Revisiting Section 8.2(c) -- in the Centocor Agreement -- Remicade/Simponi Rights. . . .

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UPDATED 04.28.09 @ 5 PM EDT
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Remember how I was asking after the terms of Appendix K, in the below agreement? Sure you do.

Appendix K sets forth the procedural mechanics that govern any manditorily arbitrated dispute between the parties. It was redacted from the original filing, in February 2004. Just now, the SEC extended, by administrative order, the confidentiality of that Appendix (and portions of some other sections, in the Centocor agreement), until December 20, 2017. Gee -- that's a long time.

So, we won't know exactly what happens in any potential arbitration, until either J&J tells us, or it is all over -- and a decision has been announced. I am not sure that the idea of "Schering's confidential competitive or financial information" should really trump a public company investor's right to receive all material information -- about an investment decision (here, whether to vote for, or against, the proposed Merck-reverse merger). It would seem a rather important consideration, in assessing the probabilities of whether J&J will ultimately prevail in reclaiming the perhaps $3 billion to $4 billion a year in Remicade/Simponi rights, outside the United States.

On the other hand, perhaps J&J will, sua sponte, decide to tip its hand, for some perceived business advantage (and explain how CEO Weldon sees the arbitration mechanics of Appendix K playing out) -- and with it, give the investors a sense of what any arbitration might hold. We'll see.

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Johnson & Johnson CEO William Weldon plainly wanted to "hold forth, in great detail" (at 1 hour, 40 minutes into the webcast) on the Remicade/Simponi matter, at today's J&J Annual Shareholders' Meeting, but has been told -- very firmly -- by his lawyers, to clam up.

His off-the-cuff, certainly unscripted use of the word "issue" (as opposed to "deal", or "transaction") -- to refer to the matter upon which he was taking a scripted "no comment" -- would plainly suggest this is not going to be an outright offer for Schering-Plough. No, I think it is a dispute about whether a "change of control" [note the small "c"s there -- not CAP "C"s!] has triggered reversion of the rights.

In that regard, note that the original Centocor agreement, at Section 8.2(c), defines a "CAP C" Change of Control -- but then doesn't employ it, in spelling out all the termination provisions.

This makes a fight pretty likely -- as it would arguably allow in extrinsic evidence of what a "small c" change of control might mean -- to experienced practicioners, in this securities law/distribution agreement context.

And, that would be very bad news for the Merck and Schering-Plough lawyers. The arguable gaffe in Section 8.2(c), then:

. . . .from such notification, to notify in writing the party subject to the change of Control of the termination of the Agreement taking effect immediately. . . .