Item 1.01 Entry Into a Material Definitive Agreement.
On January 22, 2021, the Company, Corteva, EID and Chemours entered into a
binding Memorandum of Understanding (the "MOU"), pursuant to which the parties
have agreed to release certain claims regarding the Delaware Litigation and the
Pending Arbitration, including that Chemours has released any claim set forth in
the complaint filed in the Delaware Litigation, any other similar claims arising
out of or resulting from the facts recited by Chemours in the complaint or the
process and manner in which EID structured or conducted the Chemours Separation,
and any other claims that challenge the Chemours Separation or the assumption of
Chemours Liabilities (as defined in the Chemours Separation Agreement) by
Chemours and the allocation thereof, subject in each case to certain exceptions
set forth in the MOU. The parties have further agreed not to bring any future,
additional claims regarding the Chemours Separation Agreement or the MOU outside
of arbitration. In connection with entering into the MOU, the parties will
jointly terminate the Pending Arbitration.
Pursuant to the MOU, the parties have agreed to share certain potential future
liabilities related to alleged historical releases of certain per and poly
fluorinated substances ("PFAS"), including PFOA, arising out of pre-July 1, 2015
conduct ("PFAS Liabilities") until the earlier to occur of (i) December 31,
2040, (ii) the day on which the aggregate amount of Qualified Spend (as defined
in the MOU) is equal to $4 billion or (iii) a termination in accordance with the
terms of the MOU.
The parties have agreed that, during the term of this sharing arrangement,
Chemours will bear 50% of any Qualified Spend and the Company and Corteva shall
bear 50% of any Qualified Spend. The Company's and Corteva's share of Qualified
Spend shall not exceed $2 billion in the aggregate. After the term of this
arrangement, Chemours' indemnification obligations under the Separation
Agreement would continue unchanged, subject in each case to certain exceptions
set forth in the MOU.
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In order to support and manage any potential future PFAS Liabilities, the
parties have also agreed to establish an escrow account. The MOU provides that
(1) no later than each of September 30, 2021 and September 30, 2022, Chemours
shall deposit $100 million into an escrow account and DuPont and Corteva shall
together deposit $100 million in the aggregate into an escrow account and (2) no
later than September 30 of each subsequent year through and including 2028,
Chemours shall deposit $50 million into an escrow account and DuPont and Corteva
shall together deposit $50 million in the aggregate into an escrow account.
Subject to the terms and conditions set forth in the MOU, each party may be
permitted to defer funding in any year (excluding 2021). Additionally, if on
December 31, 2028, the balance of the escrow account (including interest) is
equal to or less than $700 million, Chemours will make 50% of the deposits and
DuPont and Corteva together will make 50% of the deposits necessary to restore
the balance of the escrow account to $700 million. Such payments will be made in
a series of consecutive annual equal installments commencing on September 30,
2029 pursuant to the escrow account replenishment terms as set forth in the MOU.
All funding obligations of the Company and Corteva under this sharing
arrangement, whether in respect of escrow funding or in respect of Qualified
Spend, will be allocated between the Company and Corteva in accordance with the
terms of the Separation and Distribution Agreement, dated as of April 1, 2019,
by and among the Company, Corteva and Dow, Inc. and the terms of the Letter
Agreement, dated as of June 1, 2019 by and between the Company and Corteva.
Generally, the Company and Corteva will each bear 50 percent of the first
$300 million (up to $150 million each) of DuPont and Corteva's share of funding
obligations and amounts in excess of $300 million generally will be borne
71 percent by the Company and 29 percent by Corteva (except to the extent
otherwise set forth in the Letter Agreement).
Charges associated with the MOU would be recognized over the term of the
agreement as a component of income from discontinued operations to the extent
liabilities become probable and estimable.
The parties will cooperate in good faith to enter into additional agreements
reflecting the terms set forth in the MOU on or prior to February 28, 2021.
The foregoing description of the MOU contained herein is a summary and is
qualified in its entirety by reference to the full text of the MOU, which is
filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above is hereby incorporated by
reference into this Item 2.03.
Item 8.01 Other Events.
Settlement of Ohio MDL Personal Injury Cases
On January 21, 2021, EID and Chemours entered into settlement agreements with
plaintiffs' counsel representing the Ohio MDL plaintiffs providing for a
settlement of all cases and claims in the Ohio MDL, except as noted below (the
"Settlement"). The total settlement amount is approximately $83 million in cash
with each of the Company and EID contributing approximately $27 million and
Chemours contributing approximately $29 million. The Settlement was entered into
solely by way of compromise and settlement and is not in any way an admission of
liability or fault by the Company, Corteva, EID or Chemours. The case of Travis
and Julie Abbott v. E. I. du Pont de Nemours and Company is not included in the
settlement and is presently pending motions for new trial.
Press Release
On January 22, 2021, the Company, Chemours and Corteva issued a joint press
release announcing the MOU and the other matters described in this Current
Report on Form 8-K. A copy of the press release is attached hereto as Exhibit
99.1 and is incorporated by reference into this Item 8.01.
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Cautionary Statement on Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the
meaning of the federal securities laws, including Section 27A of the Securities
Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Forward-looking statements are based on certain assumptions and
expectations of future events that may not be accurate or realized and often
contain words such as "expect," "anticipate," "intend," "plan," "believe,"
"seek," "see," "will," "would," "estimate", "target," similar expressions, and
variations or negatives of these words. Forward-looking statements by their
nature address matters that are, to different degrees, uncertain, such as
statements about expected performance under and impact of the cost sharing
arrangement by and between DuPont, Corteva and Chemours related to future
eligible PFAS liabilities. Factors that could cause or contribute to these
differences include, but are not limited to: the achievement, terms and
conditions of final agreements related to the cost sharing arrangement; the
outcome of any pending or future litigation related to PFAS or PFOA, including
personal injury claims and natural resource damages claims; the extent and cost
of ongoing remediation obligations and potential future remediation obligations;
changes in laws and regulations applicable to PFAS chemicals; the performance by
each of the parties of their respective obligations under the cost sharing
arrangement; and the risks, uncertainties and other factors discussed in
DuPont's annual report on Form 10-K for the year ended December 31, 2019 and its
subsequent reports on Form 10-Q, Form 10-K and Form 8-K, the contents of which
are not incorporated by reference into, nor do they form part of, this
announcement. Unlisted factors may present significant additional obstacles to
the realization of forward-looking statements. Consequences of material
differences in results as compared with those anticipated in the forward-looking
statements could include, among other things, business disruption, operational
problems, financial loss, legal liability to third parties and similar risks,
any of which could have a material adverse effect on DuPont's consolidated
financial condition, results of operations, credit rating or liquidity. DuPont
does not assume any obligation to publicly provide revisions or updates to any
forward-looking statements, whether as a result of new information, future
developments or otherwise, should circumstances change, except as otherwise
required by securities and other applicable laws.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
10.1 Memorandum of Understanding, dated January 22, 2021, by and among DuPont
de Nemours, Inc., Corteva, Inc., E. I. du Pont de Nemours and Company and
The Chemours Company
99.1 Press Release, dated January 22, 2021
104 The cover page from this Current Report on Form 8-K, formatted in Inline
XBRL.
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