EXHIBIT 10.4
FORM OF
INITIAL PUBLIC OFFERING AND DISTRIBUTION AGREEMENT,
DATED AS OF MAY__, 2000,
BY AND BETWEEN
GREAT LAKES CHEMICAL CORPORATION
AND
OSCA, INC.
TABLE OF CONTENTS
1. Definitions.................................................................................................5
2. The Initial Public Offering And The Distribution...........................................................11
2.1 The Initial Public Offering.......................................................................11
2.2 The Distribution..................................................................................11
2.3 Certain Stockholder Matters.......................................................................12
2.4 Prior Relationship................................................................................12
2.5 Further Assurances Regarding The Distribution.....................................................12
2.6 Abandonment of The Distribution...................................................................13
3. Expenses...................................................................................................13
3.1 General...........................................................................................13
3.2 Certain Expenses Relating to The Initial Public Offering..........................................13
3.3 Certain Expenses Relating to The Distribution.....................................................13
4. Covenants to Preserve Tax-free Status of the Distribution..................................................13
4.1 Restrictions on OSCA..............................................................................14
4.2 Cooperation and Other Covenants...................................................................16
4.3 Indemnification For Tax Liabilities...............................................................18
4.4 Procedure for Indemnification for Tax Liabilities.................................................18
4.6 Exclusive Remedies................................................................................20
5. Certain Other Covenants....................................................................................20
5.1 Financial and Other Information...................................................................20
5.2 Other Covenants...................................................................................26
5.3 Covenants Regarding the Incurrence of Indebtedness................................................27
6. Indemnification............................................................................................28
6.1 Indemnification by OSCA...........................................................................28
6.2 Indemnification by GLC............................................................................29
6.3 Other Liabilities.................................................................................29
6.4 Tax Effects of Indemnification....................................................................30
6.5 Effect of Insurance Upon Indemnification..........................................................30
6.6 Procedure for Indemnification Involving Third-party Claims........................................31
6.7 Procedure for Indemnification Not Involving Third-party Claims....................................32
6.8 Exclusive Remedies................................................................................32
7. Miscellaneous..............................................................................................33
7.1 Survival..........................................................................................33
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7.2 Complete Agreement................................................................................33
7.3 Authority.........................................................................................33
7.4 Governing Law.....................................................................................33
7.5 Consent to Exclusive Jurisdiction.................................................................33
7.6 Notices...........................................................................................34
7.7 Amendment and Modification........................................................................35
7.8 Binding Effect; Assignment........................................................................35
7.9 Third Party Beneficiaries.........................................................................35
7.10 Counterparts......................................................................................35
7.11 Waiver............................................................................................35
7.12 Severability......................................................................................36
7.13 Remedies..........................................................................................36
7.14 Performance.......................................................................................36
7.15 References; Construction..........................................................................36
Exhibits
Agreements Subject to Section 5.2(c)......................................................................Exhibit A
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FORM OF
INITIAL PUBLIC OFFERING AND DISTRIBUTION AGREEMENT
This INITIAL PUBLIC OFFERING AND DISTRIBUTION AGREEMENT (the
"Agreement") is made and entered into as of _________ __, 2000, by and between
Great Lakes Chemical Corporation, a Delaware corporation ("GLC"), and OSCA,
Inc., a Delaware corporation and a wholly owned subsidiary of GLC ("OSCA").
Certain capitalized terms used herein are defined in Section 1 of this
Agreement.
RECITALS
WHEREAS, GLC currently owns all of the issued and outstanding OSCA
Common Stock;
WHEREAS, OSCA has previously filed the IPO Registration Statement with
the SEC but it has not yet become effective;
WHEREAS, the parties currently contemplate that, reasonably promptly
following the execution of this Agreement, OSCA shall consummate the Initial
Public Offering;
WHEREAS, immediately following the consummation of the Initial Public
Offering, GLC shall own 100% of the outstanding Class B Common Stock of OSCA,
which will constitute approximately ___% of the outstanding OSCA Capital Stock
(or approximately ____% if the underwriters exercise their over-allotment option
in full in accordance with the Underwriting Agreement);
WHEREAS, concurrently with the execution of this Agreement, GLC and
OSCA are entering into the Registration Rights Agreement;
WHEREAS, GLC currently intends to evaluate its strategic options with
respect to its entire ownership interest in OSCA remaining after the Initial
Public Offering;
WHEREAS, one of the strategic options which GLC may consider in the
future is to divest its entire ownership of OSCA in a Distribution;
WHEREAS, GLC, if it decides to proceed with the Distribution, expects
to accomplish the Distribution by means of a split-off, a spin-off or some
combination of both transactions;
WHEREAS, GLC and OSCA intend that the Distribution, if it occurs, will
be tax-free to GLC and its stockholders under Section 355 of the Code; and
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WHEREAS, the parties intend in this Agreement to set forth the
principal arrangements between them regarding the Initial Public Offering and
the Distribution;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. Definitions.
"Abandonment Notice" has the meaning set forth in Section 2.6.
"Acquisition Target" has the meaning set forth in Section 5.3(a)(i).
"Active Trade or Business" means the active conduct of the trade or
business (as defined in Section 355(b)(2) of the Code) conducted by OSCA
immediately prior to the applicable Distribution Date.
"Adjusted OSCA Indebtedness" has the meaning set forth in Section 5.3.
"Affiliate" means a OSCA Affiliate or a GLC Affiliate, as the case may
be.
"Agreement" has the meaning set forth in the Preamble.
"Ancillary Agreements" has the meaning ascribed to such term in the
Separation Agreement.
"Annual Financial Statements" has the meaning set forth in Section
5.1(a)(vi).
"Business" means the OSCA Business or the GLC Business, as the case may
be.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions located in the State of Indiana are authorized or
obligated by law or executive order to close.
"Claim" has the meaning set forth in Section 6.7.
"Class A Common Stock" means the Class A Common Stock, par value $0.01
per share, of OSCA.
"Class B Common Stock" means the Class B Common Stock, par value $0.01
per share, of OSCA.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
time, together with the rules and regulations promulgated thereunder.
"Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"CPR Rules" means the Rules for Non-Administered Arbitration of
Business Disputes promulgated by the Center for Public Resources, as in effect
on the date hereof.
"Dispute Notice" means written notice of any dispute between GLC and
OSCA arising out of or relating to this Agreement, which shall set forth, in
reasonable detail, the nature of the dispute.
"Distribution" means the distribution of OSCA Common Stock by GLC in
one or more transactions occurring after the Initial Public Offering that
collectively have the effect that all shares of OSCA Common Stock held by GLC
are distributed to GLC stockholders, whenever such transaction(s) shall occur.
"Distribution Date" means any date or dates, as the case may be,
determined by GLC, in its sole and absolute discretion, to be a date on which
shares of OSCA Common Stock held by GLC are distributed in connection with the
Distribution.
"Distribution Registration Statement" means any and all registration
statements, information statements or other documents filed by any party with
the SEC in connection with any transaction constituting part of the
Distribution, in each case as supplemented or amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, together with the rules and regulations promulgated
thereunder.
"FFO to Debt Ratio" has the meaning set forth in Section 5.3(c).
"GAAP" means generally accepted accounting principles, consistently
applied.
"GLC" has the meaning set forth in the Preamble.
"GLC Affiliate" means a Person that, after giving effect to the
Distribution, directly or indirectly through one or more intermediaries, is
Controlled by GLC.
"GLC Annual Statements" has the meaning set forth in Section
5.1(b)(ii).
"GLC Business" means any business or operations of GLC or any GLC
Affiliates other than the OSCA Business.
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"GLC Disclosure Portions" means all material set forth in, or
incorporated by reference into, either the IPO Registration Statement or the
Distribution Registration Statement, as applicable, to the extent relating
exclusively to (i) GLC and the GLC Affiliates (excluding OSCA and the OSCA
Affiliates), (ii) the GLC Business, (iii) GLC's intentions with respect to the
Distribution or (iv) the terms of the Distribution, including, without
limitation, the form, structure and terms of any transaction(s) and/or
offering(s) to effect the Distribution and the timing of and conditions to the
consummation of the Distribution.
"GLC Public Filings" has the meaning set forth in Section 5.1(a)(xiii).
"GLC Transfer Agent" means ________________, in its capacity as the
transfer agent and registrar for the GLC Common Stock.
"GLC Common Stock" means the Common Stock, par value $0.01 per share,
of GLC.
"GLC's Auditors" has the meaning set forth in Section 5.1(b)(ii).
"Indemnifying Party" means a Person that is obligated to provide
indemnification under this Agreement.
"Indemnitee" means a Person that is entitled to seek indemnification
under this Agreement.
"Indemnity Payment" means an amount that an Indemnifying Party is
required to pay to an Indemnitee under this Agreement.
"Initial Public Offering" means the initial public offering by OSCA of
shares of OSCA Common Stock as contemplated by the IPO Registration Statement.
"Insurance Proceeds" means the payment received by an insured from an
insurance carrier or paid by an insurance carrier on behalf of the insured, net
of any applicable premium adjustment and tax effect.
"IPO Registration Statement" means the Registration Statement on Form
S-1, Registration No. 333-31956 of OSCA, as supplemented and amended from time
to time.
"IRS" means Internal Revenue Service of the U.S. Department of Treasury
or any successor agency.
"Losses" means all losses, liabilities, claims, obligations, demands,
judgments, damages, dues, penalties, assessments, fines (civil or criminal),
costs, liens, expenses, forfeitures, settlements, or fees, reasonable attorneys'
fees and court costs, of any nature or kind, whether or not the same would
properly be reflected on a balance sheet, and "Loss" means any of these.
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"Negotiation Period" means the period of 20 Business Days following the
initial meeting of the representatives of GLC and OSCA following the receipt of
a Dispute Notice.
"Notice" means any notice, request, claim, demand, or other
communication under this Agreement.
"OSCA" has the meaning set forth in the Preamble.
"OSCA Affiliate" means a Person that, after giving effect to the
Distribution, directly or indirectly through one or more intermediaries, is
Controlled by, or is under common Control with OSCA.
"OSCA Business" means any business or operations of OSCA or any OSCA
Affiliates, including, in all cases, any predecessor entities.
"OSCA Capital Stock" means all classes or series of capital stock of
OSCA.
"OSCA Common Stock" means the Class A Common Stock and the Class B
Common Stock.
"OSCA Indebtedness" has the meaning set forth in Section 5.3.
"OSCA Public Documents" has the meaning set forth in Section
5.1(a)(ix).
"OSCA Transfer Agent" means ________________, in its capacity as the
transfer agent and registrar for the OSCA Common Stock.
"OSCA's Auditors" has the meaning set forth in Section 5.1(b)(i).
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Pre-Distribution Period" means the period of time from the date hereof
until the completion of the Distribution.
"Proposed Acquisition Transaction" means a transaction or series of
transactions as a result of which one or more Persons would (directly or
indirectly) acquire, or have the right to acquire, from OSCA or one or more
holders of outstanding shares of OSCA Capital Stock, a number of shares of OSCA
Capital Stock that would, when combined with the number of shares of OSCA
Capital Stock sold pursuant to the Initial Public Offering, comprise 50% or more
of (A) the value of all outstanding shares of OSCA Capital Stock as of the date
of such transaction, or in the case of a series of transactions, the date of the
last transaction of such series, or (B) the total combined
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voting power of all outstanding shares of Voting Stock of OSCA as of the date of
such transaction, or in the case of a series of transactions, the date of the
last transaction of such series.
"Quarterly Financial Statements" has the meaning set forth in Section
5.1(a)(v).
"Registration Rights Agreement" means the Registration Rights Agreement
to be entered into between GLC and OSCA concurrently with the execution and
delivery of this Agreement.
"Regulation S-K" means Regulation S-K of the General Rules and
Regulations promulgated by the SEC.
"Regulation S-X" means Regulation S-X of the General Rules and
Regulations promulgated by the SEC.
"Representation Date" means any date on which OSCA makes any
representation (i) to the IRS or to counsel selected by GLC for the purpose of
obtaining a Subsequent Tax Opinion/Ruling, or (ii) to GLC for the purpose of any
determination required to be made by GLC pursuant to Section 4.1.
"Representation Letters" means the representation letters and any other
materials (including, without limitation, the ruling request and the related
supplemental submissions to the IRS) delivered or deliverable by GLC and others
in connection with the rendering by Tax Counsel and the issuance by the IRS of
the Tax Opinions/Rulings, which to the extent related to OSCA shall be in form
and substance reasonably satisfactory to OSCA.
"Representative" means, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants or attorneys.
"Request" has the meaning set forth in Section 6.7.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, together with the rules and regulations promulgated thereunder.
"Separate Counsel" has the meaning set forth in Section 6.6(b).
"Separation Agreement" means the Master Separation Agreement by and
among GLC and OSCA, dated as of ______________, ____, as amended from time to
time.
"Service Agent" means (i) for GLC, The Corporation Trust Company, with
offices on the date hereof at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx of Xxx
Xxxxxx, Xxxxxxxx 00000; and (ii) for
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OSCA, The Corporation Trust Company, with offices on the date hereof at
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx, Xxxxxxxx 00000.
"Subsequent Tax Opinion/Ruling" means either (i) an opinion of counsel
selected by GLC, in its sole and absolute discretion, confirming, in form and
substance reasonably satisfactory to GLC, that, as a consequence of the
consummation of a subsequent transaction, no income, gain or loss for U.S.
federal income tax purposes will be recognized by GLC, the stockholders or
former stockholders of GLC, or any GLC Affiliate with respect to the
Distribution, or (ii) an IRS private letter ruling to the same effect.
"Subsidiary" means with respect to any specified Person, any
corporation or other legal entity of which such Person or any of its
Subsidiaries Controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote with respect to the election of
members to the board of directors or similar governing body; provided, however,
that for the purposes of this Agreement, neither OSCA nor any of the
Subsidiaries of OSCA shall be deemed to be Subsidiaries of GLC or of any of the
Subsidiaries of GLC.
"Tax" means (i) any income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on, minimum, estimated,
or other tax, assessment, or governmental charge of any kind whatsoever imposed
by any governmental authority, including any interest, penalty, or addition
thereto, whether disputed or not; (ii) liability for the payment of any amounts
of the type described in clause (i) above arising as a result of being (or
having been) a member of any group or being (or having been) included or
required to be included in any Tax Return related thereto; and (iii) liability
for the payment of any amounts of the type described in clause (i) above as a
result of any express or implied obligation to indemnify or otherwise assume or
succeed to the liability of any other Person.
"Tax Agreements" means, collectively, the (i) Tax Disaffiliation
Agreement between GLC and OSCA, dated as of ______________,______, as amended
from time to time and (ii) this Agreement.
"Tax Control" means the definition of "control" set forth in Section
368(c) of the Code (or in any successor statute or provision), as such
definition may be amended from time to time.
"Tax Counsel" means the law firm of Xxxxxxxx & Xxxxx.
"Tax-Free Status of the Distribution" means the nonrecognition of
taxable gain or loss for U.S. federal income tax purposes to GLC, GLC Affiliates
and GLC's stockholders in connection with the Distribution.
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"Tax Opinions/Rulings" means the opinions of Tax Counsel and the
rulings by the IRS deliverable to GLC in connection with the Distribution.
"Tax-Related Losses" means (i) all federal, state and local Taxes
(including interest and penalties thereon) imposed pursuant to any settlement,
final determination, judgment or otherwise; (ii) all accounting, legal and other
professional fees, and court costs incurred in connection with such taxes; and
(iii) all costs and expenses that may result from adverse tax consequences to
GLC or GLC's stockholders (including all costs, expenses and damages associated
with stockholder litigation or controversies) payable by GLC or GLC Affiliates.
"Third-Party Claim" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person other than GLC or any GLC Affiliate or OSCA or any OSCA
Affiliate which gives rise to a right of indemnification hereunder.
"Underwriting Agreement" means the Underwriting Agreement between OSCA
and the underwriters relating to the Initial Public Offering, as amended from
time to time.
"Value" means with respect to any trade or business (or portion
thereof), the fair market value of the assets constituting such trade or
business, less the current liabilities associated with such trade or business,
in each case determined as of the applicable Distribution Date.
"Voting Stock" means with respect to any Person, all classes and series
of the capital stock of such Person entitled to vote generally in the election
of directors.
2. The Initial Public Offering And The Distribution.
2.1 The Initial Public Offering. OSCA shall consult with, and cooperate
in all respects with, GLC in connection with the pricing of the OSCA Common
Stock to be offered in the Initial Public Offering and shall, at GLC's
direction, promptly take any and all actions necessary or desirable to
consummate the Initial Public Offering as contemplated by the IPO Registration
Statement and the Underwriting Agreement.
2.2 The Distribution. GLC currently intends, following the consummation
of the Initial Public Offering, to evaluate its strategic options with respect
to its remaining ownership interest in OSCA, including, without limitation, to
effect the Distribution by means of a split-off, a spin-off or some combination
of both transactions. GLC shall, in its sole and absolute discretion, determine
whether to proceed with all or any part of the Distribution and all terms of the
Distribution, including, without limitation, the form, structure and terms of
any transaction(s) and/or offering(s) to effect the Distribution and the timing
of and conditions to the consummation of the Distribution. In addition, if GLC
decides to proceed with the Distribution, GLC may at any time and from time to
time until the completion of the Distribution modify or change the terms of the
Distribution, including, without limitation, by accelerating or delaying the
timing of the consummation of all or
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part of the Distribution. OSCA shall cooperate with GLC in all respects to
accomplish the Distribution and shall, at GLC's direction, promptly take any and
all actions necessary or desirable to effect the Distribution, including,
without limitation, the registration under the Securities Act of OSCA Common
Stock on an appropriate registration form or forms to be designated by GLC. GLC
shall select any investment banker(s) and manager(s) in connection with the
Distribution, as well as any financial printer, solicitation and/or exchange
agent and outside counsel for GLC; provided that nothing herein shall prohibit
OSCA from engaging (at its own expense) its own financial, legal, accounting and
other advisors in connection with the Distribution.
2.3 Certain Stockholder Matters. From and after the distribution of
OSCA Common Stock in connection with any transaction(s) included as part of the
Distribution and until such OSCA Common Stock is duly transferred in accordance
with applicable law, OSCA shall regard the Persons receiving OSCA Common Stock
in such transaction(s) as record holders of OSCA Common Stock in accordance with
the terms of such transaction(s) without requiring any action on the part of
such Persons. OSCA agrees that, subject to any transfers of such stock, (a) each
such holder shall be entitled to receive all dividends payable on, and exercise
voting rights and all other rights and privileges with respect to, the shares of
OSCA Common Stock then held by such holder and (b) each such holder shall be
entitled, without any action on the part of such holder, to receive one or more
certificates representing, or other evidence of ownership of, the shares of OSCA
Common Stock then held by such holder. GLC shall cooperate, and shall instruct
the GLC Transfer Agent to cooperate, with OSCA and the OSCA Transfer Agent, and
OSCA shall cooperate, and shall instruct the OSCA Transfer Agent to cooperate,
with GLC and the GLC Transfer Agent, in connection with all aspects of the
Distribution and all other matters relating to the issuance and delivery of
certificates representing, or other evidence of ownership of, the shares of OSCA
Common Stock distributed to the holders of GLC Common Stock in connection with
any transaction(s) included as part of the Distribution. Following the
Distribution, GLC shall instruct the GLC Transfer Agent to deliver to the OSCA
Transfer Agent true, correct and complete copies of the stock and transfer
records reflecting the holders of GLC Common Stock receiving shares of OSCA
Common Stock in connection with any transaction(s) included as part of the
Distribution.
2.4 Prior Relationship. OSCA, with respect to OSCA and all of the OSCA
Affiliates, and GLC, with respect to GLC and all of the GLC Affiliates, agree to
take all commercially reasonable action to discontinue their respective uses as
promptly as is commercially reasonable of any printed material that indicates an
ownership or other relationship between or among GLC and OSCA or any of their
respective Affiliates that has changed as a result of the Initial Public
Offering, the Distribution or any other transactions contemplated hereby;
provided that this Section 2.4 shall not prohibit the use of printed material
containing appropriate and accurate references to such relationship.
2.5 Further Assurances Regarding The Distribution. In addition to the
actions specifically provided for elsewhere in this Agreement, if GLC decides to
proceed with the Distribution, OSCA shall, at GLC's direction, use all
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things commercially reasonably necessary, proper
or
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expeditious under applicable laws, regulations and agreements in order to
consummate and make effective the Distribution as promptly as reasonably
practicable. Without limiting the generality of the foregoing, OSCA shall, at
GLC's direction, cooperate with GLC, and execute and deliver, or use all
commercially reasonable efforts to cause to have executed and delivered, all
instruments, including instruments of conveyance, assignment and transfer, and
to make all filings with, and to obtain all consents, approvals or
authorizations of, any domestic or foreign governmental or regulatory authority
requested by GLC in order to consummate and make effective the Distribution.
2.6 Abandonment of The Distribution. The parties expressly acknowledge
and agree that GLC intends to evaluate its strategic options with respect to
ownership interest in OSCA remaining after the Initial Public Offering,
including, without limitation, the Distribution. The parties further acknowledge
and agree that, should GLC decide to pursue the Distribution, GLC will not be
obligated in any respect to proceed with or complete the Distribution and that
GLC may, in its sole and absolute discretion, at any time abandon its plans to
proceed with or complete the Distribution. In the event that GLC so determines
that it no longer intends to proceed with or complete the Distribution, GLC
shall provide to OSCA a written notification of such determination (an
"Abandonment Notice"). Effective as of the date of the Abandonment Notice,
provided that no Distribution Date has yet occurred, (a) Sections 4.1 and 4.2 of
this Agreement shall terminate, become null and void and have no further force
and effect (it being expressly understood and agreed by the parties that such
Sections shall remain in full force and effect in the event that a Distribution
Date has occurred on or prior to the date of the Abandonment Notice) and (b)
GLC's rights, and OSCA's obligations, set forth in the Registration Rights
Agreement shall immediately become effective.
3. Expenses.
3.1 General. Except as otherwise provided in this Agreement, the
Separation Agreement, any of the other Ancillary Agreements or any other
agreement between the parties relating to the Initial Public Offering or the
Distribution, all costs and expenses of either party hereto in connection with
the Initial Public Offering and the Distribution shall be paid by the party that
incurs such costs and expenses.
3.2 Certain Expenses Relating to The Initial Public Offering. OSCA
shall be responsible for the payment of all costs, fees and expenses relating to
the Initial Public Offering, including, but not limited to, the payment of (a)
the costs, fees and expenses of all of GLC's financial, legal, accounting and
other advisors incurred in connection with the Initial Public Offering and (b)
any internal fees, costs and expenses incurred by GLC or any GLC Affiliate in
connection with the Initial Public Offering. GLC shall be entitled to any and
all amounts received from the underwriters as reimbursement for any costs, fees
and expenses relating to the Initial Public Offering.
3.3 Certain Expenses Relating to The Distribution. GLC shall generally
be responsible for the payment of all costs, fees and expenses relating to the
Distribution; provided that OSCA shall be responsible for the payment of (a) the
costs, fees and expenses of all of OSCA's financial, legal,
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accounting and other advisors incurred in connection with the Distribution and
(b) any internal fees, costs and expenses incurred by OSCA or any OSCA Affiliate
in connection with the Distribution.
4. Covenants to Preserve Tax-free Status of the Distribution. OSCA and
GLC hereby represent and warrant to, and covenant and agree with, each other as
follows:
4.1 Restrictions on OSCA.
(a) Pre-Distribution Period. OSCA shall not take any action (such
action to include, if relevant, the issuance of OSCA Capital Stock upon the
exercise by the holders thereof of all options or convertible securities issued
by OSCA) during the Pre-Distribution Period if, as a result of taking such
action, OSCA would issue a number of shares of OSCA Capital Stock (including by
way of the exercise of stock options or the issuance of restricted stock) that
would cause GLC to cease to have Tax Control of OSCA, unless prior to the
consummation of such transaction GLC has determined, in its sole and absolute
discretion, that such transaction would not jeopardize the Tax-Free Status of
the Distribution. Notwithstanding the foregoing provisions of this Section
4.1(a), OSCA shall be permitted to issue stock options and restricted stock
awards to its employees so long as (i) OSCA repurchases sufficient shares of
issued and outstanding OSCA Capital Stock on or prior to the date such options
are exercisable or restricted stock is vested (or deemed vested) to insure that,
assuming the exercise of all exercisable options and vesting of such restricted
stock, GLC would not cease to have Tax Control of OSCA and (ii) OSCA provides
GLC with prior written notification of the procedures by which OSCA intends to
comply with its obligation described in clause (i) above and GLC approves of
such procedures (which approval shall not be unreasonably withheld). All of the
restrictions on OSCA contained in this Section 4.1 shall apply to OSCA during
the Pre-Distribution Period as well as the other periods specified in this
Section 4.1.
(b) Proposed Acquisition Transactions. Until the first day after the
two-year anniversary of the latest Distribution Date, OSCA shall not enter into
any Proposed Acquisition Transaction or, to the extent OSCA has the right to
prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition
Transaction to occur unless prior to the consummation of such Proposed
Acquisition Transaction GLC has determined, in its sole and absolute discretion,
that such Proposed Acquisition Transaction would not jeopardize the Tax-Free
Status of the Distribution.
(c) Continuation of Active Trade or Business. Until the first day after
the two-year anniversary of the latest Distribution Date,
(i) OSCA shall continue to conduct the Active Trade or Business.
(ii) Subject to clause (c)(iii) below, OSCA shall not (A) liquidate,
dispose of, or otherwise discontinue the conduct of any portion of the Active
Trade or Business with a Value in excess of $25 million or (B) dispose of any
business or assets that would cause OSCA to be operated in a manner inconsistent
in any material respect with the business purposes for the Distribution as set
forth in the Representation Letters and Tax Opinions/Rulings, in each case
unless GLC has
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determined, in its sole and absolute discretion, that such liquidation,
disposition, or discontinuance would not jeopardize the Tax-Free Status of the
Distribution.
(iii) OSCA shall not under any circumstances liquidate, dispose of, or
otherwise discontinue the conduct of any portion of the Active Trade or Business
if such liquidation, disposition or discontinuance would breach Section 4.1(d).
OSCA shall continue the active conduct of the Active Trade or Business primarily
through officers and employees of OSCA or its Subsidiaries (and not primarily
through independent contractors) who are not also officers or employees of GLC
or of any GLC Affiliates. Notwithstanding the foregoing, (A) except with respect
to any corporation or other entity the status of which as the direct owner of an
active trade or business is material to the Tax-Free Status of the Distribution,
liquidations of any of OSCA's Subsidiaries into OSCA or one or more Subsidiaries
directly or indirectly controlled by OSCA shall not be deemed to breach this
Section 4.1(c) and (B) OSCA shall not be prohibited from liquidating, disposing
of or otherwise discontinuing the conduct of one or more trades or businesses
that constituted part of the Active Trade or Business, or any portion thereof,
provided that, in the case of this clause (B), the aggregate Value of such
trades or businesses, or portions thereof, so liquidated, disposed of or
discontinued shall not exceed $25 million. For purposes of the preceding
sentence and clause (c)(ii) above, asset retirements, sale-leaseback
arrangements and discontinuances of product lines within a trade or business the
active conduct of which is continued shall not be deemed a liquidation,
disposition or discontinuance of a trade or business or portion thereof.
(iv) Solely for purposes of this Section 4.1(c), OSCA shall not be
treated as directly or indirectly controlling a Subsidiary unless OSCA owns,
directly or indirectly, shares of capital stock of such Subsidiary constituting
Tax Control.
(d) Continuity of Business.
(i) Until the first day after the two-year anniversary of the
Distribution Date, (A) OSCA shall not voluntarily dissolve or liquidate, and (B)
except in the ordinary course of business, neither OSCA nor any Subsidiaries
directly or indirectly controlled by OSCA shall sell, transfer, or otherwise
dispose of or agree to dispose of assets (including, for such purpose, any
shares of capital stock of such Subsidiaries) that, in the aggregate, constitute
more than (x) 60% of the gross assets of OSCA or (y) 60% of the consolidated
gross assets of OSCA and such Subsidiaries, unless prior to the consummation of
such transaction GLC has determined, in its sole and absolute discretion, that
such transaction would not jeopardize the Tax-Free Status of the Distribution.
The amount of gross assets of OSCA and such Subsidiaries shall be based on the
fair market value of each such asset as of the applicable Distribution Date.
(ii) Sales, transfers or other dispositions by OSCA or any of its
Subsidiaries to OSCA or one or more Subsidiaries directly or indirectly
controlled by OSCA shall not be included in any determinations under this
Section 4.1(d) of whether such 60% or more of the gross assets of OSCA or 60% of
the consolidated gross assets of OSCA and such Subsidiaries have been sold,
transferred or otherwise disposed of.
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(iii) Solely for purposes of this Section 4.1(d), OSCA shall not be
treated as directly or indirectly controlling a Subsidiary unless OSCA owns,
directly or indirectly, shares of capital stock of such Subsidiary constituting
Tax Control.
(e) Discharge of Intracompany Indebtedness. Prior to the first
Distribution Date, OSCA shall fully discharge and satisfy all of the then
existing indebtedness owed to GLC or any GLC Affiliate (other than payables
incurred in the ordinary course of the business). From such date until the first
day after the two-year anniversary of the latest Distribution Date, OSCA shall
not, and shall not permit any of its Subsidiaries to, create, incur, assume or
allow to exist any such indebtedness with GLC or any GLC Affiliate.
(f) Miscellaneous Actions. Until the first day after the two-year
anniversary of the latest Distribution Date, OSCA shall not take, or permit any
of its Subsidiaries to take, any other actions or enter into any transaction or
series of transactions or agree to enter into any other transactions that would
be reasonably likely to jeopardize the Tax-Free Status of the Distribution,
including any action or transaction that would be reasonably likely to be
inconsistent with any representation made in the Representation Letters, unless
prior to the consummation of such action or transaction GLC has determined, in
its sole and absolute discretion, that such action or transaction would not
jeopardize the Tax-Free Status of the Distribution. Notwithstanding the
foregoing, if and to the extent that any action or transaction is described in
and permitted pursuant to Sections 4.2(a), (b), (c), (d) and (e) such action or
transaction shall not be prohibited by this Section 4.1(f).
(g) Permitted Actions and Transactions. Notwithstanding the foregoing,
the provisions of Section 4.1 shall not prohibit OSCA from implementing any
transaction upon which the IRS has granted a favorable ruling in, or which is
described in reasonable detail in, any Tax Opinions/Rulings.
4.2 Cooperation and Other Covenants.
(a) Notice of Subsequent OSCA Actions. Each of OSCA and GLC shall
furnish the other with a copy of any ruling requests or other documents
delivered to the IRS that relates to the Distribution or that could otherwise be
reasonably expected to have an effect on the Tax-Free Status of the
Distribution.
(b) Cooperation. (i) Each of OSCA and GLC shall cooperate with the
other and shall take (or refrain from taking) all such actions as the other may
reasonably request in connection with obtaining any GLC determination referred
to in Section 4.1. Such cooperation shall include, without limitation, providing
any information and/or representations reasonably requested by the other to
enable either party (or counsel for such party) to obtain and maintain any
Subsequent Tax Opinion/Ruling that would permit any action described in Section
4.1 to be taken by OSCA or a OSCA Affiliate. From and after any Representation
Date in connection with obtaining any such determination or the receipt of a
Subsequent Tax Opinion/Ruling and until the first day after the two-year
anniversary of the date of such determination or receipt, neither party shall
take (nor shall
16
it refrain from taking) any action that would have caused such representation to
be untrue unless the other party has determined, in its sole and absolute
discretion, that such action would not jeopardize the Tax-Free Status of the
Distribution.
(ii) In the event that OSCA notifies GLC that it desires to take one of
the actions described in Section 4.1 and GLC concludes that such action might
jeopardize the Tax-Free Status of the Distribution, GLC shall, at the request of
OSCA, elect either to (i) use all commercially reasonable efforts to obtain a
Subsequent Tax Opinion/Ruling that would permit OSCA to take the specified
action, and OSCA shall cooperate in connection with such efforts, or (ii)
provide all reasonable cooperation to OSCA in connection with OSCA obtaining
such a Subsequent Tax Opinion/Ruling in form and substance reasonably
satisfactory to GLC; provided, however, that the reasonable costs and expenses
incurred by GLC of obtaining any such Subsequent Tax Opinion/Ruling shall be
borne by GLC.
(iii) In the event that GLC, at any time prior to the latest
Distribution Date, ceases to own OSCA Capital Stock constituting Tax Control and
such failure was not caused by any breach by OSCA of any of its representations,
warranties, covenants or other agreements made pursuant to this Agreement or
otherwise, OSCA shall cooperate with GLC and shall take (or refrain from taking)
all actions as GLC may reasonably request so as to permit GLC to regain
ownership of OSCA Capital Stock which constitutes Tax Control and would not
jeopardize the Tax-Free Status of the Distribution.
(iv) In the event that GLC, at any time prior to the latest
Distribution Date, ceases to own OSCA Capital Stock constituting Tax Control and
such failure was caused by any breach by OSCA of any of its representations,
warranties, covenants or other agreements made pursuant to this Agreement or
otherwise, in addition to any monetary damages or other indemnification
obligations owing pursuant to Section 4.3 hereof, OSCA shall promptly take (or
refrain from taking) all actions, including, but not limited to, the purchase of
OSCA Capital Stock in the open market, necessary so as to permit GLC to regain
ownership of OSCA Capital Stock which constitutes Tax Control and would not
jeopardize the Tax-Free Status of the Distribution.
(c) Notice.
(i) Until all restrictions set forth in Section 4.1 have expired, OSCA
shall give GLC written notice of any intention to effect or permit an action or
transaction described in Section 4.1 and which is prohibited thereunder at such
time within a period of time reasonably sufficient to enable GLC (A) to make the
determination referred to in Section 4.1 or (B) to prepare and seek any
Subsequent Tax Opinion/ Ruling in connection with such proposed action or
transaction. Each such notice by OSCA shall set forth the terms and conditions
of the proposed action or transaction, including, without limitation, as
applicable, the nature of any related action proposed to be taken by the Board
of Directors of OSCA, the approximate number of shares of OSCA Capital Stock
proposed to be transferred or issued, the approximate Value of OSCA's assets (or
assets of any of OSCA's Subsidiaries) proposed to be transferred, the proposed
timetable for such action or
17
transaction, and the number of shares of OSCA Capital Stock otherwise then owned
by the other party to the proposed action or transaction, all with sufficient
particularity to enable GLC to make any such required determination, including
information required to prepare and seek a Subsequent Tax Opinion/Ruling in
connection with such proposed action or transaction.
(ii) Promptly, but in any event within 30 Business Days, after GLC
receives such written notice from OSCA, GLC shall evaluate such information and
notify OSCA in writing of (A) such determination or (B) of GLC's intent to seek
a Subsequent Tax Opinion/Ruling and the proposed date for submission of the
request therefor, which date shall not be more than 45 days after the date GLC
so notifies OSCA of GLC's intent to seek a Subsequent Tax Opinion/Ruling,
provided that such 45-day period shall be appropriately extended for any period
of noncompliance by OSCA with Section 4.2(b). If GLC makes a determination that
an action or transaction described in Section 4.1 would jeopardize the Tax-Free
Status of the Distribution, such notice to OSCA shall set forth, in reasonable
detail, the reasons therefor. GLC shall notify OSCA promptly, but in any event
within two Business Days, after the receipt of a Subsequent Tax Opinion/Ruling.
4.3 Indemnification For Tax Liabilities.
(a) Notwithstanding any other provision of this Agreement or any
provision of any of the Tax Agreements to the contrary but subject to Section
4.3(b), OSCA shall indemnify, defend and hold harmless GLC and each GLC
Affiliate (or any successor to any of them) against any and all Tax-Related
Losses incurred by GLC in connection with any proposed tax assessment or tax
controversy with respect to the Distribution to the extent caused by any breach
by OSCA of any of its representations, warranties or covenants made pursuant to
this Agreement. All interest or penalties incurred in connection with such
Tax-Related Losses shall be computed for the time period up to and including the
date that OSCA pays its indemnification obligation in full.
(b) Exceptions to OSCA's Indemnification. If GLC (i) makes a
determination pursuant to any clause of Section 4.1, on the basis of a
Subsequent Tax Opinion/Ruling or otherwise, and (ii) delivers to OSCA written
notice of such determination pursuant to Section 4.2(c), OSCA shall have no
obligation pursuant to Section 4.3(a), except to the extent that any Tax-Related
Losses so incurred resulted from the inaccuracy, incorrectness or incompleteness
of any representation provided by OSCA upon which such Subsequent Tax
Opinion/Ruling and/or determination was based.
(c) Timing and Method of Tax Indemnification Payments. OSCA shall pay
any amount due and payable to GLC pursuant to this Section 4.3 on or before the
15th day following the earlier of agreement or determination that such amount is
due and payable to GLC. All payments pursuant to this Section 4.3 shall be made
by wire transfer to the bank account designated by GLC for such purpose, and on
the date of such wire transfer OSCA shall give GLC notice of the transfer.
4.4 Procedure for Indemnification for Tax Liabilities.
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(a) Notice of Claim. If GLC receives notice of the assertion of any
Third-Party Claim with respect to which OSCA may be obligated under Section 4.3
to provide indemnification, GLC shall give OSCA notice thereof (together with a
copy of such Third- Party Claim, process or other legal pleading) promptly after
becoming aware of such Third- Party Claim; provided, however, that the failure
of GLC to give notice as provided in this Section shall not relieve OSCA of its
obligations under Section 4.3, except to the extent that OSCA is actually
prejudiced by such failure to give notice. Such notice shall describe such
Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party.
(i) GLC and OSCA shall jointly control the defense of, and cooperate
with each other with respect to defending, any Third-Party Claim with respect to
which OSCA is obligated under Section 4.3 to provide indemnification, provided
that OSCA shall forfeit such joint control right with respect to a particular
Third-Party Claim if OSCA or any OSCA Affiliate makes any public statement or
filing, or takes any action (including, but not limited to, the filing of any
submission or pleading, or the giving of a deposition or production of
documents, in any administrative or court proceeding) in connection with such
Third-Party Claim that is inconsistent in a material respect with any
representation or warranty made by OSCA in this Agreement, the Tax
Opinions/Rulings, or the Representation Letters.
(ii) OSCA and GLC shall exercise their rights to jointly control the
defense of any such Third-Party Claim solely for the purpose of defeating such
Third-Party Claim and, unless required by applicable law, neither OSCA nor GLC
shall make any statements or take any actions that could reasonably result in
the shifting of liability for any Losses arising out of such Third-Party Claim
from the party making such statement or taking such action (or any of its
Affiliates) to the other party (or any of its Affiliates).
(iii) Statements made or actions taken by either OSCA or GLC in
connection with the defense of any such Third-Party Claim shall not prejudice
the rights of such party in any subsequent action or proceeding between the
parties.
(iv) If either GLC or OSCA fails to jointly defend any such Third-Party
Claim, the other party shall solely defend such Third-Party Claim and the party
failing to jointly defend shall use commercially reasonable efforts to cooperate
with the other party in its defense of such Third-Party Claim; provided,
however, that GLC may not compromise or settle any such Third-Party Claim
without the prior written consent of OSCA, which consent shall not be
unreasonably withheld or delayed. All costs and expenses of either party in
connection with, and during the course of, the joint control of the defense of
any such Third-Party Claim shall be initially paid by the party that incurs such
costs and expenses. Such costs and expenses shall be reallocated and reimbursed
in accordance with the respective indemnification obligations of the parties at
the conclusion of the defense of such Third-Party Claim.
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4.5 Arbitration. Any dispute between the parties arising out of or
relating to this Section 4, including the interpretation of this Section 4, or
any actual or purported breach of this Section 4, shall be resolved only in
accordance with the following provisions:
(a) Negotiation. GLC and OSCA shall attempt in good faith to resolve
any such dispute promptly through negotiations of the parties. In the event of
any such dispute, either party may deliver a Dispute Notice to the other party,
and within 20 Business Days after the receipt of such Dispute Notice, the
appropriate representatives of GLC and OSCA shall meet to attempt to resolve
such dispute. If such dispute has not been resolved within the Negotiation
Period, or if one of the parties fails or refuses to negotiate such dispute, the
issue shall be settled by arbitration pursuant to Section 4.5(b). The results of
such arbitration shall be final and binding on the parties.
(b) Arbitration Procedure. Either party may initiate arbitration with
regard to such dispute by giving the other party written notice either (i) at
any time following the end of the Negotiation Period, or (ii) if the parties do
not meet within 20 Business Days of the receipt of the Dispute Notice, at any
time thereafter. The arbitration shall be conducted by three arbitrators in
accordance with the CPR Rules, except as otherwise provided in this Section 4.5.
Within 20 days following receipt of the written notice of arbitration, GLC and
OSCA shall each appoint one arbitrator. The two arbitrators so appointed shall
appoint the third arbitrator. If either GLC or OSCA shall fail to appoint an
arbitrator within such 20-day period, the arbitration shall be by the sole
arbitrator appointed by the other party. Whether selected by GLC and OSCA or
otherwise, each arbitrator selected to resolve such dispute shall be a tax
attorney or tax accountant who is generally recognized in the tax community as a
qualified and competent tax practitioner with experience in the tax area
involved in the issue or issues to be resolved. Such arbitrators shall be
empowered to determine whether OSCA is required to indemnify GLC pursuant to
Section 4.3 and to determine the amount of the related indemnification payment.
Each of GLC and OSCA shall bear 50% of the aggregate expenses of the
arbitrators. The arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. xx.xx. 1-14. The place of arbitration shall be New York, New York.
The final decision of the arbitrators shall be rendered no later than one year
from the date of the written notice of arbitration.
4.6 Exclusive Remedies. Except for the right to pursue equitable
remedies, the remedies provided in this Section 4 shall be deemed the sole and
exclusive remedies of the parties with respect to the subject matters of the
indemnification provisions of Section 4.
5. Certain Other Covenants.
5.1 Financial and Other Information.
(a) Financial Information. OSCA agrees that, for so long as GLC is
required to consolidate OSCA's results of operations and financial position or
to account for its investment in OSCA under the equity method of accounting
(determined in accordance with generally accepted accounting principles
consistently applied):
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(i) OSCA shall, and shall cause each of its Subsidiaries to, maintain a
system of internal accounting controls that will provide reasonable assurance
that: (A) OSCA's and such Subsidiaries' books, records and accounts fairly
reflect all transactions and dispositions of assets and (B) the specific
objectives of accounting control are achieved.
(ii) OSCA shall, and shall cause each of its Subsidiaries to, maintain
a fiscal year which commences on January 1 and ends on December 31 of each
calendar year.
(iii) OSCA shall deliver to GLC a trial balance submission, which shall
include amounts relating to each of its Subsidiaries, in such format and detail
as GLC may request, (A) with respect to each month (other than the last month of
each fiscal year), within four Business Days following the last day of each such
month, and (B) with respect to each fiscal year, within five Business Days
following December 31 of each such year.
(iv) As soon as practicable, and in any event within seven Business
Days after the end of each of the first three fiscal quarters in each fiscal
year of OSCA and within 14 Business Days after the end of each such fiscal year,
OSCA shall deliver to GLC a consolidated income statement and balance sheet for
OSCA and its Subsidiaries for such fiscal quarter or year, as the case may be.
(v) As soon as practicable, and in any event within 35 days after the
end of each of the first three fiscal quarters in each fiscal year of OSCA and
no later than five days before OSCA intends to file its Quarterly Financial
Statements (as defined below) with the SEC, OSCA shall deliver to GLC drafts of
(A) the consolidated financial statements of OSCA and its Subsidiaries (and
notes thereto) for such periods and for the period from the beginning of the
current fiscal year to the end of such quarter, setting forth in each case in
comparative form for each such fiscal quarter of OSCA the consolidated figures
(and notes thereto) for the corresponding quarter and periods of the previous
fiscal year and all in reasonable detail and prepared in accordance with Article
10 of Regulation S-X, and (B) a discussion and analysis by management of OSCA's
and its Subsidiaries' financial condition and results of operations for such
fiscal period, including, without limitation, an explanation of any material
adverse change, all in reasonable detail and prepared in accordance with Item
303(b) of Regulation S-K. The information set forth in (A) and (B) above is
herein referred to as the "Quarterly Financial Statements." No later than the
earlier of (x) two Business Days prior to the date OSCA publicly files the
Quarterly Financial Statements with the SEC or otherwise makes such Quarterly
Financial Statements publicly available or (y) two Business Days prior to the
date on which GLC has notified OSCA that it intends to file its quarterly
financial statements with the SEC, OSCA shall deliver to GLC the final form of
the Quarterly Financial Statements certified by the chief financial officer of
OSCA as presenting fairly, in all material respects, the financial condition and
results of operations of OSCA and its Subsidiaries; provided that OSCA may
continue to revise such Quarterly Financial Statements prior to the filing
thereof in order to make corrections and non-substantive changes which
corrections and changes shall be delivered by OSCA to GLC as soon as
practicable, and in any event within eight hours thereafter; and, provided,
further, that GLC and OSCA financial representatives shall actively consult with
each other regarding any changes (whether or not substantive) which OSCA may
consider making to its Quarterly Financial Statements
21
and related disclosures during the three Business Days immediately prior to any
anticipated filing with the SEC, and OSCA shall obtain GLC's consent prior to
making any change to OSCA's Quarterly Financial Statements or related
disclosures which would have an effect upon GLC's financial statements or
related disclosures. In addition to the foregoing, no Quarterly Financial
Statement or any other document which refers, or contains information with
respect, to the ownership of OSCA by GLC, the separation of OSCA from GLC or the
Distribution shall be filed with the SEC or otherwise made public by OSCA or any
of its Subsidiaries without the prior written consent of GLC.
(vi) OSCA shall deliver to GLC as soon as practicable, and in any event
within 45 days after the end of each fiscal year of OSCA and no later than 10
days before OSCA intends to file its Annual Financial Statements (as defined
below) with the SEC, (A) drafts of the consolidated financial statements of OSCA
(and notes thereto) for such year, setting forth in each case in comparative
form the consolidated figures (and notes thereto) for the previous fiscal year
and all in reasonable detail and prepared in accordance with Regulation S-X and
(B) a discussion and analysis by management of OSCA's and its Subsidiaries'
financial condition and results of operations for such year, including, without
limitation, an explanation of any material adverse change, all in reasonable
detail and prepared in accordance with Item 303(a) of Regulation S-K. The
information set forth in (A) and (B) above is herein referred to as the "Annual
Financial Statements." OSCA shall deliver to GLC all revisions to such drafts as
soon as any such revisions are prepared or made. No later than the earlier of
(1) five Business Days prior to the date OSCA publicly files the Annual
Financial Statements with the SEC or otherwise makes such Annual Financial
Statements publicly available or (2) five Business Days prior to the date on
which GLC has notified OSCA that it intends to file its annual financial
statements with the SEC, OSCA shall deliver to GLC the final form of the Annual
Financial Statements certified by the chief financial officer of OSCA as
presenting fairly, in all material respects, the financial condition and results
of operations of OSCA and its Subsidiaries; provided that OSCA may continue to
revise such Annual Financial Statements prior to the filing thereof in order to
make corrections and non-substantive changes which corrections and changes shall
be delivered by OSCA to GLC as soon as practicable, and in any event within
eight hours thereafter; and, provided, further, that GLC and OSCA financial
representatives shall actively consult with each other regarding any changes
(whether or not substantive) which OSCA may consider making to its Annual
Financial Statements and related disclosures during the three Business Days
immediately prior to any anticipated filing with the SEC, and OSCA shall obtain
GLC's consent prior to making any change to OSCA's Annual Financial Statements
or related disclosures which would have an effect upon GLC's financial
statements or related disclosures. In addition to the foregoing, no Annual
Financial Statement or any other document which refers, or contains information
with respect, to the ownership of OSCA by GLC, the separation of OSCA from GLC
or the Distribution shall be filed with the SEC or otherwise made public by OSCA
or any of its Subsidiaries without the prior written consent of GLC. In any
event, OSCA shall deliver to GLC, no later than 80 days after the end of each
fiscal year of OSCA, the final form of the Annual Financial Statements
accompanied by an opinion thereon by OSCA's independent certified public
accountants.
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(vii) OSCA shall deliver to GLC all Quarterly and Annual Financial
Statements of each Subsidiary of OSCA which is itself required to file financial
statements with the SEC or otherwise make such financial statements publicly
available, with such financial statements to be provided in the same manner and
detail and on the same time schedule as those financial statements of OSCA
required to be delivered to GLC pursuant to this Section 5.1.
(viii) All information provided by OSCA or any of its Subsidiaries to
GLC pursuant to Sections 5.1(a)(iii) through (vii) inclusive shall be consistent
in terms of format and detail and otherwise with the procedures in effect on the
date hereof with respect to the provision of such financial information by OSCA
and its Subsidiaries, as applicable, to GLC (and, where appropriate, as
presently presented in financial reports to GLC's Board of Directors), with such
changes therein as may be requested by GLC from time to time consistent with
changes in reporting by sectors and Subsidiaries of GLC.
(ix) OSCA and each of its Subsidiaries which files information with the
SEC shall deliver to GLC: (A) as soon as the same are prepared, substantially
final drafts of: (x) all reports, notices and proxy and information statements
to be sent or made available by OSCA or any of its Subsidiaries to their
security holders, (y) all regular, periodic and other reports to be filed under
Sections 13, 14 and 15 of the Exchange Act (including Reports on Forms 10-K,
10-Q and 8-K and Annual Reports to Shareholders), and (z) all registration
statements and prospectuses to be filed by OSCA or any of its Subsidiaries with
the SEC or any securities exchange pursuant to the listed company manual (or
similar requirements) of such exchange (collectively, the documents identified
in clauses (x), (y) and (z) are referred to herein as "OSCA Public Documents"),
and (B) as soon as practicable, but in no event later than four Business Days
prior to the date the same are printed, sent or filed, whichever is earliest,
final copies of all such OSCA Public Documents; provided that OSCA may continue
to revise such OSCA Public Documents prior to the filing thereof in order to
make corrections and non-substantive changes which corrections and changes shall
be delivered by OSCA to GLC as soon as practicable, and in any event within
eight hours thereafter; and, provided, further, that GLC and OSCA financial
representatives shall actively consult with each other regarding any changes
(whether or not substantive) which OSCA may consider making to any of its OSCA
Public Documents and related disclosures prior to any anticipated filing with
the SEC, and OSCA shall obtain GLC's consent prior to making any change to its
OSCA Public Documents or related disclosures which would have an effect upon
GLC's financial statements or related disclosures. In addition to the foregoing,
no OSCA Public Document or any other document which refers, or contains
information with respect, to the ownership of OSCA by GLC, the separation of
OSCA from GLC or the Distribution shall be filed with the SEC or otherwise made
public by OSCA or any of its Subsidiaries without the prior written consent of
GLC.
(x) OSCA shall, as promptly as practicable, deliver to GLC copies of
all annual and other budgets and financial projections (consistent in terms of
format and detail and otherwise with the procedures in effect on the date
hereof) relating to OSCA or any of its Subsidiaries and shall provide GLC an
opportunity to meet with management of OSCA to discuss such budgets and
projections.
23
(xi) With reasonable promptness, OSCA shall deliver to GLC such
additional financial and other information and data with respect to OSCA and its
Subsidiaries and their business, properties, financial positions, results of
operations and prospects as from time to time may be reasonably requested by
GLC.
(xii) Prior to issuance, OSCA shall deliver to GLC copies of
substantially final drafts of all press releases and other statements to be made
available by OSCA or any of its Subsidiaries to employees of OSCA or any of its
Subsidiaries or to the public concerning material developments in the business,
properties, earnings, results of operations, financial condition or prospects of
OSCA or any of its Subsidiaries or the relationship between (A) OSCA or any of
its Subsidiaries and (B) GLC or any of its Affiliates. In addition, prior to the
issuance of any such press release or public statement, OSCA shall consult with
GLC regarding any changes (other than typographical or other similar minor
changes) to such substantially final drafts. Immediately following the issuance
thereof, OSCA shall deliver to GLC copies of final drafts of all press releases
and other public statements. OSCA and GLC will consult with each other as to the
timing of their annual and quarterly earnings releases and will give each other
an opportunity to review the information therein relating to OSCA and its
Subsidiaries and to comment thereon.
(xiii) OSCA shall cooperate fully, and cause its accountants to
cooperate fully, with GLC to the extent requested by GLC in the preparation of
GLC's public earnings releases, quarterly reports on Form 10-Q, Annual Reports
to Shareholders, Annual Reports on Form 10-K, any Current Reports on Form 8-K
and any other proxy, information and registration statements, reports, notices,
prospectuses and any other filings made by GLC with the SEC, any national
securities exchange or otherwise made publicly available (collectively, "GLC
Public Filings"). OSCA agrees to provide to GLC all information that GLC
reasonably requests in connection with any GLC Public Filings or that, in the
judgment of GLC's legal department, is required to be disclosed or incorporated
by reference therein under any law, rule or regulation. Such information shall
be provided by OSCA in a timely manner on the dates requested by GLC (which may
be earlier than the dates on which OSCA otherwise would be required hereunder to
have such information available) to enable GLC to prepare, print and release all
GLC Public Filings on such dates as GLC shall determine. OSCA shall cause its
accountants to consent to any reference to them as experts in any GLC Public
Filings required under any law, rule or regulation. If and to the extent
requested by GLC, OSCA shall diligently and promptly review all drafts of such
GLC Public Filings and prepare in a diligent and timely fashion any portion of
such GLC Public Filing pertaining to OSCA. Prior to any printing or public
release of any GLC Public Filing, an appropriate executive officer of OSCA
shall, if requested by GLC, certify that the information relating to OSCA, any
OSCA Affiliate or the OSCA Business in such GLC Public Filing is accurate, true
and correct in all material respects. Unless required by law, rule or
regulation, OSCA shall not publicly release any financial or other information
which conflicts with the information with respect to OSCA, any OSCA Affiliate or
the OSCA Business that is included in any GLC Public Filing without GLC's prior
written consent. Prior to the release or filing thereof, GLC shall provide OSCA
with a draft of any portion of a GLC Public Filing containing information
relating to OSCA and its Subsidiaries and shall give OSCA an opportunity
24
to review such information and comment thereon; provided that GLC shall
determine in its sole discretion the final form and content of all GLC Public
Filings.
(b) Auditors and Audits; Annual Statements and Accounting. OSCA agrees
that, for so long as GLC is required to consolidate OSCA's results of operations
and financial position or to account for its investment in OSCA under the equity
method of accounting (in accordance with generally accepted accounting
principles):
(i) OSCA shall not select a different accounting firm than Ernst &
Young to serve as its (and its Subsidiaries') independent certified public
accountants ("OSCA's Auditors") without GLC's prior written consent (which shall
not be unreasonably withheld).
(ii) OSCA shall use its best efforts to enable the OSCA Auditors to
complete their audit such that they will date their opinion on OSCA's audited
annual financial statements on the same date that GLC's independent certified
public accountants ("GLC's Auditors") date their opinion on GLC's audited annual
financial statements (the "GLC Annual Statements"), and to enable GLC to meet
its timetable for the printing, filing and public dissemination of the GLC
Annual Statements.
(iii) OSCA shall provide to GLC on a timely basis all information that
GLC reasonably requires to meet its schedule for the preparation, printing,
filing, and public dissemination of the GLC Annual Statements. Without limiting
the generality of the foregoing, OSCA will provide all required financial
information with respect to OSCA and its Subsidiaries to OSCA's Auditors in a
sufficient and reasonable time and in sufficient detail to permit OSCA's
Auditors to take all steps and perform all reviews necessary to provide
sufficient assistance to GLC's Auditors with respect to information to be
included or contained in the GLC Annual Statements.
(iv) OSCA shall authorize OSCA's Auditors to make available to GLC's
Auditors both the personnel who performed or are performing the annual audit of
OSCA and work papers related to the annual audit of OSCA, in all cases within a
reasonable time prior to OSCA's Auditors' opinion date, so that GLC's Auditors
are able to perform the procedures they consider necessary to take
responsibility for the work of OSCA's Auditors as it relates to GLC's Auditors'
report on GLC's statements, all within sufficient time to enable GLC to meet its
timetable for the printing, filing and public dissemination of the GLC Annual
Statements.
(v) OSCA shall provide GLC's internal auditors access to OSCA's and its
Subsidiaries, books and records so that GLC may conduct reasonable audits
relating to the financial statements provided by OSCA pursuant hereto as well as
to the internal accounting controls and operations of OSCA and its Subsidiaries.
(vi) OSCA shall give GLC as much prior notice as reasonably practical
of any proposed determination of, or any significant changes in, its accounting
estimates or accounting principles from those in effect on the date hereof. OSCA
will consult with GLC and, if requested by GLC, OSCA will consult with GLC's
independent public accountants with respect thereto. OSCA will not
25
make any such determination or changes without GLC's prior written consent if
such a determination or a change would be sufficiently material to be required
to be disclosed in OSCA's financial statements as filed with the SEC or
otherwise publicly disclosed therein.
(vii) Notwithstanding clause (vi) above, OSCA shall make any changes in
its accounting estimates or accounting principles that are requested by GLC in
order for OSCA's accounting estimates and principles to be consistent with those
of GLC.
Nothing in this Section 5.1 shall require OSCA to violate any agreement
with any of its customers regarding the confidentiality of commercially
sensitive information relating to that customer or its business; provided that
in the event that OSCA is required under this Section 5.1 to disclose any such
information, OSCA shall use all commercially reasonable efforts to seek to
obtain such customer's consent to the disclosure of such information.
5.2 Other Covenants. OSCA hereby covenants and agrees that, for so long
as GLC beneficially owns at least 50% of the outstanding shares of OSCA Common
Stock:
(a) OSCA shall not, without the prior written consent of GLC (which it
may withhold in its sole and absolute discretion), take, or cause to be taken,
directly or indirectly, any action, including making or failing to make any
election under the law of any state, which has the effect, directly or
indirectly, of restricting or limiting the ability of GLC to freely sell,
transfer, assign, pledge or otherwise dispose of shares of OSCA Common Stock or
would restrict or limit the rights of any transferee of GLC as a holder of OSCA
Common Stock. Without limiting the generality of the foregoing, OSCA shall not,
without the prior written consent of GLC (which it may withhold in its sole and
absolute discretion), take any action, or take any action to recommend to its
stockholders any action, which would among other things, limit the legal rights
of, or deny any benefit to, GLC as a OSCA stockholder in a manner not applicable
to OSCA stockholders generally.
(b) OSCA shall not, without the prior written consent of GLC (which it
may withhold in its sole and absolute discretion), issue any shares of OSCA
Capital Stock or any rights, warrants or options to acquire OSCA Capital Stock
(including, without limitation, securities convertible or exchangeable for OSCA
Capital Stock), if after giving effect to such issuances and considering all of
the shares of OSCA Capital Stock acquirable pursuant to such rights, warrants
and options to be outstanding on the date of such issuance (whether or not then
exercisable), GLC would own less than 50% of the then outstanding shares of OSCA
Common Stock.
(c) To the extent that GLC is a party to any contracts or agreements
that provide that certain actions of GLC's Subsidiaries may result in GLC being
in breach of or in default under such agreements and GLC has advised OSCA of the
existence, and has furnished OSCA with copies, of such contracts or agreements
(or the relevant portions thereof), OSCA shall not take any actions that
reasonably could result in GLC being in breach of or in default under any such
contract or agreement. As of the date hereof, the contracts and agreements (or
relevant portions thereof) applicable to this covenant are set forth on Exhibit
A attached hereto. OSCA hereby acknowledges
26
and agrees that GLC has furnished it with copies of each contract or agreement
(or the relevant portion thereof) listed on Exhibit A. The parties acknowledge
and agree that, after the date hereof, GLC may in good faith (and not solely
with the intention of imposing restrictions on OSCA pursuant to this covenant)
enter into additional contracts or agreements that provide that certain actions
of GLC's Subsidiaries may result in GLC being in breach of or in default under
such agreements. In such event, Exhibit A shall be deemed to be automatically
amended to reflect the addition of any other contracts or agreements (or
relevant portions thereof) of which GLC advises OSCA after the date hereof in
accordance with this Section 5.2(c). OSCA agrees to keep confidential and not to
disclose any information provided to it pursuant to this Section 5.2(c).
5.3 Covenants Regarding the Incurrence of Indebtedness.
(a) OSCA hereby covenants and agrees that, for so long as GLC continues
to beneficially own at least 50% of the outstanding shares of OSCA Common Stock,
OSCA shall not, and shall not permit any of its Subsidiaries to, without GLC's
prior written consent (which it may withhold in its sole and absolute
discretion), take any of the following actions:
(i) create, incur, assume or suffer to exist any OSCA Indebtedness in
excess of an aggregate of $__ million outstanding at any time; provided,
however, that OSCA may consummate, or agree to consummate, any acquisition or
other similar transaction or series of related transactions involving OSCA or
any of its Subsidiaries acquiring Control of any Person (an "Acquisition
Target") as a result of which the OSCA Indebtedness would exceed $__ million so
long as both (A) the Acquisition Target has an FFO to Debt Ratio equal to or
greater than __% and (B) the OSCA Indebtedness after giving effect to such
transaction(s) (including, without duplication, any OSCA Indebtedness incurred
in connection therewith and any Target Indebtedness that will become OSCA
Indebtedness as a result of such transaction(s)) would not exceed $__ million;
and
(ii) consummate, or agree to consummate, any acquisition or other
similar transaction or series of related transactions involving OSCA or any of
its Subsidiaries acquiring Control of any Acquisition Target with an FFO to Debt
Ratio less than __% unless the Adjusted OSCA Indebtedness would not exceed $__
million.
(b) In order to implement this Section 5.3, OSCA shall notify GLC in
writing at least 15 Business Days prior to the time it or any of its
Subsidiaries contemplates incurring any OSCA Indebtedness or agreeing to acquire
Control of an Acquisition Target of its intention to do so and shall either (i)
demonstrate to GLC's satisfaction that this Section 5.3 shall not be violated by
such proposed additional OSCA Indebtedness or acquisition or (ii) obtain GLC's
prior written consent to such proposed additional OSCA Indebtedness or
acquisition. Any such written notification from OSCA to GLC shall include
documentation of any existing OSCA Indebtedness and estimated OSCA Indebtedness
after giving effect to such proposed incurrence of additional OSCA Indebtedness
or acquisition and, if delivered in connection with any transaction(s) involving
an Acquisition Target, (A) documentation of the Acquisition Target's Target
Indebtedness, (B) calculations of the Acquisition Target's FFO to Debt Ratio and
(C) calculations of compliance with
27
this Section 5.3, including the Adjusted OSCA Indebtedness, if applicable. GLC
shall have the right to verify the accuracy of such information and OSCA shall
cooperate fully with GLC in such effort (including, without limitation, by
providing GLC with access to the working papers and underlying documentation
related to any calculations used in determining such information).
(c) For purposes of this Section 5.3, the following terms shall have
the following meanings:
"Adjusted OSCA Indebtedness" means, with respect to any proposed
transaction(s) involving an Acquisition Target, the sum of (i) the OSCA
Indebtedness immediately after giving effect to such transaction(s) (including,
without duplication, any OSCA Indebtedness incurred in connection therewith and
any Target Indebtedness that will become OSCA Indebtedness as a result of such
transaction(s)) and (ii) the amount by which the number described in clause (ii)
of the definition of "FFO to Debt Ratio" set forth in this Section 5.3 would
need to be reduced in order for the Acquisition Target's FFO to Debt Ratio to
equal __%.
"OSCA Indebtedness" means the sum of (i) the aggregate principal amount
of total liabilities (whether long-term or short-term) for borrowed money
(including capitalized leases) of OSCA and its Subsidiaries, as determined for
purposes of its consolidated financial statements prepared in accordance with
GAAP, and (ii) the aggregate amount attributable to all factoring or
securitization of receivables and other financial assets by OSCA and its
Subsidiaries in excess of $__ million.
"FFO to Debt Ratio" means, for any Acquisition Target, as of
immediately prior to OSCA acquiring Control of such Acquisition Target in the
proposed transaction(s), the percentage determined by dividing (i) the sum of
such Acquisition Target's net income plus depreciation and amortization for the
last four full fiscal quarters, as determined for purposes of its consolidated
financial statements prepared in accordance with GAAP, by (ii) the additional
OSCA Indebtedness that would be incurred in connection with such proposed
transaction(s), including, without limitation, any Target Indebtedness that will
become OSCA Indebtedness as a result of such proposed transaction(s).
"Target Indebtedness" means, with respect to any proposed
transaction(s) involving an Acquisition Target, such Acquisition Target's total
obligations (whether short-term or long-term) for borrowed money (including
capitalized leases) as of immediately prior to OSCA acquiring Control of such
Acquisition Target in such proposed transaction(s).
6. Indemnification.
6.1 Indemnification by OSCA. Subject to Section 6.3, OSCA shall
indemnify, defend and hold harmless GLC, all GLC Affiliates and each of their
respective directors, officers and employees (in their capacities as such), from
and against:
28
(a) all Losses relating to, arising out of, or due to, directly or
indirectly, any breach by OSCA or any OSCA Affiliate of any of the provisions of
this Agreement;
(b) all Losses relating to, arising out of, or due to, directly or
indirectly, any incorrect, inaccurate or incomplete financial and other
information provided by OSCA or any OSCA Affiliate to GLC pursuant to Section
5.1 of this Agreement;
(c) all Losses relating to, arising out of, or due to any untrue
statement or alleged untrue statement of a material fact contained in, or
incorporated by reference into, the IPO Registration Statement or the omission
or alleged omission to state (whether pursuant to direct statement or
incorporation by reference) in the IPO Registration Statement a material fact
required to be stated therein or necessary to make the statements therein not
misleading other than with respect to the GLC Disclosure Portions; and
(d) all Losses relating to, arising out of, or due to any untrue
statement or alleged untrue statement of a material fact contained in, or
incorporated by reference into, the Distribution Registration Statement or the
omission or alleged omission to state (whether pursuant to direct statement or
incorporation by reference) in the Distribution Registration Statement a
material fact required to be stated therein or necessary to make the statements
therein not misleading other than with respect to the GLC Disclosure Portions.
6.2 Indemnification by GLC. Subject to Section 6.3, GLC shall
indemnify, defend, and hold harmless OSCA, all OSCA Affiliates, and each of
their respective directors, officers and employees (in their capacities as
such), from and against:
(a) all Losses relating to, arising out of, or due to, directly or
indirectly, any breach by GLC or any GLC Affiliate of any of the provisions of
this Agreement;
(b) all Losses relating to, arising out of, or due to any untrue
statement or alleged untrue statement of a material fact contained in, or
incorporated by reference into, the GLC Disclosure Portions of the IPO
Registration Statement or the omission or alleged omission to state (whether
pursuant to direct statement or incorporation by reference) in the GLC
Disclosure Portions of the IPO Registration Statement a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and
(c) all Losses relating to, arising out of, or due to any untrue
statement or alleged untrue statement of a material fact contained in, or
incorporated by reference into, the GLC Disclosure Portions of the Distribution
Registration Statement or the omission or alleged omission to state (whether
pursuant to direct statement or incorporation by reference) in the GLC
Disclosure Portions of the Distribution Registration Statement a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
29
6.3 Other Liabilities.
(a) Except as provided in Section 6.4, this Section 6 shall not be
applicable to any Tax-Related Losses, which shall be governed by Section 4 of
this Agreement.
(b) This Section 6 shall not be applicable to any Losses relating to,
arising out of, or due to any breach of the provisions of any other contract,
agreement or understanding between GLC or any GLC Affiliate and OSCA or any OSCA
Affiliate, including, without limitation, the Separation Agreement and any of
the other Ancillary Agreements, which Losses shall be governed by the terms of
such contract, agreement or understanding.
6.4 Tax Effects of Indemnification.
(a) Any indemnification payment made under this Agreement shall be
characterized for tax purposes as if such payment were made immediately prior to
the latest Distribution Date, and shall therefore be treated, to the extent
permitted by law, as either (i) a distribution from OSCA to GLC or (ii) a
capital contribution from GLC to OSCA.
(b) The amount of any Loss or Tax-Related Losses for which
indemnification is provided under this Agreement shall be (i) increased to take
account of net Tax cost, if any, incurred by the Indemnitee arising from the
receipt or accrual of an Indemnity Payment hereunder (grossed up for such
increase) and (ii) reduced to take account of net Tax benefit, if any, realized
by the Indemnitee arising from incurring or paying such Loss or Tax-Related
Losses. In computing the amount of any such Tax cost or Tax benefit, the
Indemnitee shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt or
accrual of any Indemnity Payment hereunder or incurring or paying any
indemnified Loss or Tax-Related Losses. Any Indemnity Payment hereunder shall
initially be made without regard to this Section 6.4 and shall be increased or
reduced to reflect any such net Tax cost (including gross-up) or net Tax benefit
only after the Indemnitee has actually realized such cost or benefit. For
purposes of this Agreement, an Indemnitee shall be deemed to have "actually
realized" a net Tax cost or a net Tax benefit to the extent that, and at such
time as, the amount of Taxes payable by such Indemnitee is increased above or
reduced below, as the case may be, the amount of Taxes that such Indemnitee
would be required to pay but for the receipt or accrual of the Indemnity Payment
or the incurrence or payment of such Loss or Tax-Related Losses, as the case may
be. The amount of any increase or reduction hereunder shall be adjusted to
reflect any final determination (which shall include the execution of Form
870-AD or successor form) with respect to the Indemnitee's liability for Taxes,
and payments between GLC and OSCA to reflect such adjustment shall be made if
necessary.
6.5 Effect of Insurance Upon Indemnification. The amount which an
Indemnifying Party is required to pay to any Indemnitee pursuant to this Section
6 shall be reduced (including retroactively) by any Insurance Proceeds and other
amounts actually recovered by such Indemnitee in reduction of the related Loss,
it being understood and agreed that each of OSCA and GLC shall use commercially
reasonable efforts to collect any such proceeds or other amounts to which it or
any
30
of its Affiliates is entitled, without regard to whether it is the Indemnifying
Party hereunder. No Indemnitee shall be required, however, to collect any such
proceeds or other amounts prior to being entitled to indemnification from an
Indemnifying Party hereunder. If an Indemnitee receives an Indemnity Payment in
respect of a Loss and subsequently receives Insurance Proceeds or other amounts
fin respect of such Loss, then such Indemnitee shall pay to such Indemnifying
Party an amount equal to the difference between (a) the sum of the amount of
such Indemnity Payment and the amount of such Insurance Proceeds or other
amounts actually received and (b) the amount of such Loss, in each case adjusted
(at such time as appropriate adjustment can be determined) to reflect any
premium adjustment attributable to such claim.
6.6 Procedure for Indemnification Involving Third-party Claims.
(a) Notice of Claim. If any Indemnitee receives notice of the assertion
of any Third-Party Claim with respect to which an Indemnifying Party is
obligated under this Agreement to provide indemnification (other than pursuant
to Section 4), such Indemnitee shall give such Indemnifying Party notice thereof
(together with a copy of such Third-Party Claim, process or other legal
pleading) promptly after becoming aware of such Third-Party Claim; provided,
however, that the failure of any Indemnitee to give notice as provided in this
Section shall not relieve any Indemnifying Party of its obligations under this
Section 6, except to the extent that such Indemnifying Party is actually
prejudiced by such failure to give notice. Such notice shall describe such
Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party. An Indemnifying Party, at such
Indemnifying Party's own expense and through counsel chosen by such Indemnifying
Party (which counsel shall be reasonably acceptable to the Indemnitee), may
elect to defend any Third-Party Claim. If an Indemnifying Party elects to defend
a Third-Party Claim, then, within ten Business Days after receiving notice of
such Third-Party Claim (or sooner, if the nature of such Third-Party Claim so
requires), such Indemnifying Party shall notify the Indemnitee of its intent to
do so, and such Indemnitee shall cooperate in the defense of such Third-Party
Claim. Such Indemnifying Party shall pay such Indemnitee's reasonable
out-of-pocket expenses incurred in connection with such cooperation. Such
Indemnifying Party shall keep the Indemnitee reasonably informed as to the
status of the defense of such Third-Party Claim. After notice from an
Indemnifying Party to an Indemnitee of its election to assume the defense of a
Third-Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Section 6 for any legal or other expenses subsequently
incurred by such Indemnitee in connection with the defense thereof other than
those expenses referred to in the preceding sentence; provided, however, that
such Indemnitee shall have the right to employ one law firm as counsel, together
with a separate local law firm in each applicable jurisdiction ("Separate
Counsel"), to represent such Indemnitee in any action or group of related
actions (which firm or firms shall be reasonably acceptable to the Indemnifying
Party) if, in such Indemnitee's reasonable judgment at any time, either a
conflict of interest between such Indemnitee and such Indemnifying Party exists
in respect of such claim, or there may be defenses available to such Indemnitee
which are different from or in addition to those available to such Indemnifying
Party and the representation of both parties by the same counsel would be
inappropriate, and in that event (i) the reasonable fees
31
and expenses of such Separate Counsel shall be paid by such Indemnifying Party
(it being understood, however, that the Indemnifying Party shall not be liable
for the expenses of more than one Separate Counsel (excluding local counsel)
with respect to any Third-Party Claim (even if against multiple Indemnitees))
and (ii) each of such Indemnifying Party and such Indemnitee shall have the
right to conduct its own defense in respect of such claim. If an Indemnifying
Party elects not to defend against a Third-Party Claim, or fails to notify an
Indemnitee of its election as provided in this Section 6 within the period of
ten Business Days described above, the Indemnitee may defend, compromise, and
settle such Third-Party Claim and shall be entitled to indemnification hereunder
(to the extent permitted hereunder); provided, however, that no such Indemnitee
may compromise or settle any such Third-Party Claim without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, the Indemnifying Party shall
not, without the prior written consent of the Indemnitee, (i) settle or
compromise any Third-Party Claim or consent to the entry of any judgment which
does not include as an unconditional term thereof the delivery by the claimant
or plaintiff to the Indemnitee of a written release from all liability in
respect of such Third-Party Claim or (ii) settle or compromise any Third-Party
Claim in any manner that would be reasonably likely to have a material adverse
effect on the Indemnitee.
(c) Joint Defense of Certain Claims. Notwithstanding the provisions of
Section 6.6(b), GLC and OSCA shall jointly control the defense of, and cooperate
with each other with respect to defending, any Third-Party Claim with respect to
which each party is claiming that it is entitled to indemnification under
Section 6.1 or 6.2. If either GLC or OSCA fails to defend jointly any such
Third-Party Claim, the other party shall solely defend such Third-Party Claim
and the party failing to defend jointly shall use all commercially reasonable
efforts to cooperate with the other party in its defense of such Third-Party
Claim; provided, however, that neither party may compromise or settle any such
Third-Party Claim without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed. All costs and expenses of
either party in connection with, and during the course of, the joint control of
the defense of any such Third-Party Claim shall be initially paid by the party
that incurs such costs and expenses. Such costs and expenses shall be
reallocated and reimbursed in accordance with the respective indemnification
obligations of the parties at the conclusion of the defense of such Third-Party
Claim.
6.7 Procedure for Indemnification Not Involving Third-party Claims. If
any Indemnitee desires to assert against an Indemnifying Party any claim for
indemnification under this Section 6 other than a Third-Party Claim (a "Claim"),
the Indemnitee shall deliver to the Indemnifying Party notice of its demand for
satisfaction of such Claim (a "Request"), specifying in reasonable detail the
amount of such Claim and the basis for asserting such Claim. Within 30 days
after the Indemnifying Party has been given a Request, the Indemnifying Party
shall either (i) satisfy the Claim requested to be satisfied in such Request by
delivering to the Indemnitee payment by wire transfer or a certified or bank
cashier's check payable to the Indemnified Party in immediately available funds
in an amount equal to the amount of such Claim, or (ii) notify the Indemnitee
that the Indemnifying Party contests such Claim by delivering to the Indemnitee
a Dispute Notice, stating that the Indemnifying Party objects to such Claim and
specifying in reasonable detail the basis for contesting such Claim.
32
6.8 Exclusive Remedies. Except for the right to pursue equitable
remedies, the remedies provided in this Section 6 shall be deemed the sole and
exclusive remedies of the parties with respect to the subject matters of the
indemnification provisions of this Section 6.
7. Miscellaneous.
7.1 Survival. The representations and warranties contained in this
Agreement shall survive the execution and delivery hereof and all Distribution
Dates until the expiration of all applicable statutes of limitations.
7.2 Complete Agreement. Except as otherwise set forth in this
Agreement, this Agreement and the exhibits hereto shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all prior agreements and understandings, whether written or
oral, between the parties with respect to such subject matter.
7.3 Authority. Each of the parties hereto represents to the other that
(a) it has the corporate power and authority to execute, deliver and perform
each of this Agreement and the Registration Rights Agreement, (b) the execution,
delivery and performance of each of this Agreement and the Registration Rights
Agreement by it has been duly authorized by all necessary corporate action, (c)
it has duly and validly executed and delivered each of this Agreement and the
Registration Rights Agreement, and (d) each of this Agreement and the
Registration Rights Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.
7.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (other than the laws regarding
conflicts of laws) as to all matters, including matters of validity,
construction, effect, performance and remedies.
7.5 Consent to Exclusive Jurisdiction. Any action, suit or proceeding
arising out of any claim that the parties cannot settle through good faith
negotiations (except any claim to which Section 4.5 applies) shall be litigated
exclusively in the state courts of Delaware. Each of the parties hereto hereby
irrevocably and unconditionally (a) submits to the jurisdiction of the state
courts of Delaware for any such action, suit or proceeding, (b) agrees not to
commence any such action, suit or proceeding except in the state courts of
Delaware, (c) waives, and agrees not to plead or to make, any objection to the
venue of any such action, suit or proceeding in the state courts of Delaware,
(d) waives, and agrees not to plead or to make, any claim that any such action,
suit or proceeding brought in the state courts of Delaware has been brought in
an improper or otherwise inconvenient forum, (e) waives, and agrees not to plead
or to make, any claim that the state courts of Delaware lack personal
jurisdiction over it, and (f) waives its right to remove any such action, suit
or proceeding to the federal courts except when such courts are vested with sole
and exclusive jurisdiction by statute. GLC and OSCA shall cooperate with each
other in connection with any such action, suit or proceeding to obtain reliable
assurances that confidential treatment will be accorded
33
any information that either party shall reasonably deem to be confidential or
proprietary. Each of the parties hereto irrevocably designates and appoints its
respective Service Agent as its agent to receive service of process in any such
action, suit or proceeding. Each of the parties hereto further covenants and
agrees that, until the expiration of all applicable statutes of limitations
relating to potential claims under this Agreement, each such party shall
maintain a duly appointed agent for the service of summonses and other legal
process in the State of Delaware, and shall promptly notify the other party
hereto of any change in the name or address of its Service Agent and the name
and address of any replacement for its Service Agent, if such agent is no longer
the Service Agent named herein. This Section 7.5 is meant to comply with 6 Del.
C. Section 2708. Notwithstanding anything contained in this Section 7.5, all
claims for indemnification under Section 6 shall be governed by the provisions
thereof.
7.6 Notices. All Notices shall be in writing and shall be deemed given
upon (a) a transmitter's confirmation of a receipt of a facsimile transmission
(but only if followed by confirmed delivery of a standard overnight courier the
following Business Day or if delivered by hand the following Business Day), or
(b) confirmed delivery of a standard overnight courier or delivered by hand, to
the parties at the following addresses:
if to GLC:
Great Lakes Chemical Corporation
000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
with a copy to:
Great Lakes Chemical Corporation
000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Director of Taxes
Telecopy No.: (000) 000-0000
if to OSCA, to:
OSCA, Inc.
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
34
with a copy to:
OSCA, Inc.
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Telecopy No.: (000) 000-0000
or to such other address as either party hereto may have furnished to the other
party by a Notice in writing in accordance with this Section 7.6
7.7 Amendment and Modification. This Agreement may not be amended or
modified in any respect except by a written agreement signed by both of the
parties hereto.
7.8 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon the parties hereto and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Except with respect to a merger of either party with another Person,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either party hereto without the prior written consent of
the other party, which consent shall not be unreasonably withheld or delayed.
7.9 Third Party Beneficiaries. The Indemnitees and their respective
successors shall be third party beneficiaries of the indemnification provisions
of Sections 4 and 6, as applicable, and shall be entitled to enforce those
provisions and in connection with such enforcement shall be subject to Section
7.5 in each such case as fully and to the same extent as if they were parties to
this Agreement. Except as provided in the previous sentence, nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
any legal or equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, and no Person (other than as provided in the
previous sentence) shall be deemed a third party beneficiary under or by reason
of this Agreement.
7.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The Agreement may be
executed by facsimile signature.
7.11 Waiver. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in writing signed by the party against which such
waiver is to be asserted. Unless otherwise expressly provided in this Agreement,
no delay or omission on the part of any party in exercising any right or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any right or privilege under this Agreement
operate as a waiver of any other right or privilege under this Agreement nor
shall any single or partial exercise of any right or privilege preclude any
other or
35
further exercise thereof or the exercise of any other right or privilege under
this Agreement. No failure by either party to take any action or assert any
right or privilege hereunder shall be deemed to be a waiver of such right or
privilege in the event of the continuation or repetition of the circumstances
giving rise to such right unless expressly waived in writing by the party
against whom the existence of such waiver is asserted.
7.12 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.13 Remedies. Except as otherwise provided herein, each of GLC and
OSCA shall be entitled to enforce its rights under this Agreement specifically,
to recover damages and costs (including reasonable attorneys' fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. Each of GLC and OSCA acknowledges and agrees that under
certain circumstances the breach by GLC or any of its Affiliates or OSCA or any
of its Affiliates of a term or provision of this Agreement will materially and
irreparably harm the other party, that money damages will accordingly not be an
adequate remedy for such breach and that the non-defaulting party, in its sole
discretion and in addition to its rights under this Agreement and any other
remedies it may have at law or in equity, may apply to any court of law or
equity of competent jurisdiction (without posting any bond or deposit) for
specific performance and/or other injunctive relief in order to enforce or
prevent any breach of the provisions of this Agreement.
7.14 Performance. Each of the parties hereto shall use all commercially
reasonable efforts to cause to be performed all actions, agreements and
obligations set forth herein to be performed by any Affiliate of such party.
7.15 References; Construction. The table of contents and the section
and other headings and subheadings contained in this Agreement and the exhibits
hereto are solely for the purpose of reference, are not part of the agreement of
the parties hereto, and shall not in any way affect the meaning or
interpretation of this Agreement or any exhibit hereto. All references to days
or months shall be deemed references to calendar days or months. All references
to "$" shall be deemed references to United States dollars. Unless the context
otherwise requires, any reference to a "Section" or an "Exhibit" shall be deemed
to refer to a section of this Agreement or an exhibit to this Agreement, as
applicable. The words "hereof," "herein" and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this
36
Agreement, unless otherwise specifically provided, they shall be deemed to be
followed by the words "without limitation." This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing the document to be drafted.
* * * * * *
37
IN WITNESS WHEREOF, the parties hereto have caused this Initial
Public Offering and Distribution Agreement to be duly executed and delivered as
of the date and year first written above.
GREAT LAKES CHEMICAL CORPORATION
By:
-------------------------------
Name:
Its:
OSCA, INC.
By:
-------------------------------
Name:
Its:
38
