, offices, respectively, and their signatures to be and continue as set forth in the certificate of the Secretary or Assistant Secre tary, accompanying a copy of this resolution when delivered to said Bank or in any similar subsequent certificate, until written notice to the contrary is duly served on said Bank. The Chairman stated that it would be necessary for this Corporation to qualify to do business in the State of Texas in order to carry out its functions under the Agreement between the Partners dated April 2, 1953. Thereupon, on motion duly seconded and unanimously carried, it was .RESOLVED, that, for the purpose of authoriz ing this Corporation to do business in the State of Texas, the proper officers of this Corporation be and they hereby are authorized and directed for and on behalf of this Corporation to take appropri ate action to qualify this Corporation to do busi ness in the State of Texas, including, without limitation, the execution and filing of an Applica tion for Certificate of Authority. The Chairman then stated that a preliminary cost esti mate in the aggregate amount of $4,550,000 had been prepared providing for (i) the construction of facilities to produce acrylic acid, ethyl acrylate, methyl acrylate, butyl acrylate, and other specialty acrylates, and (ii) the acquisition of 29.830 acres in The Dow Chemical Company Plant B aree. .i..u Tree- port, Texas, where such construction would take place. The Chairman presented Authorization Request No. 1, dated September 4, 1958, for such sum of $4,550,000, accom panied by a schedule of Preliminary Cost Estimate, a Tentative Schedule setting forth the amounts required by months between September, 1958, and January, I960, when such sum of $4,550,000 would be required, a Projected Engineering, Pur chasing and Construction Schedule, and the proposed location of the 29.830 acres. The Chairman stated that it was proposed that the said acreage be acquired by this Corporation from The Dow Chemical Company at $750 per acre, or an aggregate of $22,372.50. Authorization Request No. 1 and the schedules submitted therewith were discussed and ordered filed with the minutes of this meeting. Thereupon, on motion duly seconded and unanimously carried, it was RESOLVED, that the officers of this Corporation be and they hereby are authorized and directed to execute Authorization Request No. 1, dated September 4, 1958, in the aggregate sum of 550,000, such sum to be applied tro the construc tion of facilities to produce acrylic acid, ethyl acrylate, methyl acrylate, butyl acrylate and other specialty acrylates, and to the acquisition by this Corporation of 29.830 acres designated as Blocks B101 and B103 at The Dow Chemical Company's 3 Plant at Freeport, Texas, all as set forth in the said Authorization Request No. 1 and accompanying papers submitted to this meeting and filed with the minutes thereof, such acreage to be acquired by this Corpo ration at $750 per acre, or an aggregate of $22,372.50. RESOLVED, that the officers of this Corpora tion be and they hereby are authorized and directed for and on behalf of this Corporation to take 331 appropriate action to effect the construction of the facilities called for in the said Authorization Request No. 1 and accompanying papers, including, without limitation, the execution of any and all contracts which may be necessary to give effect thereto. RESOLVED, that either the President or the Treasurer of this Corporation jointly with either the Vice-President and General Manager or Secretary of this Corporation be and they hereby are autho rized and directed for and on behalf of this Corpo ration to make calls in writing on The Dow Chemical Company and BASF Overzee N.V. for funds from time to time, as required to carry forward the acquisi tion of land and the construction of facilities as provided in the said Authorization Request No. 1 and accompanying papers, such funds to be received by this Corporation against issuance, first, of the 2,000,000 shares of Common Stock of this Corpora tion of the par value of $1 per share, and there after of the $4,000,000 of 4 1/2% Promissory Notes of this Corporation due December 31, I960, or such part of said $4,000,000 of Promissory Notes as may be required to carry out the program set forth in said Authorization Request No. and accompanying papers, the said shares and Promissory Notes to be issued from time to time pari passu to The Dow Chemical Company and BASF Overzee N.V. Thereupon the Board of Directors proceeded to discus the possible land requirements of this Corporation exceeding the 29.830 acres presently authorized for acquisition from The Dow Chemical Company. It was agreed that; this matter would be explored further with The Dow Chemical Company, with a view to insuring that further acreage would be made available to this Corporation. A discussion then ensued as to the fixing : 3 1e of meetings of the Board of Directors, and it was agreed that such meetings would be held on call from time to time as re quired to carry out the operations of this Corporation. There being no further business to come before the meeting, on motion duly seconded and unanimously carried, the meeting adjourned. 7}-- Secreta DOW BADISCHE CHEMICAL COMPANY BALLOT Cast at the First Meeting of the Board of Directors September 4-- 1955T The undersigned hereby vote as follows for the following officers of DOW BADISCHE CHEMICAL COMPANY, to hold office until the election and qualification of their respec tive successors: Ea.* Barnes - President Tim Toepel - Vice-President and General Manager D. J. Landsborough - Treasurer and Assistant Secretary Gilbert Kerlin - Secretary Dated: September 4, 1958- / s/ E. B. BARNES Earl Barnes /s/ J. T. FAUBION J. T. Faubion /s/ GILBERT KERLINGilbert Kerlin /s/ DAVID J. LANDSBOROUGH D. J. Landsborough /s/ TIM H. TOEPEL Tim Toepel