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DCV Holdings3/24/2005
al used in chlorine chloride. Defendants acknowledged that Du Pont falsely confirmed a non-existent rebate in the letter to DuCoa and also acknowledged that DuCoa's management included the false rebate in order to inflate revenue and to obtain more than $404,000 in unearned bonuses. The TMA issue at trial was whether there was adequate disclosure of the false nature of the rebate during the negotiations leading to the sale of the sale.
The breach of contract issue pertained to the intent of the parties in negotiating and drafting the warranties and disclosures in the Purchase Agreement. The Delaware Supreme Court affirmed this Court's ruling that Section 3.9, "No Undisclosed Liabilities," of the Purchase Agreement is ambiguous but found that the extrinsic evidence showed material disputes as to whether Defendants intended to accept liability for DCV's violations of law about which they had no knowledge. That issue is determinative as to whether Du Pont and ConAgra are liable under Section 3.9 to indemnify DCV Holdings for charges stemming from the antitrust conspiracy.
THE TMA REBATE
The Court's recital of the facts surrounding the TMA rebate is based on the evidence adduced at trial. In December 1996, DuCoa executive Pete Fischer called John Leddy, the Du Pont TMA business manager, and asked for a letter promising a TMA rebate to help smooth out a temporary accounting problem for calendar year 1996. Fischer indicated to Leddy that he would destroy the letter within a week. According to Leddy's trial testimony, he had previously provided DuCoa with at least one such letter under similar circumstances, and he trusted Fischer not to book the rebate on this occasion. On December 17, 1996, Leddy wrote a letter to Fischer which provided in part as follows:
Per our discussions, we have concluded our analysis of DuCoa's 1996 Trimethylene purchase performance versus pre-agreed commitment standards, and we are pleased to advise that DuCoa has qualified for the $0.35/lb volume rebate incentive which will be applicable to the entire 1996 TMA purchase volume.
On his file copy of the letter, Leddy wrote "cancelled 12-18-96." When asked at trial whether he had discussed this letter with anyone during the negotiations leading to the sale, Leddy testified that he never mentioned the letter or the Fischer request to Paul Halter, Du Pont's point person in the DCV transaction, or anyone from ConAgra. The Court accepts this testimony as credible. Leddy's role in this fiasco started and ended with the letter.
Pete Fischer, the recipient of the letter, wrote on his copy, "12-17-96[;] Dale--please book in December. Thanks. PF." He or someone else also pencilled in the amount of the rebate as "$506,198." Based on the rebate letter and Fischer's directive, DuCoa entered this amount on its books for 1996, booking $404,000 for executive bonuses and the remainder as earnings.
In the meantime, Defendants had decided to restructure DCV, Inc. and divest many of the newer businesses. Earnest Porta, president of DCV, Inc., strongly believed that the businesses were viable, and he opposed the divestiture. When he realized that it was inevitable, he put together a group of top DCV executives to purchase all of DCV and keep the businesses intact. These individuals were Earnie Porta; Rick Stejskal, chief financial officer of DCV, Inc.; Mark Gundersen, general counsel, DCV, Inc. and Dan Rose, then-president of Canadian Harvest, one of the more profitable IOC's. After interviewing several financial firms, Winward Capital Partners, Inc. was chosen as the group's equity partner. Tom Sikorski was Winward's primary negotiator. This group constitutes the Buyers for purpo
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