CPI



                           INDEMNIFICATION AGREEMENT



                                 by and among



             CERTAIN STOCKHOLDERS OF CPI DEVELOPMENT CORPORATION,







                                      and



                     MCC ACQUISITION HOLDINGS CORPORATION





                              Dated: May 7, 2001





==============================================================================









{PAGE}









                           INDEMNIFICATION AGREEMENT



          This Indemnification Agreement is made and entered into as

of May 7, 2001 (this "Agreement"), by and among MCC Acquisition Holdings

Corporation, a Delaware corporation ("Buyer") and the stockholders of CPI

Development Corporation, a Delaware corporation ("CPI"), listed on

hereto (the "Stockholders") (each, a "Party" and, collectively, the

"Parties").



                                   RECITALS

                                   --------



          WHEREAS, concurrently with the execution and delivery of

this Agreement, Carter-Wallace, Inc., a Delaware corporation (the "Company"),

CPI, Buyer, MCC Merger Sub Corporation, a Delaware corporation and a wholly

owned subsidiary of Buyer ("Company Merger Sub"), and MCC Acquisition Sub

Corporation, a Delaware corporation and a wholly owned subsidiary of Buyer

("CPI Merger Sub"), have executed and delivered an Agreement and Plan of

Merger, dated as of the date hereof (the "Merger Agreement"), providing for,

among other things, the merger of CPI Merger Sub with and into CPI and the

merger of Company Merger Sub with and into the Company; and



          WHEREAS, concurrently with the execution and delivery of

this Agreement, the Company and Armkel, LLC, a Delaware limited liability

company (the "Asset Buyer") have executed and delivered an Asset Purchase

Agreement, dated as of May 7, 2001 (including the exhibits, schedules and

annexes thereto, the "Asset Purchase Agreement") providing for, among other

things the sale, conveyance, transfer, assignment and delivery to Asset Buyer

of all of the Company's and its affiliates' right, title and interest in and

to the Purchased Assets (as defined in the Asset Purchase Agreement) and the

assumption by Assets Buyer of all of the Assumed Liabilities (as defined in

the Asset Purchase Agreement; such sales, transfers, assignments, purchase,

acceptances and assumptions collectively, the "Asset Purchase");



          WHEREAS, as a condition to its willingness to enter into the

Merger Agreement, Buyer (and, as a condition to enter into the Asset Purchase

Agreement, the Assets Buyer) has required that the Stockholders provide, and

the Stockholders are willing to provide, certain indemnification rights to

Buyer as set forth in this Agreement.



          NOW, THEREFORE, in consideration of the foregoing and the

mutual covenants and agreements herein contained and for other good and

valuable consideration, the receipt and adequacy of which is hereby

acknowledged, the Parties, intending to be legally bound, hereby agree as

follows:



          1. Certain Definitions. Except as specified herein, capitalized terms

used in this Agreement shall have the meanings assigned to such terms in the

Merger Agreement.



          2. General Indemnification.



          (a) Indemnification by the Stockholders. Following the CPI Merger

Effective Time and subject to the terms and conditions of this Agreement, each

Stockholder will severally (but not jointly) indemnify, defend and hold

harmless Buyer and each Subsidiary and Affiliate of Buyer and their respective

permitted assigns and the officers, directors, employees and agents



                                      2

{PAGE}



(collectively, the "Buyer Group") from and against any and all obligations,

losses, Claims, costs, interest, awards, judgments, penalties and damages

(including reasonable expenses of investigation and reasonable attorney's fees

and expenses in connection with any action, suit or proceeding, whether before

or after the CPI Merger Effective Time) (collectively, "Damages") incurred or

suffered by any member of the Buyer Group based upon or arising out of or in

connection with or related to any breach by CPI of any of its agreements,



obligations, covenants or representations and warranties contained in the

Merger Agreement (other than with respect to Taxes and with respect to the

representations and warranties set forth in Section 5.1(f) of the Merger

Agreement which is the subject of Section 3) or any agreement or document

entered in connection therewith or delivered pursuant thereto to which CPI is

party in an amount equal to each Stockholder's Percentage Share (as defined in

Section 4(a)(ii)) of the Damages so incurred or suffered. Notwithstanding

anything contained herein to the contrary, in no event shall any Stockholder

be obligated to indemnify any member of the Buyer Group for Damages (including

Tax liabilities) arising from or relating to (i) any actions taken by a Person

(other than a Stockholder) after the Company Merger Effective Time or (ii) any

Damages incurred or suffered by the Company, including any Damages of the

Company for which CPI is liable or secondarily liable by virtue of its

ownership of the capital stock of the Company or its status as an Affiliate or

a controlling person of the Company.



          (b) Intentionally Omitted



          (c) Threshold. Notwithstanding anything contained herein to the

contrary, the Stockholders shall not be obligated to make any indemnification

payment under Section 2(a) above (other than indemnification payments for

willful breaches of covenant and for breaches of Section 6.20 of the Merger

Agreement) unless and until the aggregate Damages sustained by the Buyer Group

exceed on a cumulative basis $250,000 (the "Threshold"), at which point the

Stockholders shall be obligated to indemnify the Buyer Group from and against

all cumulative Damages (both less than and in excess of the Threshold).



          2A. Indemnification With Respect to Appraisal Rights.



          (a) Indemnification by the Stockholders. Following the CPI Merger

Effective Time and subject to the terms and conditions of this Agreement, each

Stockholder will severally (but not jointly) indemnify, defend and hold

harmless Buyer Group from and against any and all Damages incurred or suffered

by any member of the Buyer Group based upon or arising out of or in connection

with or related to the exercise by any person or persons of appraisal rights

with respect to the Company Merger or CPI Merger pursuant to Section 262 of

the DGCL (collectively, "Appraisal Damages"); provided that any calculation of

Appraisal Damages shall exclude the aggregate amount of proceeds that, but for

the exercise and perfection of appraisal rights, would have been payable as

consideration in the Company Merger and the CPI Merger with respect to all

Company Shares and Recapped Shares that become the subject of perfected

appraisal rights under Section 262 of the DGCL) in an amount equal to each

Stockholder's Percentage Share (as defined in Section 4(a)(ii)) of the

Appraisal Damages so incurred or suffered. For purposes of the preceding

sentence, amounts paid directly or indirectly by any third party on behalf of

any Stockholder (including amounts paid pursuant to Section 7 and amounts

received under insurance policies but excluding amounts paid pursuant to

insurance policies or other arrangements the cost of which is borne by any





                                      3

{PAGE}



Indemnified Party or the Assets Buyer or any Affiliate thereof) shall be

deemed to have been paid by such Stockholder for purposes of determining

whether payments in excess of such Stockholder's Percentage Share have been

made.



          (b) Limitations. Notwithstanding anything contained herein to the

contrary, the Stockholders shall only be obligated to indemnify, defend and

hold harmless Buyer Group from and against forty percent (40%) of any

Appraisal Damages; provided that if the total amount of Appraisal Damages

exceeds $33,333,333.33 (the "Appraisal/Damages Cap"), then the Stockholders

shall be obligated to indemnify, defend and hold harmless Buyer Group against

100% of the amount of Appraisal Damages in excess of the Appraisal/Damages

Cap.



          3. Tax Indemnification.



          (a) Indemnification by the Stockholders. Following the CPI Merger

Effective Time and subject to the terms and conditions of this Agreement, each

Stockholder will severally (but not jointly) indemnify, defend and hold

harmless Buyer Group from and against all Taxes of CPI and Damages with

respect thereto (i) with respect to all periods ending on or prior to the

Closing Date and, (ii) with respect to any period beginning before the Closing

Date and ending after the Closing Date, but only with respect to the portion

of such period up to and including the Closing Date (such portion, a

"Pre-Closing Partial Period") and (iii) all Damages as a result of a material

breach of any representation or warranty set forth in Section 5.1(f) of the

Merger Agreement, in each case in an amount equal to each Stockholder's



Percentage Share of the Taxes or Damages so incurred or suffered.

Notwithstanding anything contained herein to the contrary, the Parties agree

that the transactions contemplated by the Merger Agreement are intended to be

treated for federal, state and local income tax purposes as a sale by the

Stockholders of Recapped Shares to Parent and therefore that such transactions

should not give rise to a federal, state or local income tax liability to CPI.

The Stockholders shall have no obligation to indemnify, defend and hold

harmless the Buyer Group from any Taxes resulting from the failure of the

transactions contemplated by the Merger Agreement to be so treated for

federal, state and local income tax purposes if such failure is caused solely

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC