EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
Dated as of March 8, 2005
among
CROMPTON CORPORATION,
COPERNICUS MERGER CORPORATION
and
GREAT LAKES CHEMICAL CORPORATION
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TABLE OF CONTENTS
PAGE
ARTICLE I The Merger........................................................................2
Section 1.1. The Merger...................................................................2
Section 1.2. Closing......................................................................2
Section 1.3. Effective Time...............................................................2
Section 1.4. Effects of the Merger........................................................3
Section 1.5. Certificate of Incorporation and By-laws of the Surviving Corporation........3
Section 1.6. Directors of the Surviving Corporation.......................................3
ARTICLE II Effect of the Merger on the Capital Stock of the Constituent
Corporations; Exchange of Certificates; Great Lakes Stock Options,
Great Lakes Restricted Share Units and Great Lakes Restricted Shares..............3
Section 2.1. Effect on Capital Stock......................................................3
Section 2.2. Exchange of Certificates.....................................................4
Section 2.3. Great Lakes Stock Options, Great Lakes Restricted Share Units
and Great Lakes Restricted Shares........................................... 8
Section 2.4. Adjustments.................................................................10
ARTICLE III Representations and Warranties of Great Lakes....................................11
Section 3.1. Organization; Standing; Corporate Power; Subsidiaries.......................11
Section 3.2. Capitalization..............................................................12
Section 3.3. Authority; Noncontravention; Voting Requirements............................13
Section 3.4. Governmental Approvals......................................................14
Section 3.5. Great Lakes SEC Documents; Undisclosed Liabilities;
Off-Balance Sheet Contracts.................................................15
Section 3.6. Absence of Certain Changes or Events........................................16
Section 3.7. Legal Proceedings...........................................................16
Section 3.8. Compliance With Laws; Permits...............................................16
Section 3.9. Information Supplied........................................................18
Section 3.10. Tax Matters.................................................................18
Section 3.11. Employee Benefits and Labor Matters.........................................20
Section 3.12. Environmental Matters.......................................................22
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 3.13. Contracts...................................................................24
Section 3.14. Title to Properties.........................................................24
Section 3.15. Intellectual Property.......................................................24
Section 3.16. Opinion of Financial Advisor................................................25
Section 3.17. Brokers and Other Advisors..................................................25
Section 3.18. State Takeover Statutes.....................................................26
ARTICLE IV Representations and Warranties of Crompton and Merger Sub........................26
Section 4.1. Organization; Standing; Corporate Power; Subsidiaries.......................26
Section 4.2. Capitalization..............................................................27
Section 4.3. Authority; Noncontravention; Voting Requirements............................28
Section 4.4. Governmental Approvals......................................................30
Section 4.5. Crompton SEC Documents; Undisclosed Liabilities;
Off-Balance Sheet Contracts.................................................30
Section 4.6. Absence of Certain Changes or Events........................................31
Section 4.7. Legal Proceedings...........................................................32
Section 4.8. Compliance With Laws; Permits...............................................32
Section 4.9. Information Supplied........................................................33
Section 4.10. Tax Matters.................................................................34
Section 4.11. Employee Benefits and Labor Matters.........................................35
Section 4.12. Environmental Matters.......................................................37
Section 4.13. Contracts...................................................................37
Section 4.14. Title to Properties.........................................................38
Section 4.15. Intellectual Property.......................................................38
Section 4.16. Opinion of Financial Advisor................................................39
Section 4.17. Brokers and Other Advisors..................................................39
Section 4.18. State Takeover Statutes; Crompton Charter Documents.........................39
Section 4.19. Operations of Merger Sub....................................................39
Section 4.20. Draft Form 10-K.............................................................40
Section 4.21. No Restatement..............................................................40
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE V Covenants Relating to the Conduct of Business; Non-Solicitation..................40
Section 5.1. Conduct of Business.........................................................40
Section 5.2. No Solicitation by Great Lakes; Etc.........................................47
Section 5.3. No Solicitation by Crompton; Etc............................................50
ARTICLE VI Additional Agreements............................................................52
Section 6.1. Preparation of the Form S-4 and the Joint Proxy Statement;
Stockholder Meetings........................................................52
Section 6.2. Access to Information; Confidentiality......................................54
Section 6.3. Reasonable Best Efforts.....................................................54
Section 6.4. Indemnification; Directors' and Officers' Insurance.........................57
Section 6.5. Fees and Expenses...........................................................58
Section 6.6. Public Announcements........................................................59
Section 6.7. Affiliates..................................................................59
Section 6.8. Stock Exchange Listing......................................................59
Section 6.9. Stockholder Litigation......................................................59
Section 6.10. Tax Treatment...............................................................59
Section 6.11. Employee Matters............................................................60
Section 6.12. Rule 16b-3..................................................................61
Section 6.13. Governance..................................................................61
Section 6.14. Crompton 2004 Indentures....................................................62
Section 6.15. Dividend Coordination.......................................................63
Section 6.16. Filing of Annual Report on Form 10-K........................................63
Section 6.17. Credit Agreement............................................................63
ARTICLE VII Conditions Precedent.............................................................63
Section 7.1. Conditions to Each Party's Obligation to Effect the Merger..................63
Section 7.2. Conditions to Obligations of Crompton and Merger Sub........................64
Section 7.3. Conditions to Obligation of Great Lakes.....................................65
Section 7.4. Limitations on Certain Conditions to Obligations of Great Lakes.............67
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE VIII Termination; Amendment...........................................................67
Section 8.1. Termination.................................................................67
Section 8.2. Termination Fee.............................................................69
Section 8.3. Effect of Termination.......................................................70
Section 8.4. Amendment...................................................................70
Section 8.5. Extension; Waiver...........................................................71
Section 8.6. Procedure for Termination or Amendment......................................71
Section 8.7. Lender Consent Under the Crompton Credit Agreement..........................71
ARTICLE IX Miscellaneous....................................................................71
Section 9.1. Nonsurvival of Representations and Warranties...............................71
Section 9.2. Assignment..................................................................71
Section 9.3. Entire Agreement; No Third-Party Beneficiaries..............................72
Section 9.4. Governing Law...............................................................72
Section 9.5. Specific Enforcement; Consent to Jurisdiction; Waiver of Jury Trial.........72
Section 9.6. Notices.....................................................................72
Section 9.7. Disclosure Schedules........................................................74
Section 9.8. Definitions.................................................................74
Section 9.9. Interpretation..............................................................77
Section 9.10. Severability................................................................77
Section 9.11. Counterparts................................................................77
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of March 8, 2005 (this
"Agreement"), is among CROMPTON CORPORATION, a Delaware corporation
("Crompton"), COPERNICUS MERGER CORPORATION, a Delaware corporation and a
direct, wholly owned Subsidiary of Crompton ("Merger Sub"), and GREAT LAKES
CHEMICAL CORPORATION, a Delaware corporation ("Great Lakes"). Certain terms used
in this Agreement are defined in Section 9.8.
WHEREAS, the respective Boards of Directors of Crompton, Merger Sub
and Great Lakes have approved and declared advisable this Agreement and the
merger of Merger Sub with and into Great Lakes (the "Merger"), on the terms and
subject to the conditions provided for in this Agreement, in order to advance
the long-term strategic business interests of Crompton and Great Lakes; and
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code"), and that this Agreement constitutes a plan
of reorganization.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, Crompton, Merger Sub and Great Lakes hereby agree as
follows:
ARTICLE I
The Merger
SECTION 1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), at the Effective Time, Merger Sub shall
be merged with and into Great Lakes, and the separate corporate existence of
Merger Sub shall thereupon cease, and Great Lakes shall be the surviving
corporation in the Merger (the "Surviving Corporation").
SECTION 1.2. Closing. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m. (New York City time) on a date to be specified by the
parties (the "Closing Date"), which date shall be no later than the second
Business Day after satisfaction or waiver of the conditions set forth in Article
VII (other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions at such
time), at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, unless another time, date or place is agreed to in writing by
the parties hereto.
SECTION 1.3. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file
with the Secretary of State of the State of Delaware a certificate of merger,
executed in accordance with the relevant provisions of the DGCL (the
"Certificate of Merger"). The Merger shall become effective upon the filing of
the Certificate of Merger or at such later time as is agreed to by the parties
hereto and specified in the Certificate of Merger (the time at which the Merger
becomes effective is herein referred to as the "Effective Time").
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SECTION 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of Great Lakes and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Great Lakes and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5. Certificate of Incorporation and By-laws of the
Surviving Corporation.
(a) The Restated Certificate of Incorporation of Great Lakes, as in
effect immediately prior to the Effective Time, shall be amended in the Merger
to be in the form of Exhibit A and, as so amended, such certificate of
incorporation shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided therein or by applicable Law.
(b) The by-laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter amended as provided therein or by applicable Law.
SECTION 1.6. Directors of the Surviving Corporation. Each of the
parties hereto shall take all necessary action to cause the directors of Merger
Sub immediately prior to the Effective Time to be the directors of the Surviving
Corporation immediately following the Effective Time, until their respective
successors are duly elected or appointed and qualified or their earlier death,
resignation or removal in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation.
ARTICLE II
Effect of the Merger on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates; Great Lakes Stock Options,
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Great Lakes Restricted Share Units and Great Lakes Restricted Shares
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SECTION 2.1. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of common stock, par value $1.00 per share, of Great Lakes ("Great Lakes
Common Stock") or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and outstanding share of
capital stock of Merger Sub shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
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(b) Cancellation of Treasury Stock and Crompton-Owned Stock. Any
shares of Great Lakes Common Stock that are owned by Great Lakes as treasury
stock, and any shares of Great Lakes Common Stock owned by Crompton or Merger
Sub, shall be automatically canceled and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Great Lakes Common Stock. Subject to Section
2.2(e), each issued and outstanding share of Great Lakes Common Stock (other
than shares to be canceled in accordance with Section 2.1(b)) shall be converted
into the right to receive 2.2232 (the "Exchange Ratio") validly issued, fully
paid and nonassessable shares of common stock, par value $0.01 per share, of
Crompton ("Crompton Common Stock") (the "Merger Consideration"). As of the
Effective Time, all such shares of Great Lakes Common Stock shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each holder of a certificate which immediately prior to the Effective Time
represented any such shares of Great Lakes Common Stock (each, a "Certificate")
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration, any dividends or other distributions to which such
holder is entitled pursuant to Section 2.2(c) and any net cash proceeds from the
sale of the Excess Shares to which such holder is entitled pursuant to Section
2.2(e), in each case to be issued or paid in consideration therefor upon
surrender of such Certificate in accordance with Section 2.2(b), without
interest.
SECTION 2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Crompton shall deposit
with the bank or trust company to be designated by Crompton and reasonably
acceptable to Great Lakes (the "Exchange Agent"), for exchange in accordance
with this Article II, through the Exchange Agent, certificates representing the
shares of Crompton Common Stock issuable pursuant to Section 2.1 in exchange for
outstanding shares of Great Lakes Common Stock (such shares of Crompton Common
Stock, together with any dividends or other distributions with respect thereto
with a record date after the Effective Time, being hereinafter referred to as
the "Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Crompton shall cause the Exchange Agent to mail to each holder
of record of a Certificate whose shares of Great Lakes Common Stock were
converted pursuant to Section 2.1(c) into the right to receive the Merger
Consideration, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent, and which shall be
in such form as Crompton and Great Lakes may reasonably agree to use and shall
have such other provisions as Crompton and Great Lakes may reasonably agree to
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing the Merger Consideration,
any dividends or other distributions to which holders of Certificates are
entitled pursuant to Section 2.2(c) and any net cash proceeds from the sale of
the Excess Shares to which such holders are entitled pursuant to Section 2.2(e).
Upon surrender of a Certificate for cancellation to the Exchange Agent, together
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with such letter of transmittal, duly completed and validly executed in
accordance with the instructions (and such other customary documents as may
reasonably be required by the Exchange Agent), the holder of such Certificate
shall be entitled to receive in exchange therefor (A) a certificate representing
that number of whole shares of Crompton Common Stock that such holder has the
right to receive pursuant to the provisions of this Article II after taking into
account all the shares of Great Lakes Common Stock then held by such holder
under all such Certificates so surrendered, (B) any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(c) and
(C) any net cash proceeds from the sale of the Excess Shares to which such
holder is entitled pursuant to Section 2.2(e), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of shares of Great Lakes Common Stock that is not registered in the transfer
records of Great Lakes, a certificate representing the proper number of shares
of Crompton Common Stock may be issued to a Person other than the Person in
whose name the Certificate so surrendered is registered, if, upon presentation
to the Exchange Agent, such Certificate shall be properly endorsed or shall
otherwise be in proper form for transfer and the Person requesting such issuance
shall have paid, or pay, any transfer and other taxes required by reason of the
issuance of shares of Crompton Common Stock to a Person other than the
registered holder of such Certificate or shall have established to the
reasonable satisfaction of Crompton and the Exchange Agent that such tax either
has been paid or is not applicable. Until surrendered as contemplated by this
Section 2.2(b), each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive the Merger Consideration, any
dividends or other distributions to which the holder of such Certificate is
entitled pursuant to Section 2.2(c) and any net cash proceeds from the sale of
the Excess Shares to which such holder is entitled pursuant to Section 2.2(e),
in each case without interest.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Crompton Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Crompton Common Stock that the holder
thereof has the right to receive upon the surrender thereof, and no cash payment
in lieu of any fractional shares of Crompton Common Stock shall be paid to any
such holder pursuant to Section 2.2(e), in each case until the holder of such
Certificate shall surrender such Certificate in accordance with this Article II.
Following surrender of any Certificate in accordance with this Article II, there
shall be paid to the record holder thereof, without interest, (i) at the time of
such surrender, the amount of any net cash proceeds from the sale of the Excess
Shares to which such holder is entitled pursuant to Section 2.2(e) and the
amount of dividends or other distributions, payable with respect to that number
of whole shares of Crompton Common Stock issuable in exchange for such
Certificate pursuant to this Article II, with a record date after the Effective
Time and paid with respect to Crompton Common Stock prior to such surrender, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such whole shares of Crompton Common Stock.
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(d) Transfer Books; No Further Ownership Rights in Great Lakes Stock.
All shares of Crompton Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II (including any
dividends or other distributions paid pursuant to Section 2.2(c) and any net
cash proceeds from the sale of the Excess Shares paid pursuant to Section
2.2(e)) shall be deemed to have been issued (and paid) in full satisfaction of
all rights pertaining to the shares of Great Lakes Common Stock previously
represented by such Certificates, and at the close of business on the day on
which the Effective Time occurs, the stock transfer books of Great Lakes shall
be closed and thereafter there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of Great
Lakes Common Stock that were outstanding immediately prior to the Effective
Time. Subject to the last sentence of Section 2.2(g), if, at any time after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Exchange Agent for any reason, they shall be canceled and exchanged as provided
in this Article II.
(e) No Fractional Shares. No certificates or scrip representing
fractional shares of Crompton Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividends or other distributions of Crompton
shall relate to such fractional share interests and such fractional share
interests will not entitle the owner thereof to vote or to any other rights of a
stockholder of Crompton. In lieu of such fractional share interests, each holder
of a Certificate shall receive (upon surrender thereof as provided in this
Article II) an amount in cash (without interest) equal to such holder's
proportionate interest in the net proceeds from the sale or sales by the
Exchange Agent in accordance with the provisions of this Section 2.2(e), on
behalf of all such holders, of the Excess Shares. As soon as reasonably
practicable following the Effective Time, the Exchange Agent shall determine the
excess of (A) the aggregate number of shares of Crompton Common Stock into which
the shares of Great Lakes Common Stock were converted pursuant to Section 2.1(c)
before giving effect to the first sentence of this Section 2.2(e) over (B) the
aggregate number of whole shares of Crompton Common Stock to which the former
holders of shares of Great Lakes Common Stock are entitled pursuant to Section
2.1(c) after giving effect to the first sentence of this Section 2.2(e) (such
excess, the "Excess Shares"). As soon as reasonably practicable after the
Effective Time, the Exchange Agent, as agent for the holders of the
Certificates, shall sell the Excess Shares at the then-prevailing prices on the
New York Stock Exchange. The sale of the Excess Shares on the New York Stock
Exchange shall be executed through one or more member firms of the New York
Stock Exchange and shall be executed in round lots to the extent practicable.
The Exchange Agent shall deduct from the proceeds of sale of the Excess Shares
all commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred in
connection with such sale of the Excess Shares. Until the net proceeds of such
sale of the Excess Shares have been distributed to the holders of Certificates,
the Exchange Agent will hold such net proceeds in trust for such holders of
Certificates (the "Excess Shares Trust"). The portion of the Excess Shares Trust
to which each holder of a Certificate shall be entitled, if any, shall be
determined by multiplying the amount of the aggregate net proceeds comprising
the Excess Shares Trust by a fraction, the numerator of which is the amount of
the fractional share interest in Crompton Common Stock to which such holder of a
Certificate is entitled and the denominator of which is the aggregate amount of
fractional share interests in Crompton Common Stock to which all holders of
Certificates are entitled. Crompton shall comply with the provisions of Rule
236(c) under the Securities Act in connection with such sale of the Excess
Shares.
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(f) Lost, Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Crompton, the posting by such Person of a bond, in such
reasonable amount as Crompton may direct, as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent will
issue, in exchange for such lost, stolen or destroyed Certificate, the Merger
Consideration, any dividends or other distributions to which the holder of such
Certificate would be entitled pursuant to Section 2.2(c) and any net cash
proceeds from the sale of the Excess Shares to which such holder would be
entitled pursuant to Section 2.2(e), in each case pursuant to this Agreement.
(g) Termination of the Exchange Fund and the Excess Shares Trust. Any
portion of the Exchange Fund or the Excess Shares Trust that remains
undistributed to the holders of the Certificates for one year after the
Effective Time shall be delivered to Crompton, upon demand, and any holders of
Certificates who have not theretofore complied with this Article II shall
thereafter look only to Crompton for payment of their claim for the Merger
Consideration, any dividends or other distributions with respect to shares of
Crompton Common Stock and any net cash proceeds from the sale of the Excess
Shares in accordance with this Article II. If any Certificate shall not have
been surrendered immediately prior to such date on which any Merger
Consideration (and all dividends or other distributions payable pursuant to
Section 2.2(c) and all net cash proceeds from the sale of the Excess Shares
payable pursuant to Section 2.2(e)) would otherwise escheat to or become
property of any Governmental Authority, any such Merger Consideration (and all
dividends or other distributions payable pursuant to Section 2.2(c) and all net
cash proceeds from the sale of the Excess Shares payable pursuant to Section
2.2(e)) shall become, to the extent permitted by applicable Law, the property of
Crompton, free and clear of all claims or interest of any Person previously
entitled thereto.
(h) No Liability. Notwithstanding any provision of this Agreement to
the contrary, none of the parties hereto, the Surviving Corporation or the
Exchange Agent shall be liable to any Person in respect of any shares of
Crompton Common Stock (or dividends or other distributions with respect thereto)
or cash from the Exchange Fund or the Excess Shares Trust, in each case
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
(i) Investment of the Exchange Fund and the Excess Shares Trust. The
Exchange Agent shall invest any cash included in the Exchange Fund or the Excess
Shares Trust, as directed by Crompton. Any interest and other income resulting
from such investments shall be the property of, and shall be paid to, Crompton.
(j) Withholding Taxes. Crompton and the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable to a
holder of shares of Great Lakes Common Stock, Great Lakes Stock Options, Great
Lakes Restricted Share Units or Great Lakes Restricted Shares pursuant to this
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Agreement such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Code, or under any provision of
state, local or foreign tax Law. To the extent amounts are so withheld and paid
over to the appropriate taxing authority, Crompton and the Exchange Agent shall
be treated as though they withheld from the type of consideration from which
withholding is required, an appropriate amount otherwise payable pursuant to
this Agreement to any holder of shares of Great Lakes Common Stock, Great Lakes
Stock Options, Great Lakes Restricted Share Units or Great Lakes Restricted
Shares in order to provide for such withholding obligation and such withheld
amounts shall be treated for the purposes of this Agreement as having been paid
to the former holder of the shares of Great Lakes Common Stock, Great Lakes
Stock Options, Great Lakes Restricted Share Units or Great Lakes Restricted
Shares. If withholding is required from shares of Crompton Common Stock,
Crompton and the Exchange Agent shall be treated as having sold such
consideration for an amount of cash equal to the fair market value of such
consideration at the time of such deemed sale and paid such cash proceeds to the
appropriate taxing authority.
SECTION 2.3. Great Lakes Stock Options, Great Lakes Restricted Share
Units and Great Lakes Restricted Shares.
(a) Great Lakes Stock Options. Before the Closing, the Board of
Directors of Great Lakes (or, if appropriate, any committee of the Board of
Directors of Great Lakes administering the Great Lakes Stock Plans) shall adopt
such resolutions or take such other actions as may be required to effect the
following:
(i) adjust the terms of all outstanding options to acquire shares
of Great Lakes Common Stock (each, a "Great Lakes Stock Option")
granted under Great Lakes' 2002 Stock Option and Incentive Plan, 1998
Stock Compensation Plan, as amended, 1993 Employee Stock Compensation
Plan, as amended, and 1984 Employee Stock Option Plan, as amended
(collectively, the "Great Lakes Stock Plans"), whether vested or
unvested, as necessary to provide that, at the Effective Time, each
Great Lakes Stock Option outstanding immediately prior to the
Effective Time shall be amended and converted into an option to
acquire, on the same terms and conditions as were applicable under the
corresponding Great Lakes Stock Option (taking into account the terms
of the Great Lakes Stock Plans, the individual award agreement
pursuant to which the Great Lakes Stock Option was granted and any
individual agreement providing for vesting of such Great Lakes Stock
Option upon a change in control of Great Lakes), that number of shares
of Crompton Common Stock (rounded down to the nearest whole share)
determined by multiplying the number of shares of Great Lakes Common
Stock subject to such Great Lakes Stock Option by the Exchange Ratio,
at a price per share of Crompton Common Stock equal to (A) the
exercise price per share of Great Lakes Common Stock otherwise
purchasable pursuant to such Great Lakes Stock Option divided by (B)
the Exchange Ratio (each Great Lakes Stock Option, as so adjusted, an
"Adjusted Great Lakes Stock Option"), provided that the exercise price
of the Adjusted Great Lakes Stock Option shall be rounded up to the
nearest whole cent; and
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(ii) make such other changes to the Great Lakes Stock Plans as
Crompton and Great Lakes may agree are appropriate to give effect to
the Merger.
(b) Great Lakes Restricted Share Units. Before the Closing, the Board
of Directors of Great Lakes (or, if appropriate, any committee of the Board of
Directors of Great Lakes administering the Great Lakes Stock Plans) shall adopt
such resolutions or take such other actions as may be required to adjust the
terms of all outstanding restricted share units granted under the Great Lakes
Stock Plans (each, a "Great Lakes Restricted Share Unit"), whether vested or
unvested, as necessary to provide that, at the Effective Time, each Great Lakes
Restricted Share Unit outstanding immediately prior to the Effective Time shall
be amended and converted into a restricted share unit to receive, on the same
terms and conditions as were applicable under the Great Lakes Restricted Share
Unit (taking into account the terms of the Great Lakes Stock Plans, the
individual award agreement pursuant to which the Great Lakes Restricted Share
Unit was granted and any individual agreement providing for the vesting of such
Great Lakes Restricted Share Unit upon a change in control of Great Lakes), that
number of shares of Crompton Common Stock (rounded down to the nearest whole
share) determined by multiplying the number of shares of Great Lakes Common
Stock subject to such corresponding Great Lakes Restricted Share Unit by the
Exchange Ratio (each Great Lakes Restricted Share Unit, as so adjusted, an
"Adjusted Great Lakes Restricted Share Unit").
(c) Great Lakes Restricted Shares. At the Effective Time, each share
of Great Lakes Common Stock (other than any shares to be cancelled in accordance
with Section 2.1(b)) which is subject to restrictions or forfeiture risks
("Great Lakes Restricted Shares") shall be converted to that number of shares of
Crompton Common Stock ("Adjusted Great Lakes Restricted Shares") as the holder
of such Great Lakes Restricted Share would have been entitled to receive
pursuant to the Merger had the Great Lakes Restricted Share not been subject to
restrictions or forfeiture risks immediately prior to the Effective Time, which
Adjusted Great Lakes Restricted Share shall be subject to the same restrictions
and forfeiture risks as applied to the corresponding Great Lakes Restricted
Share.
(d) The adjustments provided herein with respect to any Great Lakes
Stock Options that are "incentive stock options" as defined in Section 422 of
the Code shall be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code and the adjustments provided herein
with respect to any Great Lakes Stock Options, Great Lakes Restricted Share
Units and Great Lakes Restricted Shares shall be made in accordance with the
requirements of Section 409A of the Code (or a good faith interpretation thereof
in the absence of definitive guidance thereunder).
(e) At the Effective Time, by virtue of the Merger and without the
need of any further corporate action, Crompton shall assume the Great Lakes
Stock Plans, with the result that all obligations of Great Lakes under the Great
Lakes Stock Plans, including with respect to Great Lakes Stock Options, Great
Lakes Restricted Share Units and Great Lakes Restricted Shares outstanding at
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the Effective Time (adjusted pursuant to Sections 2.3(a), (b) and (c)), shall be
obligations of Crompton following the Effective Time. As of and after the
Effective Time, the Board of Directors of Crompton, or any committee thereof
responsible for the administration of stock plans, shall take such action,
including approving the issuance of shares of Crompton Common Stock, as may be
necessary to give effect to the provisions of Sections 2.3(a), (b) and (c).
(f) On, or as soon as practicable (but in any event not more than
three Business Days) after, the Closing Date, Crompton shall prepare and file
with the Securities and Exchange Commission (the "SEC") a registration statement
on Form S-8 (or another appropriate form) registering a number of shares of
Crompton Common Stock equal to the number of shares of Crompton Common Stock
subject to the Adjusted Great Lakes Stock Options and the Adjusted Great Lakes
Restricted Share Units. Such registration statement shall be kept effective (and
the current status of the prospectus or prospectuses required thereby shall be
maintained) at least for so long as any Adjusted Great Lakes Stock Options,
Adjusted Great Lakes Restricted Share Units or any unsettled awards granted
under the Great Lakes Stock Plans after the Effective Time may remain
outstanding.
(g) As soon as practicable after the Effective Time, Crompton shall
deliver to the holders of Adjusted Great Lakes Stock Options, Adjusted Great
Lakes Restricted Share Units and Adjusted Great Lakes Restricted Shares
appropriate notices setting forth such holders' rights pursuant to the
respective Great Lakes Stock Plans and the agreements evidencing the grants of
such Adjusted Great Lakes Stock Options, Adjusted Great Lakes Restricted Share
Units and Adjusted Great Lakes Restricted Shares and informing such holders that
such Adjusted Great Lakes Stock Options, Adjusted Great Lakes Restricted Share
Units and Adjusted Great Lakes Restricted Shares have been assumed by Crompton
and shall continue in effect from and after the Effective Time in accordance
with their terms (subject to the adjustments required by this Section 2.3 after
giving effect to the Merger).
(h) Except as otherwise contemplated by this Section 2.3 and except
to the extent required under the respective terms of the respective Great Lakes
Stock Options, Great Lakes Restricted Share Units and Great Lakes Restricted
Shares (including any individual agreement providing for vesting of the
applicable award upon a change in control of Great Lakes) all restrictions or
limitations on transfer and vesting with respect to Great Lakes Stock Options,
Great Lakes Restricted Share Units and Great Lakes Restricted Shares awarded
under the Great Lakes Stock Plans or any other plan, program or arrangement of
Great Lakes or any of its Subsidiaries, to the extent that such restrictions or
limitations shall not have already lapsed, shall remain in full force and effect
with respect to such options, restricted share units or restricted shares after
giving effect to the Merger and the assumption by Crompton as set forth above.
SECTION 2.4. Adjustments. Notwithstanding any provision of this
Article II to the contrary (but without in any way limiting the covenants in
Section 5.1(a) or 5.1(b)), if between the date of this Agreement and the
Effective Time the outstanding shares of Great Lakes Common Stock or Crompton
10
Common Stock shall have been changed (or a provision for such change shall have
been irrevocably made) into a different number of shares or a different class by
reason of the occurrence or record date of any stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares or
similar transaction, the Exchange Ratio and other portions of this Agreement
that would be affected by the number of such shares outstanding (including
Section 2.3 and the limitations on dividends in Section 5.1) shall be
appropriately adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares or
similar transaction.
ARTICLE III
Representations and Warranties of Great Lakes
---------------------------------------------
Except as set forth in the Filed Great Lakes SEC Documents or in the
disclosure schedule delivered by Great Lakes to Crompton simultaneously with the
execution of this Agreement (the "Great Lakes Disclosure Schedule") and subject
to Section 9.7(a), Great Lakes represents and warrants to Crompton and Merger
Sub as follows:
SECTION 3.1. Organization; Standing; Corporate Power; Subsidiaries.
(a) Each of Great Lakes and its Subsidiaries is a corporation or a
limited liability company duly organized, validly existing and, where
applicable, in good standing under the Laws of the jurisdiction in which it is
incorporated or organized and has all requisite corporate or limited liability
company power and authority necessary to own or lease all of its properties and
assets and to carry on its business as it is now being conducted. Each of Great
Lakes and its Subsidiaries is duly licensed or qualified to do business and,
where applicable, is in good standing in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or in good
standing, individually or in the aggregate, has not had and would not reasonably
be expected to have a Great Lakes Material Adverse Effect. For purposes of this
Agreement, "Great Lakes Material Adverse Effect" shall mean (i) any change,
event, occurrence or state of facts that is materially adverse to the business,
assets and liabilities (contingent or otherwise), taken together, or financial
condition of Great Lakes and its Subsidiaries, taken as a whole, other than to
the extent based upon, resulting from or relating to any one or more of the
following: (A) any change in the United States economy or securities or
financial markets in general, (B) any change that generally affects the chemical
industry which does not affect Great Lakes and its Subsidiaries to a materially
greater extent than such change affects other Persons in the chemical industry,
(C) any change in applicable Laws or in GAAP, (D) the negotiation, execution or
public announcement of this Agreement, compliance with the terms of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby, including any impact thereof on relationships, contractual
or otherwise, with customers, suppliers, distributors, partners or employees, or
(E) any act of terrorism or war (whether or not threatened, pending or declared)
11
or (ii) any change, event, occurrence or state of facts that would prevent or
materially delay or materially impair the ability of Great Lakes to consummate
the transactions contemplated hereby. Notwithstanding the foregoing, in no event
shall a change in the trading prices of Great Lakes Common Stock or the relative
prices of Great Lakes Common Stock and Crompton Common Stock, by themselves, be
considered to constitute a Great Lakes Material Adverse Effect.
(b) All the outstanding shares of capital stock of, or other equity
interests in, each "significant subsidiary" (as defined in Rule 1-02 of
Regulation S-X of the SEC) of Great Lakes (collectively, the "Great Lakes
Significant Subsidiaries") have been duly authorized and validly issued and are
fully paid and nonassessable and are owned directly or indirectly by Great Lakes
free and clear of all liens, pledges, charges, mortgages, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens").
(c) Great Lakes has made available to Crompton true and complete
copies of its Restated Certificate of Incorporation and Amended and Restated
By-Laws (collectively, the "Great Lakes Charter Documents").
SECTION 3.2. Capitalization.
(a) The authorized capital stock of Great Lakes consists of
200,000,000 shares of Great Lakes Common Stock. At the close of business on
March 7, 2005, (i) 56,605,503 shares of Great Lakes Common Stock were issued and
outstanding, (ii) 16,970,125 shares of Great Lakes Common Stock were held by
Great Lakes in its treasury, (iii) 4,750,000 shares of Great Lakes Common Stock
were reserved for issuance under Great Lakes Stock Plans (of which 4,292,256
shares of Great Lakes Common Stock were subject to outstanding Great Lakes Stock
Options granted under the Great Lakes Stock Plans) and (iv) no shares of Great
Lakes Common Stock were owned by any Subsidiary of Great Lakes. All outstanding
shares of Great Lakes Common Stock are, and all shares which may be issued will
be, duly authorized and validly issued and are fully paid, nonassessable and not
subject to preemptive rights. Great Lakes has made available to Crompton a true
and complete list of all Great Lakes Stock Options, Great Lakes Restricted Share
Units, Great Lakes Restricted Shares or other rights to purchase or receive
shares of Great Lakes Common Stock granted under the Great Lakes Stock Plans or
otherwise by Great Lakes or any of its Subsidiaries outstanding as of March 8,
2005, the number of shares of Great Lakes Common Stock subject thereto,
expiration dates and exercise prices thereof and the names of the holders
thereof. Except as set forth above in this Section 3.2(a), at the close of
business on March 8, 2005, no shares of capital stock or other voting securities
of Great Lakes were issued, reserved for issuance or outstanding. Except as set
forth above in this Section 3.2(a), there are no outstanding stock appreciation
rights, rights to receive shares of Great Lakes Common Stock on a deferred basis
or other rights that are linked to the value of Great Lakes Common Stock granted
under the Great Lakes Stock Plans or otherwise by Great Lakes or any of its
Subsidiaries.
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(b) There are no bonds, debentures, notes or other indebtedness of
Great Lakes having the right to vote (or convertible into, or exchangeable or
exercisable for, securities having the right to vote) on any matters on which
stockholders of Great Lakes may vote. Except as set forth above in Section
3.2(a) and except as permitted under Section 5.1(a), (i) there are not issued,
reserved for issuance or outstanding (A) any securities of Great Lakes or any of
the Great Lakes Significant Subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of Great Lakes or
any of the Great Lakes Significant Subsidiaries or (B) any warrants, calls,
options or other rights to acquire from Great Lakes or any of the Great Lakes
Significant Subsidiaries, or any obligation of Great Lakes or any of the Great
Lakes Significant Subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable or exercisable for capital stock or
voting securities of Great Lakes or any of the Great Lakes Significant
Subsidiaries and (ii) there are not any outstanding obligations of Great Lakes
or any of the Great Lakes Significant Subsidiaries to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or cause to
be issued, delivered or sold, any such securities. Neither Great Lakes nor any
of the Great Lakes Significant Subsidiaries is a party to any voting agreement
with respect to the voting of any such securities.
SECTION 3.3. Authority; Noncontravention; Voting Requirements.
(a) Great Lakes has all necessary corporate power and authority to
execute and deliver this Agreement and, subject to obtaining the Great Lakes
Stockholder Approval, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Great Lakes of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of Great Lakes, and no other corporate action on the part of Great
Lakes is necessary to authorize the execution, delivery and performance by Great
Lakes of this Agreement and the consummation by it of the transactions
contemplated hereby, subject to obtaining the Great Lakes Stockholder Approval.
This Agreement has been duly executed and delivered by Great Lakes and, assuming
the due authorization, execution and delivery of this Agreement by the other
parties hereto, constitutes a legal, valid and binding obligation of Great
Lakes, enforceable against Great Lakes in accordance with its terms, except that
such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar Laws of general
application affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity, whether
considered in a proceeding at law or in equity.
(b) As of the date hereof, the Board of Directors of Great Lakes, at
a meeting duly called and held, has unanimously (i) approved and declared
advisable this Agreement, the Merger and the other transactions contemplated
hereby and (ii) resolved to recommend that stockholders of Great Lakes adopt
this Agreement.
(c) The execution and delivery of this Agreement do not, and the
consummation of the Merger and the other transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation or breach of, or default (with or
13
without notice or lapse of time or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
benefit under, or result in the creation of any Lien in or upon any of the
properties or other assets of Great Lakes or any of its Subsidiaries under, (i)
the Great Lakes Charter Documents or the certificates of incorporation and
by-laws (or comparable organizational documents) of the Great Lakes Significant
Subsidiaries (collectively, the "Great Lakes Subsidiary Charter Documents"),
(ii) any loan or credit agreement, bond, debenture, note, mortgage, indenture,
lease, sublease or other contract, agreement, obligation, commitment,
arrangement, understanding, instrument, permit or license, whether oral or
written (each, a "Contract"), to which Great Lakes or any of its Subsidiaries is
a party or any of their respective properties or other assets is subject or
(iii) subject to the governmental filings and other matters referred to in
Section 3.4, any Law applicable to Great Lakes or any of its Subsidiaries or
their respective properties or other assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, breaches, defaults, rights,
losses or Liens that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Great Lakes Material Adverse Effect.
(d) The affirmative vote (in person or by proxy) of the holders of a
majority of the outstanding shares of Great Lakes Common Stock at the Great
Lakes Stockholders Meeting or any adjournment or postponement thereof in favor
of the adoption of this Agreement (the "Great Lakes Stockholder Approval") is
the only vote or approval of the holders of any class or series of capital stock
of Great Lakes or any of its Subsidiaries that is necessary to adopt this
Agreement and consummate the Merger and the other transactions contemplated
hereby.
SECTION 3.4. Governmental Approvals. No consent, approval, order or
authorization of, action by or in respect of, or registration, declaration or
filing with, any Federal, state, local or foreign government, any court,
administrative, regulatory or other governmental agency, commission or authority
or any non-governmental self-regulatory agency, commission or authority (each, a
"Governmental Authority") is required by or with respect to Great Lakes or any
of its Subsidiaries in connection with the execution and delivery of this
Agreement by Great Lakes or the consummation by Great Lakes of the Merger or the
other transactions contemplated by this Agreement, except for (a) (i) the filing
of a premerger notification and report form by Great Lakes and termination or
expiration of all relevant waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing of a
Notification of a Concentration and receipt of clearance from the European
Commission pursuant to Council Regulation No. 139/2004, as amended (the "EC
Merger Regulation"), if required, and (iii) any other applicable filings and
approvals under similar foreign antitrust Laws, (b) the filing with the SEC of
(A) a joint proxy statement relating to the Great Lakes Stockholders Meeting and
the Crompton Stockholders Meeting (as amended or supplemented from time to time,
the "Joint Proxy Statement") and (B) such reports under Section 13(a), 13(d),
15(d) or 16(a) of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (the "Exchange Act"), as may be required
in connection with this Agreement and the transactions contemplated by this
Agreement, (c) the filing of the Certificate of Merger with the Secretary of
14
State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which Great Lakes is qualified to do business,
(d) such filings with and approvals of the New York Stock Exchange or the
Pacific Stock Exchange and (e) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made, individually or in the aggregate, would not reasonably be
expected to have a Great Lakes Material Adverse Effect.
SECTION 3.5. Great Lakes SEC Documents; Undisclosed Liabilities;
Off-Balance Sheet Contracts.
(a) Great Lakes has filed and furnished all required reports,
schedules, forms, statements and other documents with the SEC since December 31,
2002 (collectively and together with all documents filed on a voluntary basis on
Form 8-K, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "Great Lakes SEC Documents").
No Subsidiary of Great Lakes is required to file periodic reports with the SEC
pursuant to the Exchange Act. As of their respective effective dates (in the
case of the Great Lakes SEC Documents that are registration statements filed
pursuant to the requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities Act")) and as of
their respective SEC filing dates (in the case of all other Great Lakes SEC
Documents), the Great Lakes SEC Documents complied in all material respects with
the requirements of the Exchange Act or the Securities Act, as the case may be,
applicable to such Great Lakes SEC Documents, and none of the Great Lakes SEC
Documents as of such respective dates contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated financial statements of Great Lakes included in
the Great Lakes SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited quarterly statements, as indicated in the
notes thereto and reports furnished or filed under Form 8-K) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of Great Lakes and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited quarterly
statements and reports furnished or filed under Form 8-K, to the absence of
footnote disclosure and to normal year-end audit adjustments).
(c) Except (i) as set forth in the audited consolidated financial
statements of Great Lakes as at and for the year ended December 31, 2004, a true
and complete copy of which has been delivered to Crompton by Great Lakes (the
"Great Lakes 2004 Audited Financial Statements"), or (ii) for liabilities
incurred since the date of the Great Lakes 2004 Audited Financial Statements (x)
in the ordinary course of business or (y) pursuant to the terms of Contracts in
15
effect as of the date hereof or Contracts entered into after the date hereof not
in violation of this Agreement, neither Great Lakes nor any of its Subsidiaries
has any liabilities or obligations of any kind or nature (whether known or
unknown, accrued, absolute, contingent or otherwise and whether due or to become
due) that would be required by GAAP to be reflected in or reserved against or
otherwise described in the consolidated balance sheet of Great Lakes (including
the notes thereto) as of December 31, 2004 which, individually or in the
aggregate, have had or would reasonably be expected to have a Great Lakes
Material Adverse Effect.
(d) Neither Great Lakes nor any of its Subsidiaries is a party to, or
has any commitment to become a party to, any joint venture, off-balance sheet
partnership or any similar Contract relating to any transaction or relationship
between or among Great Lakes and any of its Subsidiaries, on the one hand, and
any unconsolidated Affiliate, including any structured finance, special purpose
or limited purpose Person, on the other hand, or any "off-balance sheet
arrangements" (as defined in Item 303(a) of Regulation S-K of the SEC).
SECTION 3.6. Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby or permitted to be incurred pursuant to Section 5.1(a), (a)
since December 31, 2004, there have not been any events, changes, occurrences or
state of facts that, individually or in the aggregate, have had or would
reasonably be expected to have a Great Lakes Material Adverse Effect and (b)
since December 31, 2004 through the date of this Agreement, Great Lakes and its
Subsidiaries have conducted their business in the ordinary course consistent
with past practice and have taken no actions which, if taken after the date of
this Agreement, would have violated Section 5.1(a)(i), (ii), (iii), (iv), (v),
(vii), (viii) or (ix).
SECTION 3.7. Legal Proceedings. There is no suit, action or
proceeding pending or, to the Knowledge of Great Lakes, threatened against Great
Lakes or any of its Subsidiaries that, individually or in the aggregate, has had
or would reasonably be expected to have a Great Lakes Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Authority or arbitrator outstanding against, or, to the Knowledge of Great
Lakes, investigation by any Governmental Authority involving, Great Lakes or any
of its Subsidiaries that, individually or in the aggregate, has had or would
reasonably be expected to have a Great Lakes Material Adverse Effect.
SECTION 3.8. Compliance With Laws; Permits.
(a) Great Lakes and its Subsidiaries are in compliance with all laws
(including common law), statutes, ordinances, codes, rules, regulations, decrees
and orders of Governmental Authorities (collectively, "Laws") applicable to
Great Lakes or any of its Subsidiaries, any of their respective properties or
other assets or any of their respective businesses or operations, except for
instances of noncompliance or possible noncompliance that, individually or in
the aggregate, have not had and would not reasonably be expected to have a Great
Lakes Material Adverse Effect. Since December 31, 2003, neither Great Lakes nor
16
any of its Subsidiaries has received written notice to the effect that a
Governmental Authority claimed or alleged that Great Lakes or any of its
Subsidiaries was not in compliance with all Laws applicable to Great Lakes or
any of its Subsidiaries, any of their respective properties or other assets or
any of their respective businesses or operations, except for instances of
noncompliance or possible noncompliance that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Great Lakes Material
Adverse Effect. Great Lakes and each of its Subsidiaries hold or have in effect
all licenses, franchises, permits, certificates, approvals and authorizations
from Governmental Authorities, or required by Laws, Environmental Laws or
Governmental Authorities to be obtained, in each case necessary for the lawful
conduct of their respective businesses (collectively, "Great Lakes Permits"),
except for such Great Lakes Permits the failure of which to hold or have in
effect, individually or in the aggregate, has not had and would not reasonably
be expected to have a Great Lakes Material Adverse Effect, and there has
occurred no violation of, default (with or without notice or lapse of time or
both) under, or event giving to others any right of termination, amendment or
cancellation of, with or without notice or lapse of time or both, any Great
Lakes Permit, except for violations, defaults or events that, individually or in
the aggregate, have not had and would not reasonably be expected to have a Great
Lakes Material Adverse Effect. The consummation of the Merger, in and of itself,
will not cause the revocation or cancellation of any Great Lakes Permit, except
for such revocations or cancellations that, individually or in the aggregate,
would not reasonably be expected to have a Great Lakes Material Adverse Effect.
(b) Great Lakes and each of its officers and directors are in
compliance with, and have complied, in each case in all material respects with
(i) the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the related
rules and regulations promulgated under such act or the Exchange Act
("Xxxxxxxx-Xxxxx") and (ii) the applicable listing and corporate governance
rules and regulations of the New York Stock Exchange and the Pacific Stock
Exchange. Great Lakes has previously disclosed to Crompton any of the
information required to be disclosed by Great Lakes and certain of its officers
to the Board of Directors of Great Lakes or any committee thereof pursuant to
the certification requirements contained in Form 10-K and Form 10-Q under the
Exchange Act.
(c) Great Lakes has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) or 15d-15(e) under the
Exchange Act); such disclosure controls and procedures are designed to ensure
that material information relating to Great Lakes, including its consolidated
Subsidiaries, is made known to Great Lakes' principal executive officer and its
principal financial officer by others within those entities, particularly during
the periods in which the periodic reports required under the Exchange Act are
being prepared; and such disclosure controls and procedures are effective in
timely alerting Great Lakes' principal executive officer and its principal
financial officer to material information required to be included in Great
Lakes' periodic reports required under the Exchange Act.
17
(d) Great Lakes has disclosed, based on its most recent evaluation
prior to the date hereof, to Great Lakes' auditors and the audit committee of
the Board of Directors of Great Lakes and to Crompton (i) any significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting that existed as of December 31, 2004 or later
which are reasonably likely to adversely affect in any material respect Great
Lakes' ability to record, process, summarize and report financial information
for its financial statements and (ii) any fraud, whether or not material, that
involves management or other employees who have a significant role in Great
Lakes' internal controls over financial reporting.
SECTION 3.9. Information Supplied. None of the information supplied
(or to be supplied) in writing by or on behalf of Great Lakes specifically for
inclusion or incorporation by reference in (a) the registration statement on
Form S-4 to be filed with the SEC by Crompton in connection with the issuance of
shares of Crompton Common Stock in the Merger (as amended or supplemented from
time to time, the "Form S-4") will, at the time the Form S-4, or any amendments
or supplements thereto, are filed with the SEC or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading, or (b) the Joint Proxy
Statement will, on the date it is first mailed to stockholders of Great Lakes
and the stockholders of Crompton, and at the time of Great Lakes Stockholders
Meeting and the Crompton Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, Great Lakes makes no representation or warranty with respect to any
information supplied (or to be supplied) by or on behalf of Crompton or Merger
Sub for inclusion or incorporation by reference in any of the foregoing
documents.
SECTION 3.10. Tax Matters.
(a) Each of Great Lakes and its Subsidiaries has timely filed, or has
caused to be timely filed on its behalf (taking into account any extension of
time within which to file), all material Tax Returns required to be filed by it,
and all such filed Tax Returns are correct and complete in all material
respects. All Taxes shown to be due on such Tax Returns have been timely paid.
(b) No material deficiency with respect to Taxes has been proposed,
asserted or assessed against Great Lakes or any of its Subsidiaries that has not
previously been paid.
(c) The Federal income Tax Returns of Great Lakes and each of its
Subsidiaries have been examined by and settled with the IRS (or the applicable
statute of limitations has expired) for all years through 2000. All assessments
for Taxes due with respect to such completed and settled examinations or any
concluded litigation have been fully paid.
18
(d) Neither Great Lakes nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code within the two
year period ending on the Closing Date.
(e) No audit or other administrative or court proceedings are pending
with any Governmental Authority with respect to income or franchise Taxes of
Great Lakes or any of its Subsidiaries and no written notice thereof has been
received.
(f) Neither Great Lakes nor any of its Subsidiaries is a party to any
contract, agreement, plan or other arrangement that, individually or
collectively, would give rise to the payment of any amount which would not be
deductible by reason of Section 162(m) or Section 280G of the Code or would be
subject to withholding under Section 4999 of the Code.
(g) Great Lakes has made available to Crompton true and complete
copies of (i) all income and franchise Tax Returns of Great Lakes and its
Subsidiaries for the preceding three taxable years and (ii) any audit report
issued within the last three years (or otherwise with respect to any audit or
proceeding in progress) relating to income and franchise Taxes of Great Lakes or
any of its Subsidiaries.
(h) Great Lakes was at no time a "United States real property holding
corporation" within the meaning of Section 897 of the Code during the five-year
period ending on the Closing Date.
(i) Neither Great Lakes nor any of its Affiliates has taken or agreed
to take (or failed to so take or agree to take) any action or knows of any facts
or circumstances that would reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(j) Neither Great Lakes nor any of its Subsidiaries has participated
in, or made a filing under Treasury Regulation Section 1.6011-4 with respect to,
any "listed transaction" within the meaning of Treasury Regulation Section
1.6011-4(b)(2).
(k) For purposes of this Agreement: (x) "Taxes" means (A) all
federal, state, local or foreign taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever imposed by any
Governmental Authority, (B) all interest, penalties, fines, additions to tax or
additional amounts imposed by any Governmental Authority in connection with any
item described in clause (A), and (C) any transferee liability in respect of any
items described in clauses (A) and/or (B) payable by reason of contract,
assumption, transferee liability, operation of Law, Treasury Regulation Section
1.1502-6(a) (or any predecessor or successor thereof of any analogous or similar
19
provision under Law) or otherwise, and (y) "Tax Returns" means any return,
report, claim for refund, estimate, information return or statement or other
similar document relating to or required to be filed with any Governmental
Authority with respect to Taxes, including any schedule or attachment thereto,
and including any amendment thereof.
SECTION 3.11. Employee Benefits and Labor Matters.
(a) Section 3.11(a) of Great Lakes Disclosure Schedule sets forth a
true and complete list of all "employee benefit plans" (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), and all other material employee benefit plans, policies, agreements,
arrangements or payroll practices, including employment, individual consulting
or other compensation agreements, or bonus or other incentive compensation,
stock purchase, equity or equity-based compensation, deferred compensation,
change in control, retention, severance, sick leave, vacation pay, employee
loans, salary continuation, health insurance, life insurance and educational
assistance plan, policies, agreements or arrangements with respect to which
Great Lakes or any of its Subsidiaries has any obligation or liability,
contingent or otherwise, for current or former employees, individual consultants
or directors of Great Lakes or any of its Subsidiaries (collectively, the "Great
Lakes Plans"). Section 3.11(a) of Great Lakes Disclosure Schedule separately
sets forth each Great Lakes Plan which is subject to Title IV of ERISA (a "Title
IV Plan") or is a "multiemployer plan", as defined in Section 4001(a)(3) of
ERISA (a "Multiemployer Plan"), or is or has been subject to Sections 4063 or
4064 of ERISA.
(b) True and complete copies of the following documents with respect
to each of the Great Lakes Plans (other than a Multiemployer Plan) have been
made available to Crompton by Great Lakes to the extent applicable: (i) any
plans and related trust documents, insurance contracts or other funding
arrangements, and all amendments thereto; (ii) the most recent Forms 5500 and
all schedules thereto, (iii) the most recent actuarial report, if any; (iv) the
most recent IRS determination letter; (v) the most recent summary plan
descriptions; and (vi) written summaries of all non-written Great Lakes Plans.
(c) The Great Lakes Plans have been maintained, in form and operation
in all material respects, in accordance with their terms and with all applicable
provisions of ERISA, the Code and other Laws.
(d) The Great Lakes Plans intended to qualify under Section 401 or
other tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A of the
Code are so qualified, and any trusts intended to be exempt from federal income
taxation under the Code are so exempt. Nothing has occurred with respect to the
operation of the Great Lakes Plans that would reasonably be expected to cause
the loss of such qualification or exemption, or the imposition of any material
liability, penalty or tax under ERISA or the Code.
(e) Neither Great Lakes nor any of its Subsidiaries is required to
contribute to, or otherwise has any liability with respect to, a Multiemployer
Plan.
20
(f) All contributions required to have been made under any of the
Great Lakes Plans or by law (without regard to any waivers granted under Section
412 of the Code), have been timely made, and no accumulated funding deficiencies
exist in any of Great Lakes Plans subject to Title IV of ERISA or Section 412 of
the Code.
(g) The "benefit liabilities" as defined in Section 4001(a)(16) of
ERISA of each Title IV Plan using the actuarial assumptions used by the Pension
Benefit Guaranty Corporation ("PBGC") to determine the level of funding required
in the event of the termination of such Title IV Plan do not exceed the assets
of such Title IV Plan.
(h) There are no pending actions, claims or lawsuits arising from or
relating to the Great Lakes Plans, or the assets thereof (in each case, other
than routine benefit claims), nor does Great Lakes have any Knowledge of facts
that would form the basis for any such claim or lawsuit that, individually or in
the aggregate, has had or would reasonably be expected to have a Great Lakes
Material Adverse Effect.
(i) None of the Great Lakes Plans provide for post-employment life
insurance or health coverage for any participant or any beneficiary of a
participant, except as may be required under Part 6 of the Subtitle B of Title I
of ERISA, Section 4980B of the Code or similar provisions of applicable state
Law and at the expense of the participant or the participant's beneficiary.
(j) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any current or former employee of Great Lakes or any of
its Subsidiaries (under any of the Great Lakes Plans or otherwise), (ii)
increase any benefits otherwise payable to any current or former employee of
Great Lakes or any of its Subsidiaries under any of the Great Lakes Plans, (iii)
result in the acceleration of the time of payment of or vesting of any rights
with respect to such benefits under any of the Great Lakes Plans, or (iv)
require any contributions or payments to fund any obligations under any of the
Great Lakes Plans.
(k) To the Knowledge of Great Lakes, any individual who performs
services for Great Lakes or any of its Subsidiaries (other than through a
contract with an organization other than such individual) and who is not treated
as an employee of Great Lakes or any of its Subsidiaries for Federal income tax
purposes by Great Lakes is not an employee for such purposes.
(l) None of the employees of Great Lakes or any of its Subsidiaries
is represented in his or her capacity as an employee of Great Lakes or any of
its Subsidiaries by any labor organization, and neither Great Lakes nor any of
its Subsidiaries has recognized any labor organization, nor has any labor
organization been elected as the collective bargaining agent of any employees of
Great Lakes or any of its Subsidiaries, nor has Great Lakes or any of its
21
Subsidiaries entered into any collective bargaining agreement or union contract
recognizing any labor organization as the bargaining agent of any employees of
Great Lakes or any of its Subsidiaries. There is no union organization activity
involving any of the employees of Great Lakes or any of its Subsidiaries pending
or, to the Knowledge of Great Lakes, threatened that, individually or in the
aggregate, has had or would reasonably be expected to have a Great Lakes
Material Adverse Effect. There is no picketing pending or, to the Knowledge of
Great Lakes, threatened, and there are no strikes, slowdowns, work stoppages,
other job actions, lockouts, arbitrations, grievances or other labor disputes
involving any of the employees of Great Lakes or any of its Subsidiaries pending
or, to the Knowledge of Great Lakes, threatened that, individually or in the
aggregate, have had or would reasonably be expected to have a Great Lakes
Material Adverse Effect. There are no complaints, charges or claims against
Great Lakes or any of its Subsidiaries pending or, to the Knowledge of Great
Lakes, threatened that could be brought by or filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with or
otherwise relating to the employment or termination of employment or failure to
employ by Great Lakes or any of its Subsidiaries, of any individual that,
individually or in the aggregate, have had or would reasonably be expected to
have a Great Lakes Material Adverse Effect. Great Lakes and its Subsidiaries are
in material compliance with all Laws relating to employment, including all such
Laws relating to wages, hours, the Worker Adjustment and Retraining Notification
Act and any similar state or local "mass layoff" or "plant closing" law
(collectively, "WARN"), collective bargaining, discrimination, civil rights,
safety and health, workers' compensation and the collection and payment of
withholding and/or social security taxes and any similar tax. In the six years
preceding the date hereof, there has been no "mass layoff" or "plant closing"
(as defined by WARN) with respect to Great Lakes or any of its Subsidiaries.
SECTION 3.12. Environmental Matters.
(a) Except for those matters that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Great Lakes Material
Adverse Effect, (i) each of Great Lakes and its Subsidiaries is, and has been,
in compliance with all applicable Environmental Laws, (ii) there is no
investigation, suit, claim, action or proceeding relating to Environmental
Liabilities or relating to or arising under Environmental Laws that is pending
or, to the Knowledge of Great Lakes, threatened against or affecting Great Lakes
or any of its Subsidiaries or any real property currently or, to the Knowledge
of Great Lakes, formerly owned, operated or leased by Great Lakes or any of its
Subsidiaries, (iii) neither Great Lakes nor any of its Subsidiaries has received
any notice of or entered into or assumed by Contract, any known obligation,
liability, order, settlement, judgment, injunction or decree relating to
Environmental Liabilities or relating to or arising under Environmental Laws,
(iv) to the knowledge of Great Lakes, no facts, circumstances or conditions
exist with respect to Great Lakes or any of its Subsidiaries that would
reasonably be expected to result in Great Lakes or any of its Subsidiaries
incurring Environmental Liabilities, including facts, circumstances or
conditions relating to any property currently or, to the Knowledge of Great
Lakes, formerly owned, operated or leased by Great Lakes or any of its
Subsidiaries or any property to or at which Great Lakes or any of its
Subsidiaries transported or arranged for the disposal or treatment of Hazardous
Materials and (v) none of the transactions contemplated hereby requires notice
to, or approval of, any Governmental Authority with jurisdiction over
Environmental Laws.
22
(b) For purposes of this Agreement:
(i) "Environmental Laws" shall mean all Laws relating in any way
to the environment, preservation or reclamation of natural resources,
the presence, management or Release of, or exposure to, Hazardous
Materials, or to human health and safety, including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. ss.
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
ss. 5101 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. ss. 6901 et seq.), the Clean Water Act (33 U.S.C. ss. 1251 et
seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Safe
Drinking Water Act (42 U.S.C. ss. 300f et seq.), the Toxic Substances
Control Act (15 U.S.C. ss. 2601 et seq.), and the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et seq.), each of
their state and local counterparts or equivalents, each of their
foreign and international equivalents and any transfer of ownership
notification or approval statute (including the Industrial Site
Recovery Act (N.J. Stat. Xxx. ss. 13:1K-6 et seq.), as each has been
amended and the regulations promulgated pursuant thereto.
(ii) "Environmental Liabilities" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, remedial
actions, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and
costs of investigation and feasibility studies), fines, penalties,
sanctions and interest incurred as a result of any claim or demand by
any other Person or in response to any violation of Environmental Law,
whether known or unknown, accrued or contingent, whether based in
contract, tort, implied or express warranty, strict liability,
criminal or civil statute, to the extent based upon, related to, or
arising under or pursuant to any Environmental Law, environmental
permit, order or agreement with any Governmental Authority or other
Person, which relates to any environmental, health or safety
condition, violation of Environmental Law or a Release or threatened
Release of Hazardous Materials.
(iii) "Hazardous Materials" shall mean any material, substance or
waste that is regulated, classified, or otherwise characterized under
or pursuant to any Environmental Law as "hazardous", "toxic", a
"pollutant", a "contaminant", "radioactive" or words of similar
meaning or effect, including petroleum and its by-products, asbestos,
polychlorinated biphenyls, radon, mold, urea formaldehyde insulation,
chlorofluorocarbons and all other ozone-depleting substances.
(iv) "Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, disposing of or migrating into or through the
environment or any natural or man-made structure.
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SECTION 3.13. Contracts.
(a) Except as has not had and would not reasonably be expected to
have a Great Lakes Material Adverse Effect, neither Great Lakes nor any of its
Subsidiaries is a party to, and none of their respective properties or other
assets is subject to, any Contract that is of a nature required to be filed as
an exhibit to a report or filing under the Securities Act or the Exchange Act,
other than any Contract that is filed as an exhibit to the Filed Great Lakes SEC
Documents.
(b) All "material contracts" (as defined in Item 601(b)(10) of
Regulation S-K under the Exchange Act) of Great Lakes or any of its Subsidiaries
(collectively, the "Great Lakes Material Contracts") are valid and binding and
in full force and effect (except those which are cancelled, rescinded or
terminated after the date hereof in accordance with their terms), except where
the failure to be in full force and effect, individually or in the aggregate,
has not had and would not reasonably be expected to have a Great Lakes Material
Adverse Effect. None of Great Lakes or any of its Subsidiaries nor, to the
Knowledge of Great Lakes, any other party to any of the Great Lakes Material
Contracts is in violation or breach of or default (with or without notice or
lapse of time or both) under, or has waived or failed to enforce any rights or
benefits under, any Great Lakes Material Contract, except, in each case for
violations, breaches, defaults or failures to enforce rights or benefits that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Great Lakes Material Adverse Effect.
SECTION 3.14. Title to Properties.
(a) Each of Great Lakes and its Subsidiaries has good and marketable
title to, or valid leasehold interests in, all its properties and other assets
except for such as are no longer used or useful in the conduct of its business
or as have been disposed of in the ordinary course of business and except for
defects in title, easements, restrictive covenants and similar encumbrances
that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Great Lakes Material Adverse Effect. All such properties and
other assets, other than properties and other assets in which Great Lakes or any
of its Subsidiaries has a leasehold interest, are free and clear of all Liens,
except for Liens that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Great Lakes Material Adverse Effect.
(b) Each of Great Lakes and its Subsidiaries has complied with the
terms of all leases to which it is a party and under which it is in occupancy,
and all such leases are in full force and effect, except for such noncompliance
or failure to be in full force and effect that, individually or in the
aggregate, has not had and would not reasonably be expected to have a Great
Lakes Material Adverse Effect.
SECTION 3.15. Intellectual Property.
(a) Each of Great Lakes and its Subsidiaries owns, or is validly
licensed or otherwise has the right to use all patents, patent applications,
trademarks, trademark rights, trade names, trade name rights, domain names,
service marks, service xxxx rights, copyrights, technical know-how and other
proprietary intellectual property rights whether U.S. or foreign and computer
programs (collectively, "Intellectual Property Rights") which are material to
the conduct of the business of Great Lakes and its Subsidiaries, taken as a
whole.
24
(b) No claims are pending or, to the Knowledge of Great Lakes,
threatened that Great Lakes or any of its Subsidiaries is infringing (including
with respect to the manufacture, use or sale by Great Lakes or any of its
Subsidiaries of their respective commercial products), misappropriating or
otherwise violating the Intellectual Property Rights of any Person which,
individually or in the aggregate, have had or would reasonably be expected to
have a Great Lakes Material Adverse Effect. As of the date of this Agreement, to
the Knowledge of Great Lakes, no Person or Persons are infringing,
misappropriating or otherwise violating the rights of Great Lakes or any of its
Subsidiaries with respect to any Intellectual Property Right in a manner which,
individually or in the aggregate, has had or would reasonably be expected to
have a Great Lakes Material Adverse Effect.
(c) No claims are pending or, to the Knowledge of Great Lakes,
threatened with regard to the ownership by Great Lakes or any of its
Subsidiaries or the validity or enforceability of any of their respective
Intellectual Property Rights which, individually or in the aggregate, have had
or would reasonably be expected to have a Great Lakes Material Adverse Effect.
(d) The consummation of the transactions contemplated hereby will
not: (i) result in the breach, modification, cancellation, termination or
suspension of any agreement for Intellectual Property Rights, which,
individually or in the aggregate, would reasonably be expected to have a Great
Lakes Material Adverse Effect or (ii) result in the loss or impairment of Great
Lakes' ownership of or right to use its Intellectual Property Rights, which,
individually or in the aggregate, would reasonably be expected to have a Great
Lakes Material Adverse Effect.
SECTION 3.16. Opinion of Financial Advisor. The Board of Directors of
Great Lakes has received the opinion of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, dated as of the date of this Agreement, to the effect that, as of
such date, and subject to the various assumptions and qualifications set forth
therein, the Exchange Ratio is fair, from a financial point of view, to the
holders of shares of Great Lakes Common Stock.
SECTION 3.17. Brokers and Other Advisors. No broker, investment
banker, financial advisor or other Person, other xxxx Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated, the fees and expenses of which will be paid by
Great Lakes, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Great Lakes.
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SECTION 3.18. State Takeover Statutes. The Board of Directors of
Great Lakes has approved the terms of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement, and such
approval represents all the action necessary to render inapplicable to this
Agreement, the Merger and the other transactions contemplated by this Agreement,
the provisions of Section 203 of the DGCL ("Section 203") to the extent, if any,
Section 203 would otherwise be applicable to this Agreement, the Merger and the
other transactions contemplated by this Agreement.
ARTICLE IV
Representations and Warranties of Crompton and Merger Sub
---------------------------------------------------------
Except as set forth in the Filed Crompton SEC Documents, the Draft
Form 10-K or in the disclosure schedule delivered by Crompton to Great Lakes
simultaneously with the execution of this Agreement (the "Crompton Disclosure
Schedule") and subject to Section 9.7(b), Crompton and Merger Sub jointly and
severally represent and warrant to Great Lakes as follows:
SECTION 4.1. Organization; Standing; Corporate Power; Subsidiaries.
(a) Each of Crompton and its Subsidiaries is a corporation or a
limited liability company duly organized, validly existing and, where
applicable, in good standing under the Laws of the jurisdiction in which it is
incorporated or organized and has all requisite corporate or limited liability
company power and authority necessary to own or lease all of its properties and
assets and to carry on its business as it is now being conducted. Each of
Crompton and its Subsidiaries is duly licensed or qualified to do business and,
where applicable, is in good standing in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or in good
standing, individually or in the aggregate, has not had and would not reasonably
be expected to have a Crompton Material Adverse Effect. For purposes of this
Agreement, "Crompton Material Adverse Effect" shall mean (i) any change, event,
occurrence or state of facts that is materially adverse to the business, assets
and liabilities (contingent or otherwise), taken together, or financial
condition of Crompton and its Subsidiaries, taken as a whole, other than to the
extent based upon, resulting from or relating to any one or more of the
following: (A) any change in the United States economy or securities or
financial markets in general, (B) any change that generally affects the chemical
industry which does not affect Crompton and its Subsidiaries to a materially
greater extent than such change affects other Persons in the chemical industry,
(C) any change in applicable Laws or in GAAP, (D) the negotiation, execution or
public announcement of this Agreement, compliance with the terms of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby, including any impact thereof on relationships, contractual
or otherwise, with customers, suppliers, distributors, partners or employees, or
(E) any act of terrorism or war (whether or not threatened, pending or declared)
or (ii) any change, event, occurrence or state of facts that would prevent or
26
materially delay or materially impair the ability of Crompton or Merger Sub to
consummate the transactions contemplated hereby. Notwithstanding the foregoing,
in no event shall a change in the trading prices of Crompton Common Stock or the
relative prices of Crompton Common Stock and Great Lakes Common Stock, by
themselves, be considered to constitute a Crompton Material Adverse Effect.
(b) All the outstanding shares of capital stock of, or other equity
interests in, each "significant subsidiary" (as defined in Rule 1-02 of
Regulation S-X of the SEC) of Crompton (collectively, the "Crompton Significant
Subsidiaries") have been duly authorized and validly issued and are fully paid
and nonassessable and are owned directly or indirectly by Crompton free and
clear of all Liens.
(c) Crompton has made available to Great Lakes true and complete
copies of its Amended and Restated Certificate of Incorporation and By-Laws
(collectively, the "Crompton Charter Documents").
SECTION 4.2. Capitalization.
(a) The authorized capital stock of Crompton consists of 500,000,000
shares of Crompton Common Stock and 250,000 shares of preferred stock, par value
$0.10 per share, of Crompton ("Crompton Preferred Stock"). At the close of
business on March 7, 2005, (i) 119,152,254 shares of Crompton Common Stock were
issued and outstanding, (ii) 1,905,737 shares of Crompton Common Stock were held
by Crompton in its treasury, (iii) 17,438,398 shares of Crompton Common Stock
were reserved for issuance under Crompton's 1988 Long-Term Incentive Plan, 1993
Stock Option Plan, 1998 Long-Term Incentive Plan, 2001 Employee Stock Option
Plan and Employee Stock Purchase Plan (collectively, the "Crompton Stock Plans")
(of which 12,983,579 shares of Crompton Common Stock were subject to outstanding
options to acquire Crompton Common Stock (the "Crompton Stock Options") granted
under the Crompton Stock Plans), (iv) no shares of Crompton Common Stock were
owned by any Subsidiary of Crompton, (v) no shares of Crompton Preferred Stock
were issued or outstanding and (vi) 150,000 shares of Crompton Preferred Stock
designated as Series A Junior Participating Preferred Stock (the "Crompton
Participating Preferred Stock") were reserved for issuance in connection with
the rights to purchase shares of Crompton Participating Preferred Stock (the
"Crompton Rights") issued pursuant to the rights agreement, dated as of
September 2, 1999 (the "Crompton Rights Agreement"), between Crompton and
ChaseMellon Shareholder Services, L.C.C., as rights agent. All outstanding
shares of capital stock of Crompton are, and all shares which may be issued
(including shares of Crompton Common Stock to be issued in accordance with this
Agreement) will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Crompton has made available
to Great Lakes a true and complete list of all Crompton Stock Options or other
rights to purchase or receive shares of Crompton Common Stock granted under the
Crompton Stock Plans or otherwise by Crompton or any of its Subsidiaries
outstanding as of March 8, 2005, the number of shares of Crompton Common Stock
subject thereto, expiration dates and exercise prices thereof and the names of
the holders thereof. Except as set forth above in this Section 4.2(a), at the
close of business on March 8, 2005, no shares of capital stock or other voting
27
securities of Crompton were issued, reserved for issuance or outstanding. Except
as set forth above in this Section 4.2(a), there are no outstanding stock
appreciation rights, rights to receive shares of Crompton Common Stock on a
deferred basis or other rights that are linked to the value of Crompton Common
Stock granted under the Crompton Stock Plans or otherwise by Crompton or any of
its Subsidiaries.
(b) There are no bonds, debentures, notes or other indebtedness of
Crompton having the right to vote (or convertible into, or exchangeable or
exercisable for, securities having the right to vote) on any matters on which
stockholders of Crompton may vote. Except as set forth above in Section 4.2(a)
and except as permitted by Section 5.1(b), (i) there are not issued, reserved
for issuance or outstanding (A) any securities of Crompton or any of the
Crompton Significant Subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of Crompton or any
of the Crompton Significant Subsidiaries or (B) any warrants, calls, options or
other rights to acquire from Crompton or any of the Crompton Significant
Subsidiaries, or any obligation of Crompton or any of the Crompton Significant
Subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of Crompton or any of the Crompton Significant Subsidiaries and (ii)
there are not any outstanding obligations of Crompton or any of the Crompton
Significant Subsidiaries to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered or
sold, any such securities. Neither Crompton nor any of the Crompton Significant
Subsidiaries is a party to any voting agreement with respect to the voting of
any such securities.
(c) The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, par value $0.01 per share ("Merger Sub Common Stock").
All of the issued and outstanding shares of Merger Sub Common Stock are owned by
Crompton. Merger Sub does not have issued or outstanding any options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating Merger Sub to issue, transfer or sell any shares of
Merger Sub Common Stock to any Person, other than Crompton.
SECTION 4.3. Authority; Noncontravention; Voting Requirements.
(a) Each of Crompton and Merger Sub has all necessary corporate power
and authority to execute and deliver this Agreement and, subject to obtaining
the Crompton Stockholder Approval, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by each of Crompton and Merger Sub of this Agreement, and the
consummation by each of them of the transactions contemplated hereby, have been
duly authorized by all necessary corporate action on the part of Crompton and
Merger Sub, and no other corporate action on the part of Crompton or Merger Sub
is necessary to authorize the execution, delivery and performance by each of
Crompton and Merger Sub of this Agreement and the consummation by each of them
of the transactions contemplated hereby, subject, in connection with the
issuance of shares of Crompton Common Stock in the Merger, to obtaining the
28
Crompton Stockholder Approval. This Agreement has been duly executed and
delivered by Crompton and Merger Sub and, assuming the due authorization,
execution and delivery of this Agreement by Great Lakes, constitutes a legal,
valid and binding obligation of Crompton and Merger Sub, enforceable against
Crompton and Merger Sub in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar Laws of general
application affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity, whether
considered in a proceeding at law or in equity.
(b) As of the date hereof, the Board of Directors of Crompton, at a
meeting duly called and held, has (i) approved and declared advisable this
Agreement, the Merger and the other transactions contemplated by this Agreement,
(ii) directed that the approval of the issuance of the shares of Crompton Common
Stock contemplated by this Agreement (including pursuant to the Merger and the
exercise of Great Lakes Stock Options and Great Lakes Restricted Share Units as
adjusted pursuant to Section 2.3) be submitted to a vote at a meeting of the
stockholders of Crompton and (iii) resolved to recommend that the stockholders
of Crompton approve the issuance of the shares of Crompton Common Stock
(including pursuant to the Merger and the exercise of Great Lakes Stock Options
and Great Lakes Restricted Share Units as adjusted pursuant to Section 2.3).
(c) The execution and delivery of this Agreement do not, and the
consummation of the Merger and the other transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation or breach of, or default (with or
without notice or lapse of time or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
benefit under, or result in the creation of any Lien in or upon any of the
properties or other assets of Crompton or any of its Subsidiaries under, (i) the
Crompton Charter Documents or the certificates of incorporation and by-laws (or
comparable organizational documents) of the Crompton Significant Subsidiaries
(collectively, the "Crompton Subsidiary Charter Documents"), (ii) any Contract
to which Crompton or any of its Subsidiaries is a party or any of their
respective properties or other assets is subject or (iii) subject to the
governmental filings and other matters referred to in Section 4.4, any Law
applicable to Crompton or any of its Subsidiaries or their respective properties
or other assets, other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, breaches, defaults, rights, losses or Liens that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Crompton Material Adverse Effect.
(d) The affirmative vote (in person or by proxy) of the holders of a
majority of the shares of Crompton Common Stock cast at the Crompton
Stockholders Meeting or any adjournment or postponement thereof to approve the
issuance of shares of Crompton Common Stock contemplated by this Agreement
(including pursuant to the Merger and the exercise of Great Lakes Stock Options
and Great Lakes Restricted Share Units as adjusted pursuant to Section 2.3),
provided that the total vote cast represents at least a majority of the shares
of Crompton Common Stock entitled to vote thereon (the "Crompton Stockholder
Approval"), is the only vote of the holders of any class or series of the
capital stock of Crompton necessary to approve the issuance of shares of
Crompton Common Stock in connection with the Merger and the other transactions
contemplated by this Agreement.
29
(e) Crompton, as the sole stockholder of Merger Sub, has adopted this
Agreement, and such adoption is the only vote or approval of the holders of any
class or series of the capital stock of Merger Sub that is necessary to adopt
this Agreement and consummate the Merger and the other transactions contemplated
hereby.
SECTION 4.4. Governmental Approvals. No consent, approval, order or
authorization of, action by or in respect of, or registration, declaration or
filing with, any Governmental Authority is required by or with respect to
Crompton or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by Crompton and Merger Sub or the consummation by
Crompton and Merger Sub of the Merger or the other transactions contemplated by
this Agreement, except for (a) (i) the filing of a premerger notification and
report form by Crompton and termination or expiration of all relevant waiting
periods under the HSR Act, (ii) the filing of a Notification of a Concentration
and receipt of clearance from the European Commission pursuant to the EC Merger
Regulation, if required, and (iii) any other applicable filings and approvals
under similar foreign antitrust Laws, (b) the filing with the SEC of (A) the
Joint Proxy Statement and (B) such reports under Section 13(a), 13(d), 15(d) or
16(a) of the Exchange Act as may be required in connection with this Agreement
and the transactions contemplated by this Agreement, (c) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, (d)
such filings with and approvals of the New York Stock Exchange and (e) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made, individually or in the
aggregate, would not reasonably be expected to have a Crompton Material Adverse
Effect.
SECTION 4.5. Crompton SEC Documents; Undisclosed Liabilities;
Off-Balance Sheet Contracts.
(a) Crompton has filed and furnished all required reports, schedules,
forms, statements and other documents with the SEC since December 31, 2002
(collectively and together with all documents filed on a voluntary basis on Form
8-K, and in each case including all exhibits and schedules thereto and documents
incorporated by reference therein, the "Crompton SEC Documents"). No Subsidiary
of Crompton is required to file periodic reports with the SEC pursuant to the
Exchange Act. As of their respective effective dates (in the case of the
Crompton SEC Documents that are registration statements filed pursuant to the
requirements of the Securities Act) and as of their respective SEC filing dates
(in the case of all other Crompton SEC Documents), the Crompton SEC Documents
complied in all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be, applicable to such Crompton SEC
Documents, and none of the Crompton SEC Documents as of such respective dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
30
(b) The consolidated financial statements of Crompton included in the
Crompton SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited quarterly statements, as indicated in the
notes thereto and reports furnished or filed under Form 8-K) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of Crompton and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited quarterly statements and
reports furnished or filed under Form 8-K, to the absence of footnote disclosure
and to normal year-end audit adjustments).
(c) Except (i) as set forth in the consolidated financial statements
of Crompton as at and for the year ended December 31, 2004 included in the Draft
Form 10-K (the "Crompton 2004 Financial Statements"), or (ii) for liabilities
incurred since the date of the Crompton 2004 Financial Statements (x) in the
ordinary course of business or (y) pursuant to the terms of Contracts in effect
as of the date hereof or Contracts entered into after the date hereof not in
violation of this Agreement, neither Crompton nor any of its Subsidiaries has
any liabilities or obligations of any kind or nature (whether known or unknown,
accrued, absolute, contingent or otherwise and whether due or to become due)
that would be required by GAAP to be reflected in or reserved against or
otherwise described in the consolidated balance sheet of Crompton (including the
notes thereto) as of December 31, 2004 which, individually or in the aggregate,
have had or would reasonably be expected to have a Crompton Material Adverse
Effect.
(d) Neither Crompton nor any of its Subsidiaries is a party to, or
has any commitment to become a party to, any joint venture, off-balance sheet
partnership or any similar Contract relating to any transaction or relationship
between or among Crompton and any of its Subsidiaries, on the one hand, and any
unconsolidated Affiliate, including any structured finance, special purpose or
limited purpose Person, on the other hand, or any "off-balance sheet
arrangements" (as defined in Item 303(a) of Regulation S-K of the SEC).
SECTION 4.6. Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby or permitted to be incurred pursuant to Section 5.1(b), (a)
since December 31, 2004, there have not been any events, changes, occurrences or
state of facts that, individually or in the aggregate, have had or would
reasonably be expected to have a Crompton Material Adverse Effect and (b) since
December 31, 2004 through the date of this Agreement, Crompton and its
Subsidiaries have conducted their business in the ordinary course consistent
with past practice and have taken no actions which, if taken after the date of
this Agreement, would have violated Section 5.1(b)(i), (ii), (iii), (iv), (v),
(vii), (viii) or (ix).
31
SECTION 4.7. Legal Proceedings. There is no suit, action or
proceeding pending or, to the Knowledge of Crompton, threatened against Crompton
or any of its Subsidiaries that, individually or in the aggregate, has had or
would reasonably be expected to have a Crompton Material Adverse Effect, nor is
there any judgment, decree, injunction, rule or order of any Governmental
Authority or arbitrator outstanding against, or, to the Knowledge of Crompton,
investigation by any Governmental Authority involving, Crompton or any of its
Subsidiaries that, individually or in the aggregate, has had or would reasonably
be expected to have a Crompton Material Adverse Effect.
SECTION 4.8. Compliance With Laws; Permits.
(a) Crompton and its Subsidiaries are in compliance with all Laws
applicable to Crompton or any of its Subsidiaries, any of their respective
properties or other assets or any of their respective businesses or operations,
except for instances of noncompliance or possible noncompliance that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Crompton Material Adverse Effect. Since December 31, 2003,
neither Crompton nor any of its Subsidiaries has received written notice to the
effect that a Governmental Authority claimed or alleged that Crompton or any of
its Subsidiaries was not in compliance with all Laws applicable to Crompton or
any of its Subsidiaries, any of their respective properties or other assets or
any of their respective businesses or operations, except for instances of
noncompliance or possible noncompliance that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Crompton Material
Adverse Effect. Crompton and each of its Subsidiaries hold or have in effect all
licenses, franchises, permits, certificates, approvals and authorizations from
Governmental Authorities, or required by Laws, Environmental Laws or
Governmental Authorities to be obtained, in each case necessary for the lawful
conduct of their respective businesses (collectively, "Crompton Permits"),
except for such Crompton Permits the failure of which to hold or have in effect,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Crompton Material Adverse Effect, and there has occurred no
violation of, default (with or without notice or lapse of time or both) under,
or event giving to others any right of termination, amendment or cancellation
of, with or without notice or lapse of time or both, any Crompton Permit, except
for violations, defaults or events that, individually or in the aggregate, have
not had and would not reasonably be expected to have a Crompton Material Adverse
Effect. The consummation of the Merger, in and of itself, will not cause the
revocation or cancellation of any Crompton Permit, except for such revocations
or cancellations that, individually or in the aggregate, would not reasonably be
expected to have a Crompton Material Adverse Effect.
(b) Crompton and each of its officers and directors are in compliance
with, and have complied, in each case in all material respects with (i) the
applicable provisions of Xxxxxxxx-Xxxxx and (ii) the applicable listing and
corporate governance rules and regulations of the New York Stock Exchange.
Crompton has previously disclosed to Great Lakes any of the information required
to be disclosed by Crompton and certain of its officers to the Board of
Directors of Crompton or any committee thereof pursuant to the certification
requirements contained in Form 10-K and Form 10-Q under the Exchange Act.
32
(c) Crompton has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) or 15d-15(e) under the
Exchange Act); such disclosure controls and procedures are designed to ensure
that material information relating to Crompton, including its consolidated
Subsidiaries, is made known to Crompton's principal executive officer and its
principal financial officer by others within those entities, particularly during
the periods in which the periodic reports required under the Exchange Act are
being prepared; and such disclosure controls and procedures are effective in
timely alerting Crompton's principal executive officer and its principal
financial officer to material information required to be included in Crompton's
periodic reports required under the Exchange Act.
(d) Crompton has disclosed, based on its most recent evaluation prior
to the date hereof, to Crompton's auditors and the audit committee of the Board
of Directors of Crompton and to Great Lakes (i) any significant deficiencies and
material weaknesses in the design or operation of internal controls over
financial reporting that existed as of December 31, 2004 or later which are
reasonably likely to adversely affect in any material respect Crompton's ability
to record, process, summarize and report financial information for its financial
statements and (ii) any fraud, whether or not material, that involves management
or other employees who have a significant role in Crompton's internal controls
over financial reporting.
(e) To the Knowledge of Crompton, Crompton's auditors and its
principal executive officer and its principal financial officer will be able to
give the certifications and attestations required pursuant to the rules and
regulations adopted pursuant to Sections 302, 906 and 404 of Xxxxxxxx-Xxxxx,
without qualification, when next due.
SECTION 4.9. Information Supplied. None of the information supplied
(or to be supplied) in writing by or on behalf of Crompton or Merger Sub
specifically for inclusion or incorporation by reference in (a) the Form S-4
will, at the time the Form S-4 or any amendments or supplements thereto are
filed with the SEC or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they are made, not
misleading, or (b) the Joint Proxy Statement will, on the date it is first
mailed to stockholders of Great Lakes and stockholders of Crompton, and at the
time of Great Lakes Stockholders Meeting and the Crompton Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, Crompton and Merger Sub make no
representation or warranty with respect to any information supplied (or to be
supplied) by or on behalf of Great Lakes for inclusion or incorporation by
reference in any of the foregoing documents.
33
SECTION 4.10. Tax Matters.
(a) Each of Crompton and its Subsidiaries has timely filed, or has
caused to be timely filed on its behalf (taking into account any extension of
time within which to file), all material Tax Returns required to be filed by it,
and all such filed Tax Returns are correct and complete in all material
respects. All Taxes shown to be due on such Tax Returns have been timely paid.
(b) No material deficiency with respect to Taxes has been proposed,
asserted or assessed against Crompton or any of its Subsidiaries that has not
previously been paid.
(c) The Federal income Tax Returns of Crompton and each of its
Subsidiaries have been examined by and settled with the IRS (or the applicable
statute of limitations has expired) for all years through 2001. All assessments
for Taxes due with respect to such completed and settled examinations or any
concluded litigation have been fully paid.
(d) Neither Crompton nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code within the two
year period ending on the Closing Date.
(e) No audit or other administrative or court proceedings are pending
with any Governmental Authority with respect to income or franchise Taxes of
Crompton or any of its Subsidiaries and no written notice thereof has been
received.
(f) Neither Crompton nor any of its Subsidiaries is a party to any
contract, agreement, plan or other arrangement that, individually or
collectively, would give rise to the payment of any amount which would not be
deductible by reason of Section 162(m) or Section 280G of the Code or would be
subject to withholding under Section 4999 of the Code.
(g) Crompton has made available to Great Lakes true and complete
copies of (i) all income and franchise Tax Returns of Crompton and its
Subsidiaries for the preceding three taxable years and (ii) any audit report
issued within the last three years (or otherwise with respect to any audit or
proceeding in progress) relating to income and franchise Taxes of Crompton or
any of its Subsidiaries.
(h) Neither Crompton nor any of its Affiliates has taken or agreed to
take (or failed to so take or agree to take) any action or knows of any facts or
circumstances that would reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(i) Neither Crompton nor any of its Subsidiaries has participated in,
or made a filing under Treasury Regulation Section 1.6011-4 with respect to, any
"listed transaction" within the meaning of Treasury Regulation Section
1.6011-4(b)(2).
34
SECTION 4.11. Employee Benefits and Labor Matters.
(a) Section 4.11(a) of Crompton Disclosure Schedule sets forth a true
and complete list of "employee benefit plans" (as defined in Section 3(3) of
ERISA), and all other material employee benefit plans, policies, agreements,
arrangements or payroll practices, including employment, individual consulting
or other compensation agreements, or bonus or other incentive compensation,
stock purchase, equity or equity-based compensation, deferred compensation,
change in control, retention, severance, sick leave, vacation pay, employee
loans, salary continuation, health insurance, life insurance and educational
assistance plan, policies, agreements or arrangements with respect to which
Crompton or any of its Subsidiaries has any obligation or liability, contingent
or otherwise, for current or former employees, individual consultants or
directors of Crompton or any of its Subsidiaries (collectively, the "Crompton
Plans"). Section 4.11(a) of Crompton Disclosure Schedule separately sets forth
each Crompton Plan which is subject to Title IV of ERISA or is a Multiemployer
Plan, or is or has been subject to Sections 4063 or 4064 of ERISA.
(b) True and complete copies of the following documents with respect
to each of the Crompton Plans (other than a Multiemployer Plan) have been made
available to Great Lakes by Crompton to the extent applicable: (i) any plans and
related trust documents, insurance contracts or other funding arrangements, and
all amendments thereto; (ii) the most recent Forms 5500 and all schedules
thereto, (iii) the most recent actuarial report, if any; (iv) the most recent
IRS determination letter; (v) the most recent summary plan descriptions; and
(vi) written summaries of all non-written Crompton Plans.
(c) The Crompton Plans have been maintained, in form and operation in
all material respects, in accordance with their terms and with all applicable
provisions of ERISA, the Code and other Laws.
(d) The Crompton Plans intended to qualify under Section 401 or other
tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A of the Code
are so qualified, and any trusts intended to be exempt from federal income
taxation under the Code are so exempt. Nothing has occurred with respect to the
operation of the Crompton Plans that would reasonably be expected to cause the
loss of such qualification or exemption, or the imposition of any material
liability, penalty or tax under ERISA or the Code.
(e) Neither Crompton nor any of its Subsidiaries is required to
contribute to, or otherwise has any liability with respect to, a Multiemployer
Plan.
(f) All contributions required to have been made under any of the
Crompton Plans or by law (without regard to any waivers granted under Section
412 of the Code), have been timely made, and no accumulated funding deficiencies
exist in any of Crompton Plans subject to Title IV of ERISA or Section 412 of
the Code.
35
(g) The "benefit liabilities" as defined in Section 4001(a)(16) of
ERISA of each Title IV Plan using the actuarial assumptions used by the PBGC to
determine the level of funding required in the event of the termination of such
Title IV Plan do not exceed the assets of such Title IV Plan.
(h) There are no pending actions, claims or lawsuits arising from or
relating to the Crompton Plans, or the assets thereof (in each case, other than
routine benefit claims), nor does Crompton have any Knowledge of facts that
would form the basis for any such claim or lawsuit that, individually or in the
aggregate, has had or would reasonably be expected to have a Crompton Material
Adverse Effect.
(i) None of the Crompton Plans provide for post-employment life
insurance or health coverage for any participant or any beneficiary of a
participant, except as may be required under Part 6 of the Subtitle B of Title I
of ERISA, Section 4980B of the Code or similar provisions of applicable state
Law and at the expense of the participant or the participant's beneficiary.
(j) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any current or former employee of Crompton or any of its
Subsidiaries (under any of the Crompton Plans or otherwise), (ii) increase any
benefits otherwise payable to any current or former employee of Crompton or any
of its Subsidiaries under any of the Crompton Plans, (iii) result in the
acceleration of the time of payment of or vesting of any rights with respect to
such benefits under any of the Crompton Plans, or (iv) require any contributions
or payments to fund any obligations under any of the Crompton Plans.
(k) To the Knowledge of Crompton, any individual who performs
services for Crompton or any of its Subsidiaries (other than through a contract
with an organization other than such individual) and who is not treated as an
employee of Crompton or any of its Subsidiaries for Federal income tax purposes
by Crompton is not an employee for such purposes.
(l) None of the employees of Crompton or any of its Subsidiaries is
represented in his or her capacity as an employee of Crompton or any of its
Subsidiaries by any labor organization. Neither Crompton nor any of its
Subsidiaries has recognized any labor organization, nor has any labor
organization been elected as the collective bargaining agent of any employees of
Crompton or any of its Subsidiaries, nor has Crompton or any of its Subsidiaries
entered into any collective bargaining agreement or union contract recognizing
any labor organization as the bargaining agent of any employees of Crompton or
any of its Subsidiaries. There is no union organization activity involving any
of the employees of Crompton or any of its Subsidiaries pending or, to the
Knowledge of Crompton, threatened that, individually or in the aggregate, has
had or would reasonably be expected to have a Crompton Material Adverse Effect.
There is no picketing pending or, to the Knowledge of Crompton, threatened, and
there are no strikes, slowdowns, work stoppages, other job actions, lockouts,
arbitrations, grievances or other labor disputes involving any of the employees
of Crompton or any of its Subsidiaries pending or, to the Knowledge of Crompton,
36
threatened that, individually or in the aggregate, have had or would reasonably
be expected to have a Crompton Material Adverse Effect. There are no complaints,
charges or claims against Crompton or any of its Subsidiaries pending or, to the
Knowledge of Crompton, threatened that could be brought by or filed with any
Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment or
failure to employ by Crompton or any of its Subsidiaries, of any individual
that, individually or in the aggregate, have had or would reasonably be expected
to have a Crompton Material Adverse Effect. Crompton and its Subsidiaries are in
material compliance with all Laws relating to the employment of labor, including
all such Laws relating to wages, hours, WARN, collective bargaining,
discrimination, civil rights, safety and health, workers' compensation and the
collection and payment of withholding and/or social security taxes and any
similar tax. In the six years preceding the date hereof, there has been no "mass
layoff" or "plant closing" (as defined by WARN) with respect to Crompton or any
of its Subsidiaries.
SECTION 4.12. Environmental Matters. Except for those matters that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Crompton Material Adverse Effect, (i) each of Crompton and
its Subsidiaries is, and has been, in compliance with all applicable
Environmental Laws, (ii) there is no investigation, suit, claim, action or
proceeding relating to Environmental Liabilities or relating to or arising under
Environmental Laws that is pending or, to the Knowledge of Crompton, threatened
against or affecting Crompton or any of its Subsidiaries or any real property
currently or, to the Knowledge of Crompton, formerly owned, operated or leased
by Crompton or any of its Subsidiaries, (iii) neither Crompton nor any of its
Subsidiaries has received any notice of or entered into or assumed by Contract,
any known obligation, liability, order, settlement, judgment, injunction or
decree relating to Environmental Liabilities or relating to or arising under
Environmental Laws, (iv) to the knowledge of Crompton, no facts, circumstances
or conditions exist with respect to Crompton or any of its Subsidiaries that
would reasonably be expected to result in Crompton or any of its Subsidiaries
incurring Environmental Liabilities, including facts, circumstances or
conditions relating to any property currently or, to the Knowledge of Crompton,
formerly owned, operated or leased by Crompton or any of its Subsidiaries or any
property to or at which Crompton or any of its Subsidiaries transported or
arranged for the disposal or treatment of Hazardous Materials and (v) none of
the transactions contemplated hereby requires notice to, or approval of, any
Governmental Authority with jurisdiction over Environmental Laws.
SECTION 4.13. Contracts.
(a) Except as has not had and would not reasonably be expected to
have a Crompton Material Adverse Effect, neither Crompton nor any of its
Subsidiaries is a party to, and none of their respective properties or other
assets is subject to, any Contract that is of a nature required to be filed as
an exhibit to a report or filing under the Securities Act or the Exchange Act,
other than any Contract that is filed as an exhibit to the Filed Crompton SEC
Documents.
37
(b) All "material contracts" (as defined in Item 601(b)(10) of
Regulation S-K under the Exchange Act) of Crompton or any of its Subsidiaries
(collectively, the "Crompton Material Contracts") are valid and binding and in
full force and effect (except those which are cancelled, rescinded or terminated
after the date hereof in accordance with their terms), except where the failure
to be in full force and effect, individually or in the aggregate, has not had
and would not reasonably be expected to have a Crompton Material Adverse Effect.
None of Crompton or any of its Subsidiaries nor, to the Knowledge of Crompton,
any other party to any of the Crompton Material Contracts is in violation or
breach of or default (with or without notice or lapse of time or both) under, or
has waived or failed to enforce any rights or benefits under, any Crompton
Material Contract, except, in each case for violations, breaches, defaults or
failures to enforce rights or benefits that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Crompton Material
Adverse Effect.
SECTION 4.14. Title to Properties.
(a) Each of Crompton and its Subsidiaries has good and marketable
title to, or valid leasehold interests in, all its properties and other assets
except for such as are no longer used or useful in the conduct of its business
or as have been disposed of in the ordinary course of business and except for
defects in title, easements, restrictive covenants and similar encumbrances
that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Crompton Material Adverse Effect. All such properties and
other assets, other than properties and other assets in which Crompton or any of
its Subsidiaries has a leasehold interest, are free and clear of all Liens,
except for Liens that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Crompton Material Adverse Effect.
(b) Each of Crompton and its Subsidiaries has complied with the terms
of all leases to which it is a party and under which it is in occupancy, and all
such leases are in full force and effect, except for such noncompliance or
failure to be in full force and effect that, individually or in the aggregate,
has not had and would not reasonably be expected to have a Crompton Material
Adverse Effect.
SECTION 4.15. Intellectual Property.
(a) Each of Crompton and its Subsidiaries owns, or is validly
licensed or otherwise has the right to use all Intellectual Property Rights
which are material to the conduct of the business of Crompton and its
Subsidiaries, taken as a whole.
(b) No claims are pending or, to the Knowledge of Crompton,
threatened that Crompton or any of its Subsidiaries is infringing (including
with respect to the manufacture, use or sale by Crompton or any of its
Subsidiaries of their respective commercial products), misappropriating or
otherwise violating the Intellectual Property Rights of any Person which,
individually or in the aggregate, have had or would reasonably be expected to
have a Crompton Material Adverse Effect. As of the date of this Agreement, to
the Knowledge of Crompton, no Person or Persons are infringing, misappropriating
or otherwise violating the rights of Crompton or any of its Subsidiaries with
respect to any Intellectual Property Right in a manner which, individually or in
the aggregate, has had or would reasonably be expected to have a Crompton
Material Adverse Effect.
38
(c) No claims are pending or, to the Knowledge of Crompton,
threatened with regard to the ownership by Crompton or any of its Subsidiaries
or the validity or enforceability of any of their respective Intellectual
Property Rights which, individually or in the aggregate, have had or would
reasonably be expected to have a Crompton Material Adverse Effect.
(d) The consummation of the transactions contemplated hereby will
not: (i) result in the breach, modification, cancellation, termination or
suspension of any agreement for Intellectual Property Rights, which,
individually or in the aggregate, would reasonably be expected to have a
Crompton Material Adverse Effect or (ii) result in the loss or impairment of
Crompton's ownership of or right to use its Intellectual Property Rights, which,
individually or in the aggregate, would reasonably be expected to have a
Crompton Material Adverse Effect.
SECTION 4.16. Opinion of Financial Advisor. The Board of Directors of
Crompton has received the opinion of each of Citigroup Global Markets Inc. and
Xxxxxx Xxxxxxx & Co. Incorporated, dated as of the date of this Agreement, to
the effect that, as of such date, and subject to the various assumptions and
qualifications set forth therein, the Exchange Ratio is fair, from a financial
point of view, to Crompton.
SECTION 4.17. Brokers and Other Advisors. No broker, investment
banker, financial advisor or other Person, other than Citigroup Global Markets
Inc. and Xxxxxx Xxxxxxx & Co. Incorporated, the fees and expenses of which will
be paid by Crompton, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Crompton.
SECTION 4.18. State Takeover Statutes; Crompton Charter Documents.
The Board of Directors of Crompton has approved the terms of this Agreement and
the consummation of the Merger and the other transactions contemplated by this
Agreement, and such approval represents all the action necessary to render
inapplicable to this Agreement, the Merger and the other transactions
contemplated by this Agreement, the provisions of (i) Section 203 to the extent,
if any, Section 203 would otherwise be applicable to this Agreement, the Merger
and the other transactions contemplated by this Agreement and (ii) Article XIII
of the Amended and Restated Certificate of Incorporation of Crompton to the
extent, if any, such Article would otherwise be applicable to this Agreement,
the Merger and the other transactions contemplated by this Agreement.
SECTION 4.19. Operations of Merger Sub. Merger Sub was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement,
has engaged in no other business activities and has conducted its operations
only as contemplated hereby.
39
SECTION 4.20. Draft Form 10-K. Section 4.20 of the Crompton
Disclosure Schedule sets forth a true and complete copy of the draft annual
report on Form 10-K of Crompton for the year ended December 31, 2004 (including
the Crompton 2004 Financial Statements) presented to the Audit Committee of the
Board of Directors of Crompton on March 8, 2005 (the "Draft Form 10-K"). At such
March 8, 2005 meeting, the Audit Committee of the Board of Directors of Crompton
reviewed and approved the Draft Form 10-K. The annual report on Form 10-K of
Crompton for the year ended December 31, 2004 to be filed with the SEC shall be
identical in all substantial respects to the Draft Form 10K, except for the
completion of blanks, removal of brackets and other minor changes thereto
(collectively, the "Permitted Changes"). As of the date of this Agreement, the
Draft Form 10-K does not contain any untrue statement of material fact or omit
to state a material fact required to be stated therein in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, it being understood that the Permitted Changes in the Draft Form
10-K shall not constitute misstatements or omissions for purposes of this
Section 4.20. The Crompton 2004 Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the footnotes thereto) and fairly present in all
material respects the consolidated financial position of Crompton and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
SECTION 4.21. No Restatement. None of the items set forth on Section
7.3(d) of the Crompton Disclosure Schedule has caused, nor will cause, a
restatement or other modification of the historical earnings or other financial
results of Crompton and its consolidated Subsidiaries.
ARTICLE V
Covenants Relating to the Conduct of Business; Non-Solicitation
---------------------------------------------------------------
SECTION 5.1. Conduct of Business.
(a) Conduct of Business of Great Lakes. During the period from the
date of this Agreement to the Effective Time, Great Lakes shall, and shall cause
each of its Subsidiaries to, carry on its business in the ordinary course
consistent with past practice and comply with all applicable Laws in all
material respects, and, to the extent consistent therewith, use all reasonable
best efforts to preserve intact its current business organizations, keep
available the services of its current officers, employees and consultants and
preserve its relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with Great Lakes or any of its
Subsidiaries with the intention that the goodwill and ongoing business of Great
Lakes and its Subsidiaries shall be materially unimpaired at the Effective Time.
Without limiting the generality of the foregoing, during the period from the
date of this Agreement to the Effective Time, except as set forth in Section
5.1(a) of the Great Lakes Disclosure Schedule or as expressly contemplated by
this Agreement, Great Lakes shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Crompton, which shall not
be unreasonably withheld or delayed:
40
(i) (A) declare, set aside or pay any dividends on (other than
the continuation of Great Lakes' regular quarterly cash dividend not
in excess of $0.10 per share of Great Lakes Common Stock), or make any
other distributions (whether in cash, stock or property) in respect
of, any of its capital stock, other than dividends or distributions by
a direct or indirect wholly owned Subsidiary of Great Lakes to its
parent, (B) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (C)
purchase, redeem or otherwise acquire any shares of its capital stock
or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities, or any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock based performance units
(other than (A) (I) the issuance of shares of Great Lakes Common Stock
upon the exercise of Great Lakes Stock Options or Great Lakes
Restricted Share Units outstanding on the date hereof or granted after
the date hereof in accordance with clause (B) below, in either case in
accordance with their terms on the date hereof (or on the date of
grant, if later), or (II) the issuance of Great Lakes Restricted
Shares or Great Lakes Restricted Share Units granted under the Great
Lakes Stock Plans or granted under individual agreements as in effect
on the date hereof or granted after the date hereof in accordance with
clause (B) below, in either case in accordance with their terms on the
date hereof (or on the date of grant, if later) and (B) the grant of
Great Lakes Stock Options, Great Lakes Restricted Shares or Great
Lakes Restricted Share Units to (x) non-employee directors and (y)
employees hired any time after the date hereof, under the Great Lakes
Stock Plans or under any individual agreement in accordance with Great
Lakes' ordinary course of business consistent with past practice);
(iii) amend the Great Lakes Charter Documents or the Great Lakes
Subsidiary Charter Documents;
(iv) acquire in any manner an amount of assets of any third party
or third parties, individually or in the aggregate, in excess of
$5,000,000, except (A) for acquisitions of assets in the ordinary
course of business consistent with past practice that would not
materially hinder or delay the consummation of the transactions
contemplated by this Agreement and (B) as required by existing
Contracts as of the date hereof;
41
(v) sell, lease, license, mortgage, sell and leaseback or
otherwise encumber or subject to any Lien or otherwise dispose of any
of its properties or other assets to a third party or third parties,
individually or in the aggregate, in excess of $5,000,000, except for
(A) sales of properties or other assets in the ordinary course of
business consistent with past practice and (B) pursuant to existing
Contracts as of the date hereof;
(vi) except as provided for in Great Lakes' 2005 capital
expenditure budget, a true and complete copy of which has been made
available by Great Lakes to Crompton, make any new capital
expenditures;
(vii) grant to any director, officer or employee of Great Lakes
or any of its Subsidiaries (A) any material increase in compensation,
bonus or other benefits or (B) any increase in severance or
termination pay, in each case except in the ordinary course of
business consistent with past practice or as required by any
employment, severance or termination agreement or collective
bargaining agreement as in effect as of the date hereof;
(viii) (A) enter into any employment, deferred compensation,
supplemental retirement or other similar agreement (or any amendment
to any such existing agreement) with any director or officer of Great
Lakes or any of its Subsidiaries; (B) increase or accelerate the
vesting and/or payment of, benefits under any existing severance or
termination pay policies or employment agreements, in each case except
as required by applicable Law, in the ordinary course of business
consistent with past practice or as required by any employment,
severance or termination agreement or collective bargaining agreement
as in effect as of the date hereof or (C) increase benefits or rights
under any Great Lakes Plan (except as required by applicable Law) or
adopt or establish any new employee benefit plan, program, arrangement
or policy; provided, however, that Great Lakes may amend the Great
Lakes Supplemental Retirement Plan to provide for full vesting and
lump sum payouts of the present value of participants' accrued
benefits thereunder upon or following the Closing, subject to review
and approval of any present value calculations by Crompton, which
approval will not be unreasonably withheld; and provided further that,
as soon as practicable following the signing of this Agreement, Great
Lakes shall provide Crompton with the present value calculations
required above (and all data reasonably required for Crompton to
verify such calculations) and Crompton shall review such calculations
and provide its approval within ten Business Days after the receipt of
such information;
(ix) except as required by existing Contracts as of the date
hereof, (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another Person or issue or sell any debt
securities or options, warrants, calls or other rights to acquire any
debt securities of Great Lakes or any of its Subsidiaries, guarantee
any debt securities of another Person, enter into any "keep well" or
42
other agreement to maintain any financial statement condition of
another Person or enter into any arrangement having the economic
effect of any of the foregoing or (B) make any loans, advances or
capital contributions to, or investments in, any other Person, other
than Great Lakes or any direct or indirect wholly owned Subsidiary of
Great Lakes, in each case except for any such incurrences or making of
loans, advances, capital contributions or investments that would not
require the approval of the Board of Directors of Great Lakes or any
committee thereof;
(x) enter into any Contract which if in effect as of the date
hereof would be required to be disclosed pursuant to Section 3.13(b)
to the extent consummation of the transactions contemplated by this
Agreement or compliance by Great Lakes with the provisions of this
Agreement would reasonably be expected to conflict with, or result in
a violation or breach of, or default (with or without notice or lapse
of time or both) under, or give rise to a right of, or result in,
termination, cancellation or acceleration of any obligation or to a
loss of a benefit under, or result in the creation of any Lien in or
upon any of the properties or other assets of Great Lakes or any of
its Subsidiaries under, or give rise to any increased, additional,
accelerated or guaranteed right or entitlement of any third party
under, or result in any material alteration of, any provision of such
Contract;
(xi) revalue any assets material to Great Lakes and its
Subsidiaries, taken as a whole, or, except as required by GAAP, make
any material change in accounting methods, principles or practices;
(xii) make any material tax election or settle or compromise any
material Tax liability in excess of the amount reserved therefor on
the Great Lakes 2004 Audited Financial Statements, or agree to an
extension of a statute of limitations with respect to material Taxes;
(xiii) fund the respective Trust Agreements, dated as of February
12, 1998 and January 1, 2004, as amended, or make any payments from
the Trust Agreement, dated as of February 12, 1998, prior to the
Closing; provided, however, that no earlier than five Business Days
prior to the Closing, Great Lakes may fund the Trust Agreement, dated
February 12, 1998, as amended, for (A) payments that may be required
under the Great Lakes Non-Employee Directors' Deferred and Long Term
Compensation Plan upon or after the Closing with respect to settlement
of stock units outstanding thereunder as of the date hereof, (B) the
present value of the accrued benefits remaining to be paid under the
Great Lakes Directors Retirement Plan, (C) the present value of the
lump sum payments to be made under the Great Lakes Supplemental
Retirement Plan pursuant to the amendment thereto described in Section
5.1(a)(viii), and (D) the cash value of the payments that may be
43
required under the terms of the Change in Control Agreements listed on
Section 5.1(a) of the Great Lakes Disclosure Schedule upon or after
the Closing, with any present value calculations pursuant to this
Section 5.1(a)(xiii) to be made using reasonable actuarial assumptions
and subject to review and approval by Crompton, which approval shall
not be unreasonably withheld; and provided further, that, as soon as
practicable following the signing of this Agreement, Great Lakes shall
provide Crompton with the present value calculations required above
(and all data reasonably necessary for Crompton to verify such
calculations) and Crompton shall review such calculations and provide
its approval within ten Business Days after the receipt thereof;
provided further, notwithstanding anything contained in the foregoing
provisions of this Section 5.1(a)(xiii), no approval by Crompton shall
be required for eligible participants to receive payment of the
amounts otherwise payable under the terms of the plans set forth above
and at the time and in accordance with the other provisions of the
applicable plans;
(xiv) take any action that would violate the last sentence of
Section 6.3(a); or
(xv) authorize any of, or commit, propose or agree to take any
of, the foregoing actions.
(b) Conduct of Business of Crompton. During the period from the date
of this Agreement to the Effective Time, Crompton shall, and shall cause each of
its Subsidiaries to, carry on its business in the ordinary course consistent
with past practice and comply with all applicable Laws in all material respects,
and, to the extent consistent therewith, use all reasonable best efforts to
preserve intact its current business organizations, keep available the services
of its current officers, employees and consultants and preserve its
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with Crompton or any of its Subsidiaries with
the intention that the goodwill and ongoing business of Crompton and its
Subsidiaries shall be materially unimpaired at the Effective Time. Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, except as set forth in Section 5.1(b) of
the Crompton Disclosure Schedule or as expressly contemplated by this Agreement,
Crompton shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of Great Lakes, which shall not be unreasonably withheld
or delayed:
(i) (A) declare, set aside or pay any dividends on (other than
the continuation of Crompton's regular quarterly cash dividend not in
excess of $0.05 per share of Crompton Common Stock), or make any other
distributions (whether in cash, stock or property) in respect of, any
of its capital stock, other than dividends or distributions by a
direct or indirect wholly owned Subsidiary of Crompton to its parent,
(B) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (C) purchase,
redeem or otherwise acquire any shares of its capital stock or any
other securities thereof or any rights, warrants or options to acquire
any such shares or other securities;
44
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities, or any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock based performance units
(other than (A) the issuance of shares of Crompton Common Stock upon
the exercise of Crompton Stock Options or other awards outstanding
under the Crompton Stock Plans on the date hereof or granted after the
date hereof in accordance with clauses (B) or (C) below, in either
case in accordance with their terms on the date hereof (or on the date
of grant, if later), (B) the grant of Crompton Stock Options or other
awards under the Crompton Stock Plans to (x) non-employee directors
and (y) employees hired any time after the date hereof, in accordance
with Crompton's ordinary course of business consistent with past
practice, and (C) the grant of Crompton Stock Options to participants
in the Crompton's Employee Stock Purchase Plan in accordance with the
terms of such plan);
(iii) amend the Crompton Charter Documents or the Crompton
Subsidiary Charter Documents;
(iv) acquire in any manner an amount of assets of any third
party, except (A) for acquisitions of assets in the ordinary course of
business consistent with past practice that would not materially delay
or materially impair the consummation of the transactions contemplated
by this Agreement, (B) as required by existing Contracts as of the
date hereof and (C) for acquisitions of assets that would not require
the approval of the Board of Directors of Crompton or any committee
thereof;
(v) sell, lease, license, mortgage, sell and leaseback or
otherwise encumber or subject to any Lien or otherwise dispose of any
of its properties or other assets to a third party, except (A) for
sales of properties or other assets in the ordinary course of business
consistent with past practice, (B) pursuant to existing Contracts as
of the date hereof and (C) for sales of properties or other assets
that would not require the approval of the Board of Directors of
Crompton or any committee thereof;
(vi) except as provided for in Crompton's 2005 capital
expenditure budget, a true and complete copy of which has been made
available by Crompton to Great Lakes, make any new capital expenditure
or expenditures which, in the aggregate, are in excess of $10,000,000;
45
(vii) grant to any director, officer or employee of Crompton or
any of its Subsidiaries (A) any material increase in compensation,
bonus or other benefits or (B) any increase in severance or
termination pay, in each case except (I) in the ordinary course of
business consistent with past practice, (II) as required by any
employment, severance or termination agreement or collective
bargaining agreement as in effect as of the date hereof or (III) for
any such grants that would not require the approval of the Board of
Directors of Crompton or any committee thereof;
(viii) (A) enter into any employment, deferred compensation,
supplemental retirement or other similar agreement (or any amendment
to any such existing agreement) with any director or officer of
Crompton or any of its Subsidiaries or (B) increase or accelerate the
vesting and/or payment of, benefits under any existing severance or
termination pay policies or employment agreements, in each case except
(I) as required by applicable Law, (II) in the ordinary course of
business consistent with past practice, (III) as required by any
employment, severance or termination agreement or collective
bargaining agreement as in effect as of the date hereof or (IV) for
any such agreements, increases or accelerations that would not require
the approval of the Board of Directors of Crompton or any committee
thereof;
(ix) except as required by existing Contracts as of the date
hereof, (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another Person or issue or sell any debt
securities or options, warrants, calls or other rights to acquire any
debt securities of Crompton or any of its Subsidiaries, guarantee any
debt securities of another Person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
Person or enter into any arrangement having the economic effect of any
of the foregoing or (B) make any loans, advances or capital
contributions to, or investments in, any other Person, other than
Crompton or any direct or indirect wholly owned Subsidiary of
Crompton, in each case except for any such incurrences or making of
loans, advances, capital contributions or investments that would not
require the approval of the Board of Directors of Crompton or any
committee thereof;
(x) enter into any Contract which if in effect as of the date
hereof would be required to be disclosed pursuant to Section 4.13(b)
to the extent consummation of the transactions contemplated by this
Agreement or compliance by Crompton with the provisions of this
Agreement would reasonably be expected to conflict with, or result in
a violation or breach of, or default (with or without notice or lapse
of time or both) under, or give rise to a right of, or result in,
termination, cancellation or acceleration of any obligation or to a
loss of a benefit under, or result in the creation of any Lien in or
upon any of the properties or other assets of Crompton or any of its
Subsidiaries under, or give rise to any increased, additional,
accelerated or guaranteed right or entitlement of any third party
under, or result in any material alteration of, any provision of such
Contract;
46
(xi) revalue any assets material to Crompton and its
Subsidiaries, taken as a whole, or, except as required by GAAP, make
any material change in accounting methods, principles or practices;
(xii) make any material tax election or settle or compromise any
material Tax liability in excess of the amount reserved therefor on
the Crompton 2004 Financial Statements, or agree to an extension of a
statute of limitations with respect to material Taxes;
(xiii) take any action that would violate the last sentence of
Section 6.3(a); or
(xiv) authorize any of, or commit, propose or agree to take any
of, the foregoing actions.
(c) Notification of Changes; Filings. Great Lakes and Crompton shall
promptly inform the other party orally and in writing of (i) any representation
or warranty made by it contained in this Agreement that is qualified as to
materiality, Great Lakes Material Adverse Effect or Crompton Material Adverse
Effect, as the case may be, becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure of it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement. Great Lakes and Crompton
shall promptly provide the other copies of all filings made by such party with
any Governmental Authority in connection with this Agreement and the
transactions contemplated hereby.
SECTION 5.2. No Solicitation by Great Lakes; Etc.
(a) Great Lakes shall not, nor shall it authorize or permit any of
its Subsidiaries, any of their respective directors, officers or employees or
any investment banker, financial advisor, attorney, accountant or other advisor,
agent or representative (collectively, "Representatives") retained by it or any
of its Subsidiaries to, (i) solicit, initiate or encourage, or take any other
action to facilitate, any inquiries or the making of any proposal that
constitutes a Great Lakes Takeover Proposal or (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any information,
or otherwise cooperate in any way with, any Great Lakes Takeover Proposal. Great
Lakes shall, and shall cause its Subsidiaries and Representatives to,
immediately cease and cause to be terminated all existing discussions or
negotiations with any Person conducted heretofore with respect to any Great
Lakes Takeover Proposal. Notwithstanding the foregoing, prior to receipt of the
Great Lakes Stockholder Approval, in response to a Great Lakes Takeover Proposal
47
that the Board of Directors of Great Lakes determines in good faith (after
consultation with a financial advisor of nationally recognized reputation)
constitutes or is reasonably likely to lead to a Great Lakes Superior Proposal,
and which Great Lakes Takeover Proposal did not result from a breach of this
Section 5.2(a), Great Lakes may (A) furnish information with respect to Great
Lakes and its Subsidiaries to the Person making such Great Lakes Takeover
Proposal (and its Representatives) pursuant to a customary confidentiality
agreement that does not contain terms that would prevent Great Lakes from
complying with its obligations under this Section 5.2, and (B) participate in
discussions or negotiations with the Person making such Great Lakes Takeover
Proposal (and its Representatives) regarding such Great Lakes Takeover Proposal.
(b) For purposes of this Agreement, "Great Lakes Takeover Proposal"
shall mean any written, bona fide proposal or offer (i) for a merger,
consolidation, dissolution, recapitalization or other business combination
involving Great Lakes, (ii) for the issuance of 25% or more of the equity
securities of Great Lakes as consideration for the assets or securities of
another Person or (iii) to acquire in any manner, directly or indirectly, 25% or
more of the equity securities of Great Lakes or assets (including equity
securities of any Subsidiary of Great Lakes) that represent 25% or more of the
total consolidated assets of Great Lakes, in each case other than the
transactions contemplated by this Agreement.
(c) For purposes of this Agreement, "Great Lakes Superior Proposal"
shall mean any written, bona fide offer made by a third party that if
consummated would result in such Person (or its shareholders) owning, directly
or indirectly, 50% or more of the shares of Great Lakes Common Stock then
outstanding (or of the surviving entity in a merger or the direct or indirect
parent of the surviving entity in a merger) or 50% or more of the total
consolidated assets of Great Lakes, which the Board of Directors of Great Lakes
determines in good faith (after consultation with a financial advisor of
nationally recognized reputation) to be more favorable to the stockholders of
Great Lakes than the Merger (taking into account all the terms and conditions of
such proposal and this Agreement).
(d) In addition to the other obligations of Great Lakes set forth in
this Section 5.2, Great Lakes shall promptly advise Crompton, orally and in
writing, and in no event later than 24 hours after receipt, if any proposal,
offer, inquiry or other contact is received by, any information is requested
from, or any discussions or negotiations are sought to be initiated or continued
with, Great Lakes in respect of any Great Lakes Takeover Proposal, and shall, in
any such notice to Crompton, indicate the identity of the Person making such
proposal, offer, inquiry or other contact and the material terms and conditions
of any proposals or offers or the nature of any inquiries or contacts, and
thereafter shall promptly keep Crompton informed of all material developments
affecting the status and terms of any such proposals, offers, inquiries or
requests and of the status of any such discussions or negotiations.
48
(e) Neither the Board of Directors of Great Lakes nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Crompton), or
propose to withdraw (or modify in a manner adverse to Crompton), the approval,
recommendation or declaration of advisability by such Board of Directors or any
such committee thereof of this Agreement or the Merger or (B) recommend, adopt
or approve, or propose publicly to recommend, adopt or approve, any Great Lakes
Takeover Proposal (any action described in this clause (i) being referred to as
a "Great Lakes Adverse Recommendation Change") or (ii) approve or recommend, or
propose to approve or recommend, or allow Great Lakes or any of its Subsidiaries
to execute or enter into, any letter of intent, memorandum of understanding,
agreement in principle, merger agreement, acquisition agreement, option
agreement, joint venture agreement, partnership agreement or other similar
agreement constituting or related to any Great Lakes Takeover Proposal (other
than a confidentiality agreement pursuant to Section 5.2(a)). Notwithstanding
the foregoing, the Board of Directors of Great Lakes may (I) make a Great Lakes
Adverse Recommendation Change if such Board of Directors determines in good
faith (after consultation with outside counsel) that it is required to do so in
order to comply with its fiduciary duties to the stockholders of Great Lakes
under applicable Law or (II) in response to a Great Lakes Superior Proposal that
did not result from a breach of Section 5.2(a), cause Great Lakes to terminate
this Agreement pursuant to Section 8.1(f)(ii) (provided that Great Lakes shall
pay to Crompton the Great Lakes Termination Fee as provided in Section 8.2(a)
concurrently with such termination); provided, however, that (x) no Great Lakes
Adverse Recommendation Change may be made in response to a Great Lakes Superior
Proposal and (y) Great Lakes shall not terminate this Agreement pursuant to
Section 8.1(f)(ii), in each case until after the third Business Day following
Crompton's receipt of written notice from Great Lakes (a "Great Lakes Adverse
Recommendation or Termination Notice") advising Crompton that the Board of
Directors of Great Lakes intends to make such Great Lakes Adverse Recommendation
Change or to cause Great Lakes to terminate this Agreement pursuant to Section
8.1(f)(ii) (it being understood and agreed that any amendment or change to the
financial terms or other material terms of such Great Lakes Superior Proposal
shall require a new Great Lakes Adverse Recommendation or Termination Notice and
a new three Business Day period). In determining whether to make a Great Lakes
Adverse Recommendation Change in response to a Great Lakes Superior Proposal or
to cause Great Lakes to terminate this Agreement pursuant to Section 8.1(f)(ii),
the Board of Directors of Great Lakes shall take into account any changes to the
terms of this Agreement proposed by Crompton or other proposals or offers made
by Crompton (in response to a Great Lakes Adverse Recommendation or Termination
Notice or otherwise) in determining whether such Great Lakes Takeover Proposal
still constitutes a Great Lakes Superior Proposal.
(f) Nothing contained in this Section 5.2 shall prohibit Great Lakes
or its Board of Directors from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation
M-A promulgated under the Exchange Act or (ii) making any required disclosure to
the stockholders of Great Lakes if the Board of Directors of Great Lakes
determines in good faith (after consultation with outside counsel) that failure
to do so would constitute a violation of applicable Law; provided, however, that
in no event shall Great Lakes or its Board of Directors or any committee thereof
take, or agree or resolve to take, any action prohibited by Section 5.2(e).
49
SECTION 5.3. No Solicitation by Crompton; Etc.
(a) Crompton shall not, nor shall it authorize or permit any of its
Subsidiaries, any of their respective directors, officers or employees or any
Representatives retained by it or any of its Subsidiaries to, (i) solicit,
initiate or encourage, or take any other action to facilitate, any inquiries or
the making of any proposal that constitutes a Crompton Takeover Proposal or (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information, or otherwise cooperate in any way with, any Crompton
Takeover Proposal. Crompton shall, and shall cause its Subsidiaries and
Representatives to, immediately cease and cause to be terminated all existing
discussions or negotiations with any Person conducted heretofore with respect to
any Crompton Takeover Proposal. Notwithstanding the foregoing, prior to receipt
of the Crompton Stockholder Approval, in response to a Crompton Takeover
Proposal that the Board of Directors of Crompton determines in good faith (after
consultation with a financial advisor of nationally recognized reputation)
constitutes or is reasonably likely to lead to a Crompton Superior Proposal, and
which Crompton Takeover Proposal did not result from a breach of this Section
5.3(a), Crompton may (A) furnish information with respect to Crompton and its
Subsidiaries to the Person making such Crompton Takeover Proposal (and its
Representatives) pursuant to a customary confidentiality agreement that does not
contain terms that would prevent Crompton from complying with its obligations
under this Section 5.3, and (B) participate in discussions or negotiations with
the Person making such Crompton Takeover Proposal (and its Representatives)
regarding such Crompton Takeover Proposal.
(b) For purposes of this Agreement, "Crompton Takeover Proposal"
shall mean any written, bona fide proposal or offer (i) for a merger,
consolidation, dissolution, recapitalization or other business combination
involving Crompton, (ii) for the issuance of 25% or more of the equity
securities of Crompton as consideration for the assets or securities of another
Person or (iii) to acquire in any manner, directly or indirectly, 25% or more of
the equity securities of Crompton or assets (including equity securities of any
Subsidiary of Crompton) that represent 25% or more of the total consolidated
assets of Crompton, in each case other than the transactions contemplated by
this Agreement.
(c) For purposes of this Agreement, "Crompton Superior Proposal"
shall mean any written, bona fide offer made by a third party that if
consummated would result in such Person (or its shareholders) owning, directly
or indirectly, 50% or more of the shares of Crompton Common Stock then
outstanding (or of the surviving entity in a merger or the direct or indirect
parent of the surviving entity in a merger) or 50% or more of the total
consolidated assets of Crompton, which the Board of Directors of Crompton
determines in good faith (after consultation with a financial advisor of
nationally recognized reputation) to be more favorable to the stockholders of
Crompton than the Merger (taking into account all the terms and conditions of
such proposal and this Agreement).
50
(d) In addition to the other obligations of Crompton set forth in
this Section 5.3, Crompton shall promptly advise Great Lakes, orally and in
writing, and in no event later than 24 hours after receipt, if any proposal,
offer, inquiry or other contact is received by, any information is requested
from, or any discussions or negotiations are sought to be initiated or continued
with, Crompton in respect of any Crompton Takeover Proposal, and shall, in any
such notice to Great Lakes, indicate the identity of the Person making such
proposal, offer, inquiry or other contact and the material terms and conditions
of any proposals or offers or the nature of any inquiries or contacts, and
thereafter shall promptly keep Great Lakes informed of all material developments
affecting the status and terms of any such proposals, offers, inquiries or
requests and of the status of any such discussions or negotiations.
(e) Neither the Board of Directors of Crompton nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Great Lakes),
or propose to withdraw (or modify in a manner adverse to Great Lakes), the
approval, recommendation or declaration of advisability by such Board of
Directors or any such committee thereof of this Agreement or the Merger or the
issuance of shares of Crompton Common Stock contemplated by this Agreement or
(B) recommend, adopt or approve, or propose publicly to recommend, adopt or
approve, any Crompton Takeover Proposal (any action described in this clause (i)
being referred to as a "Crompton Adverse Recommendation Change") or (ii) approve
or recommend, or propose to approve or recommend, or allow Crompton or any of
its Subsidiaries to execute or enter into, any letter of intent, memorandum of
understanding, agreement in principle, merger agreement, acquisition agreement,
option agreement, joint venture agreement, partnership agreement or other
similar agreement constituting or related to any Crompton Takeover Proposal
(other than a confidentiality agreement pursuant to Section 5.3(a)).
Notwithstanding the foregoing, the Board of Directors of Crompton may (I) make a
Crompton Adverse Recommendation Change if such Board of Directors determines in
good faith (after consultation with outside counsel) that it is required to do
so in order to comply with its fiduciary duties to the stockholders of Crompton
under applicable Law or (II) in response to a Crompton Superior Proposal that
did not result from a breach of Section 5.3(a), cause Crompton to terminate this
Agreement pursuant to Section 8.1(e)(ii) (provided that Crompton shall pay to
Great Lakes the Crompton Termination Fee as provided in Section 8.2(c)
concurrently with such termination); provided, however, that (x) no Crompton
Adverse Recommendation Change may be made in response to a Crompton Superior
Proposal and (y) Crompton shall not terminate this Agreement pursuant to Section
8.1(e)(ii), in each case until after the third Business Day following Great
Lakes' receipt of written notice from Crompton (a "Crompton Adverse
Recommendation or Termination Notice") advising Great Lakes that the Board of
Directors of Crompton intends to make such Crompton Adverse Recommendation
Change or to cause Crompton to terminate this Agreement pursuant to Section
8.1(e)(ii) (it being understood and agreed that any amendment or change to the
financial terms or other material terms of such Crompton Superior Proposal shall
require a new Crompton Adverse Recommendation or Termination Notice and a new
three Business Day period). In determining whether to make a Crompton Adverse
Recommendation Change in response to a Crompton Superior Proposal or to cause
Crompton to terminate this Agreement pursuant to Section 8.1(e)(ii), the Board
of Directors of Crompton shall take into account any changes to the terms of
this Agreement proposed by Great Lakes or other proposals or offers made by
Great Lakes (in response to a Crompton Adverse Recommendation or Termination
Notice or otherwise) in determining whether such Crompton Takeover Proposal
still constitutes a Crompton Superior Proposal.
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(f) Nothing contained in this Section 5.3 shall prohibit Crompton or
its Board of Directors from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation
M-A promulgated under the Exchange Act or (ii) making any required disclosure to
the stockholders of Crompton if the Board of Directors of Crompton determines in
good faith (after consultation with outside counsel) that failure to do so would
constitute a violation of applicable Law; provided, however, that in no event
shall Crompton or its Board of Directors or any committee thereof take, or agree
or resolve to take, any action prohibited by Section 5.3(e).
ARTICLE VI
Additional Agreements
SECTION 6.1. Preparation of the Form S-4 and the Joint Proxy
Statement; Stockholder Meetings.
(a) As soon as practicable following the date of this Agreement,
Great Lakes and Crompton shall prepare and file with the SEC the Joint Proxy
Statement and Great Lakes and Crompton shall prepare and Crompton shall file
with the SEC the Form S-4, in which the Joint Proxy Statement will be included
as a prospectus. Each of Great Lakes and Crompton shall use its reasonable best
efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing and keep the Form S-4 effective for so
long as necessary to consummate the Merger. Great Lakes shall use its reasonable
best efforts to cause the Joint Proxy Statement to be mailed to the stockholders
of Great Lakes, and Crompton shall use its reasonable best efforts to cause the
Joint Proxy Statement to be mailed to the stockholders of Crompton, in each case
as promptly as practicable after the Form S-4 is declared effective under the
Securities Act. Crompton shall also take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified or filing a
general consent to service of process) required to be taken under any applicable
state securities Laws in connection with the issuance of shares of Crompton
Common Stock in the Merger, and Great Lakes shall furnish all information
concerning Great Lakes and the holders of shares of Great Lakes Common Stock as
may be reasonably requested by Crompton in connection with any such action. No
filing of, or amendment or supplement to, the Form S-4 will be made by Crompton,
and no filing of, or amendment or supplement to the Joint Proxy Statement will
be made by Great Lakes or Crompton, in each case without providing the other
party a reasonable opportunity to review and comment thereon. If at any time
prior to the Effective Time, any information relating to Great Lakes or
Crompton, or any of their respective Affiliates, directors or officers, should
be discovered by Great Lakes or Crompton which should be set forth in an
amendment or supplement to either the Form S-4 or the Joint Proxy Statement, so
that either such document would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
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which discovers such information shall promptly notify the other parties hereto
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by Law, disseminated to
the stockholders of Great Lakes and the stockholders of Crompton. The parties
shall notify each other promptly of the receipt of any comments from the SEC or
the staff of the SEC and of any request by the SEC or the staff of the SEC for
amendments or supplements to the Joint Proxy Statement or the Form S-4 or for
additional information and shall supply each other with copies of (i) all
correspondence between it or any of its Representatives, on the one hand, and
the SEC or the staff of the SEC, on the other hand, with respect to the Joint
Proxy Statement, the Form S-4 or the Merger and (ii) all orders of the SEC
relating to the Form S-4.
(b) Great Lakes shall, as soon as practicable following the date of
this Agreement, establish a record date for, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Great Lakes Stockholders Meeting")
for the purpose of obtaining the Great Lakes Stockholder Approval. Subject to
Section 5.2(e), Great Lakes shall, through its Board of Directors, recommend to
its stockholders adoption of this Agreement, and for so long as there has not
been a Great Lakes Adverse Recommendation Change, Great Lakes shall use its
reasonable best efforts to solicit proxies from its stockholders to vote in
favor of the adoption of this Agreement at the Great Lakes Stockholders Meeting.
Notwithstanding any Great Lakes Adverse Recommendation Change, but only if this
Agreement is not otherwise terminated, the Great Lakes Stockholders Meeting
shall be duly called, noticed, convened and held and the adoption of this
Agreement shall be submitted to the stockholders of Great Lakes for a vote at
the Great Lakes Stockholders Meeting. Great Lakes shall use its reasonable best
efforts to cause the Great Lakes Stockholders Meeting to occur on the same date
as the Crompton Stockholders Meeting.
(c) Crompton shall, as soon as practicable following the date of this
Agreement, establish a record date for, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Crompton Stockholders Meeting") for the
purpose of obtaining the Crompton Stockholder Approval. Subject to Section
5.3(e), Crompton shall, through its Board of Directors, recommend to its
stockholders approval of the issuance of shares of Crompton Common Stock
contemplated by this Agreement (including pursuant to the Merger and the
exercise of Great Lakes Stock Options and Great Lakes Restricted Share Units as
adjusted pursuant to Section 2.3), and for so long as there has not been a
Crompton Adverse Recommendation Change, Crompton shall use its reasonable best
efforts to solicit proxies from its stockholders to vote in favor of the
approval of the issuance of shares of Crompton Common Stock contemplated by this
Agreement (including pursuant to the Merger and the exercise of Great Lakes
Stock Options and Great Lakes Restricted Share Units as adjusted pursuant to
Section 2.3) at the Crompton Stockholders Meeting. Notwithstanding any Crompton
Adverse Recommendation Change, but only if this Agreement is not otherwise
terminated, the Crompton Stockholders Meeting shall be duly called, noticed,
convened and held and this Agreement and the issuance of shares of Crompton
Common Stock contemplated by this Agreement (including pursuant to the Merger
and the exercise of Great Lakes Stock Options and Great Lakes Restricted Share
Units as adjusted pursuant to Section 2.3) shall be submitted to the
stockholders of Crompton for a vote at the Crompton Stockholders Meeting.
Crompton shall use its reasonable best efforts to cause the Crompton
Stockholders Meeting to occur on the same date as the Great Lakes Stockholders
Meeting.
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SECTION 6.2. Access to Information; Confidentiality.
(a) Subject to applicable Laws relating to the exchange of
information and other Laws relating to competition, each of Great Lakes and
Crompton shall and shall cause each of their Subsidiaries to, afford to the
other, and the other's officers, employees, accountants, counsel, financial
advisors and other Representatives, reasonable access during normal business
hours during the period prior to the Effective Time or the termination of this
Agreement to all its and its Subsidiaries' properties, contracts, commitments,
personnel, books and records. During such period, each party shall furnish
promptly to the other party (i) a copy of each report, schedule, registration
statement and other document filed by such party during such period pursuant to
the requirements of Federal or state securities Laws and (ii) all other
information concerning such party and its Subsidiaries' business, properties and
personnel as the other party may reasonably request. Notwithstanding the
foregoing, the parties shall take appropriate measures to preserve
attorney-client privilege (or other evidentiary privilege) and not to contravene
any applicable Law.
(b) Except for disclosures expressly permitted by the terms of the
confidentiality agreement, dated as of December 31, 2004, between Great Lakes
and Crompton, as amended from time to time (the "Confidentiality Agreement"),
each party shall hold, and shall cause its officers, employees, accountants,
counsel, financial advisors and other Representatives to hold, all information
received from the other party, directly or indirectly, and whether obtained
pursuant to the provisions of this Section 6.2 or otherwise, in confidence in
accordance with the terms of the Confidentiality Agreement.
(c) No investigation or consultation pursuant to this Section 6.2 or
otherwise, nor any information provided or received by any party hereto pursuant
to this Agreement will affect any of the representations or warranties of the
parties hereto contained in this Agreement or the conditions hereunder to the
obligations of the parties hereto.
SECTION 6.3. Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions set forth in this
Agreement (including, for the avoidance of doubt, Sections 5.2 and 5.3), each of
the parties agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement, including
using reasonable best efforts to accomplish the following: (i) the taking of all
acts necessary to cause the conditions to Closing to be satisfied as promptly as
54
practicable, (ii) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Authorities and the making of all
necessary registrations and filings (including filings with Governmental
Authorities, if any) and the taking of all steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by any
Governmental Authority, (iii) the obtaining of all necessary consents, approvals
or waivers from third parties, (iv) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Authority vacated or reversed, (v) the obtaining of the tax
opinions referred to in Sections 7.2(c) and 7.3(c) and (vi) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. Subject
to the terms and conditions of this Agreement (including, for the avoidance of
doubt, Sections 5.2 and 5.3), each of the parties agrees that it shall not take
any action that would reasonably be expected to prevent or materially delay or
materially impair the consummation of the transactions contemplated by this
Agreement.
(b) In furtherance and not in limitation of Section 6.3(a), (i) each
party hereto agrees to make an appropriate filing of a premerger notification
and report form pursuant to the HSR Act with respect to the transactions
contemplated by this Agreement as promptly as practicable and in any event
within 15 Business Days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and use its reasonable best efforts to take,
or cause to be taken, all other actions consistent with this Section 6.3
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable; (ii) if required by applicable
Law, Crompton agrees to file with the European Commission as promptly as
reasonably practicable the Form CO required for the transactions contemplated by
this Agreement pursuant to the EC Merger Regulation and Great Lakes agrees to
provide Crompton as promptly as practicable with such assistance as Crompton
reasonably requests for the purposes of filing such Form CO and, if such a
filing is made, each party agrees to supply as promptly as practical any
additional information and documentary material that may be required or
requested by the European Commission and use its reasonable best efforts to take
or cause to be taken all other actions consistent with this Section 6.3
necessary to obtain clearance from the European Commission and (iii) Great Lakes
or Crompton, as the case may be, agrees to file, as necessary, as promptly as
practicable any other merger notifications or filings required by other
applicable foreign competition, antitrust, merger control or other similar Laws
and Great Lakes or Crompton, as the case may be, agrees to provide the other as
promptly as practicable with such assistance as the other reasonably requests
for the purposes of such notifications or filings and, if any such notifications
or filings are made, each party agrees to supply as promptly as practicable any
additional information and documentary material that may be required or
requested by the relevant Governmental Authority under such Laws and use its
reasonable best efforts to take or cause to be taken all other actions
consistent with this Section 6.3 necessary to obtain clearance from the relevant
Governmental Authority under such Laws.
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(c) In addition to Section 6.3(b) and without limiting this Section
6.3, Great Lakes and Crompton each agrees to use its reasonable best efforts to
take promptly any and all steps necessary to avoid or eliminate each and every
impediment under any competition, antitrust, merger control or other similar
Laws that may be asserted by any relevant Governmental Authority under such
Laws, so as to enable the parties to close the transactions contemplated by this
Agreement as expeditiously as possible. In addition, each of Great Lakes and
Crompton agrees to use its reasonable best efforts to take promptly any and all
steps necessary to vacate or lift any order relating to competition, antitrust,
merger control or other similar Laws that would have the effect of making any of
the transactions contemplated by this Agreement illegal or otherwise prohibiting
or materially delaying their consummation.
(d) In connection with the foregoing and without limiting this
Section 6.3, each of the parties hereto shall use its reasonable best efforts to
(i) cooperate in all respects with each other in connection with any filing or
submission with a Governmental Authority in connection with the transactions
contemplated by this Agreement and in connection with any investigation or other
inquiry by or before a Governmental Authority relating to the transactions
contemplated hereby, including any proceeding initiated by a private party, and
(ii) keep the other party informed in all material respects and on a reasonably
timely basis of any material communication received by such party from, or given
by such party to, the Federal Trade Commission, the Antitrust Division of the
Department of Justice, the European Commission or any other Governmental
Authority and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby. Subject to applicable Laws relating to the
exchange of information, each of the parties hereto shall have the right to
review in advance, and to the extent practicable each will consult the other on,
all the information relating to the other parties and their respective
Subsidiaries, as the case may be, that appears in any filing made with, or
written materials submitted to, any third party and/or any Governmental
Authority in connection with the transactions contemplated hereby.
(e) Notwithstanding anything to the contrary in this Agreement, (i)
Great Lakes shall not, without Crompton's prior written consent, commit to any
divestitures, licenses, hold separate arrangements or similar matters, including
covenants affecting business operating practices (or allow any of its
Subsidiaries to commit to any divestitures, licenses, hold separate arrangements
or similar matters), and Great Lakes shall commit to, and shall use reasonable
best efforts to effect (and shall cause its Subsidiaries to commit to and use
reasonable best efforts to effect), any such divestitures, licenses, hold
separate arrangements or similar matters as Crompton shall request, but solely
if such divestitures, licenses, hold separate arrangements or similar matters
are contingent on consummation of the transactions contemplated by this
Agreement and (ii) neither Crompton nor any of its Subsidiaries shall be
required (pursuant to Section 6.3 or otherwise) to agree (with respect to (x)
Crompton or any of its Subsidiaries or (y) Great Lakes or any of its
Subsidiaries) to any divestitures, licenses, hold separate arrangements or
similar matters, including covenants affecting business operating practices, if
such divestitures, licenses, arrangements or similar matters, individually or in
the aggregate, would reasonably be expected to have a material adverse effect on
the business, assets and liabilities (contingent or otherwise), taken together,
or financial condition of either Crompton and its Subsidiaries, taken as a
whole, or Great Lakes and its Subsidiaries, taken as a whole.
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(f) In connection with and without limiting Section 6.3(a), each of
Great Lakes and its Board of Directors and Crompton and its Board of Directors
shall (i) take all action necessary to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to this Agreement or any
of the transactions contemplated by this Agreement and (ii) if any state
takeover statute or similar statute becomes applicable to this Agreement or any
of the transactions contemplated by this Agreement, take all action necessary to
ensure that the transactions contemplated by this Agreement may be consummated
as promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on this Agreement
and the transactions contemplated by this Agreement.
SECTION 6.4. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted by applicable Law, indemnify, defend and
hold harmless, and provide advancement of expenses to, each person who is now,
or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer, director or employee of Great Lakes or any of its
Subsidiaries (the "Indemnified Parties") against all losses, claims, damages,
costs, expenses, liabilities or judgments or amounts that are paid in settlement
of or in connection with any claim, action, suit, proceeding or investigation
based in whole or in part on or arising in whole or in part out of the fact that
such person is or was a director, officer or employee of Great Lakes or any
Subsidiary of Great Lakes, and pertaining to any matter existing or occurring,
or any acts or omissions occurring, at or prior to the Effective Time, whether
asserted or claimed prior to, or at or after, the Effective Time (including
matters, acts or omissions occurring in connection with the approval of this
Agreement and the consummation of the transactions contemplated hereby), to the
same extent that such persons are indemnified or have the right to advancement
of expenses as of the date of this Agreement pursuant to (i) the Great Lakes
Charter Documents and (ii) any indemnification agreements in existence on the
date hereof between Great Lakes or any of its Subsidiaries, on the one hand, and
any director, officer or employee of Great Lakes or any of its Subsidiaries, on
the other hand.
(b) For six years after the Effective Time, Crompton shall maintain
in effect Great Lakes' current directors' and officers' liability insurance in
respect of acts or omissions occurring at or prior to the Effective Time
(including for acts or omissions occurring in connection with the approval of
this Agreement and the consummation of the transactions contemplated hereby),
covering each person currently covered by Great Lakes' directors' and officers'
liability insurance policy (a true and complete copy of which has been
heretofore made available to Crompton), on terms with respect to such coverage
and amount no less favorable than those of such policy in effect on the date
hereof; provided, however, that Crompton may substitute therefor policies of
Crompton containing terms with respect to coverage and amount no less favorable
to such Indemnified Parties; provided, further, that in satisfying its
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obligation under this Section 6.4(b), Crompton shall not be obligated to pay
aggregate premiums in excess of 300% of the amount paid by Great Lakes in its
last full fiscal year, it being understood and agreed that Crompton shall
nevertheless be obligated to provide such coverage as may be obtained for such
300% amount. Crompton shall have the right to cause coverage to be extended
under Great Lakes' directors' and officers' liability insurance policy by
obtaining a six-year "tail" policy on terms and conditions no less favorable
than Great Lakes' existing directors' and officers' liability insurance policy,
and such "tail" policy shall satisfy the provisions of this Section 6.4(b).
(c) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and is not the continuing
or surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and other assets
to any Person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall expressly assume the obligations set forth in this Section
6.4.
(d) Crompton, from and after the Effective Time, hereby
unconditionally guarantees the timely payment of all funds owed by, and the
timely performance of all other obligations of, the Surviving Corporation under
this Section 6.4. Crompton agrees that its payment obligations hereunder are
unconditional, irrespective of the validity or enforceability of this Agreement
against the Surviving Corporation or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor
(other than the defenses of statute of limitations, which are not waived).
Crompton hereby acknowledges that its obligations under this Section 6.4
constitute a guaranty of payment and not merely of collectability and Crompton
hereby waives (i) promptness, diligence, presentment, demand of payment, protest
and order in connection with this guarantee and (ii) any requirement that any
party enforcing the guarantee exhaust any right to take any action against the
Surviving Corporation or any other person prior to or contemporaneously with
proceeding to exercise any right against Crompton hereunder.
(e) The provisions of this Section 6.4: (i) are intended to be for
the benefit of, and will be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights, including in the case of any Indemnified
Party, any right to indemnification or contribution, that any such person may
have by contract or otherwise.
SECTION 6.5. Fees and Expenses. Except as provided in Section 8.2,
all fees and expenses incurred in connection with this Agreement, the Merger and
the other transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that Crompton and Great Lakes each shall bear and pay 50% of the costs
and expenses incurred in connection with filing, printing and mailing the Form
S-4 and the Joint Proxy Statement and the filing fee under the HSR Act.
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SECTION 6.6. Public Announcements. Great Lakes and Crompton shall
consult with each other before issuing, and give each other the opportunity to
review and comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement, including the
Merger, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
Law, court process or by obligations pursuant to any listing agreement with any
national securities exchange or national securities quotation system. The
parties agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
SECTION 6.7. Affiliates. As soon as practicable after the date
hereof, Great Lakes shall deliver to Crompton a letter identifying all Persons
who Great Lakes believes will be at the time this Agreement is submitted for
adoption by the stockholders of Great Lakes, "affiliates" of Great Lakes for
purposes of Rule 145 under the Securities Act and applicable SEC rules and
regulations. Great Lakes shall use its reasonable best efforts to cause each
such Person to deliver to Crompton on or prior to the Closing Date a written
agreement substantially in the form attached as Exhibit B.
SECTION 6.8. Stock Exchange Listing. To the extent Crompton does not
issue treasury shares in the Merger which are already listed, Crompton shall use
its reasonable best efforts to cause the shares of Crompton Common Stock to be
issued in the Merger and the exercise of Great Lakes Stock Options and Great
Lakes Restricted Share Units as adjusted pursuant to Section 2.3 to be approved
for listing on the New York Stock Exchange, subject to official notice of
issuance, prior to the Closing Date.
SECTION 6.9. Stockholder Litigation. Great Lakes and Crompton shall
give the other the opportunity to participate in the defense or settlement of
any stockholder litigation against either party and/or its directors relating to
the transactions contemplated by this Agreement.
SECTION 6.10. Tax Treatment.
(a) Great Lakes and Crompton shall execute and deliver to Weil,
Gotshal & Xxxxxx LLP, counsel to Great Lakes, and Mayer, Brown, Xxxx & Maw LLP,
counsel to Crompton, certificates substantially in the forms attached hereto as
Exhibits C and D at such time or times as reasonably requested by such law firms
in connection with their delivery of the opinions referred to in Sections 7.2(c)
and 7.3(c). None of Great Lakes, Crompton or Merger Sub shall take or cause to
be taken any action which would cause to be untrue any of the representations in
such certificates.
(b) Great Lakes, Crompton and Merger Sub intend that the transactions
contemplated hereby will qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and the parties hereto will take the position for all
Tax purposes that the transactions contemplated hereby so qualify unless a
contrary position is required by a final determination within the meaning of
Section 1313 of the Code. Great Lakes, Crompton and Merger Sub shall each use
their respective reasonable best efforts to cause the transactions contemplated
hereby to qualify as a "reorganization" within the meaning of Section 368(a) of
the Code, and shall not take actions, cause actions to be taken or fail to take
actions that are reasonably likely to prevent such result.
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SECTION 6.11. Employee Matters.
(a) For a period ending not earlier than the first anniversary of the
Effective Time, employees of Great Lakes or any of its Subsidiaries who continue
their employment after the Effective Time (the "Affected Employees") shall be
provided, while they continue to be employed by Great Lakes, Crompton or any of
their respective Subsidiaries, base salary or hourly wage rates that are no less
favorable than those then provided for similarly situated employees of Crompton.
Nothing in this Section 6.11 shall be deemed to require Great Lakes, Crompton or
any of their respective Subsidiaries to continue the employment of any Affected
Employee after the Effective Time.
(b) For a period ending not earlier than the first anniversary of the
Effective Time, the Affected Employees shall be provided employee benefits that
are not materially less favorable in the aggregate than the benefits then
provided to similarly situated employees of Crompton; provided, however, that
continuing the material Great Lakes Plans during this one year period shall be
deemed to satisfy the requirements of this Section 6.11(b).
(c) With respect to any benefit plan, program, arrangement (including
any "employee benefit plan" (as defined in Section 3(3) of ERISA) and any
vacation or sick leave program), Crompton shall, and shall cause the Surviving
Corporation to, recognize the service with Great Lakes or any of its
Subsidiaries immediately prior to the Effective Time of the Affected Employees
for purposes of eligibility, vesting and, solely for purposes of vacation and
sick leave (but not for any other plan, program or arrangement), benefit
accrual, under such plan or program.
(d) With respect to any welfare plan in which employees of Great
Lakes or any of its Subsidiaries may become eligible to participate after the
Effective Time, other than the Great Lakes Plans in which such employees
participate immediately prior to the Effective Time, Crompton shall, and shall
cause the Surviving Corporation to, (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to such employees to the extent such conditions
were satisfied under the corresponding Great Lakes Plans immediately prior to
the Effective Time, and (ii) provide each such employee with credit for any
co-payments and deductibles paid prior to the Effective Time (but in the same
calendar year in which the Effective Time occurs) under a corresponding Great
Lakes Plan towards satisfying any analogous deductible or out-of-pocket
requirements to the extent applicable under any such plan.
(e) With respect to any accrued but unused vacation time to which any
Affected Employee is entitled pursuant to the vacation policy applicable to such
employee immediately prior to the Effective Time, Crompton shall, and shall
cause the Surviving Corporation to, (i) either allow such Affected Employee to
use such accrued vacation or pay to such Affected Employee in cash the amount of
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such accrued vacation pay and (ii) to the extent required by the terms of the
Great Lakes vacation policy as in effect immediately prior to the Effective
Time, pay in cash the accrued vacation of any Affected Employee whose employment
terminates for any reason prior to the close of business on the last calendar
day of the year in which the Effective Time occurs.
(f) With respect to jurisdictions outside of the United States, Great
Lakes shall, and shall cause its Affiliates to, comply with applicable
requirements of local Laws relating to employees and employee benefit plans with
respect to the effect of the transactions contemplated by this Agreement.
SECTION 6.12. Rule 16b-3. Prior to the Effective Time, Great Lakes
and Crompton shall take such steps as may be reasonably requested by any party
hereto to cause dispositions of Great Lakes equity securities (including
derivative securities) pursuant to the transactions contemplated by this
Agreement by each individual who is a director or officer of Great Lakes to be
exempt under Rule 16b-3 promulgated under the Exchange Act in accordance with
that certain No-Action Letter dated January 12, 1999 issued by the SEC regarding
such matters.
SECTION 6.13. Governance.
(a) Crompton shall cause the number of directors that will comprise
the full Board of Directors of Crompton at the Effective Time to be eleven.
Crompton shall cause the election of each of the five Great Lakes Board
Designees to become directors of Crompton as of, and conditioned upon the
occurrence of, the Effective Time. Crompton shall cause the remaining six
members of the Board of Directors of Crompton as of the Effective Time to
consist of five of the individuals who are members of the Board of Directors of
Crompton as of the date of this Agreement (which individuals will be designated
by Crompton in writing prior to the mailing of the Joint Proxy Statement) and
the individual who is the Chairman and Chief Executive Officer of Crompton
(collectively, the "Original Crompton Board Members"). Crompton shall use its
best efforts to cause each Great Lakes Board Designee whose term expires in 2006
or 2007 to be re-nominated for one additional term, unless such Great Lakes
Board Designee does not meet Crompton's board membership criteria then in effect
or such Great Lakes Board Designee is the Great Lakes Board Designee designated
to resign from or not seek re-election to the Board of Directors of Crompton
under Section 6.13(b). For purposes of this Agreement, "Great Lakes Board
Designees" shall mean the five individuals, each of whom must be serving as a
member of the Board of Directors of Great Lakes as of the date of this
Agreement, designated by Great Lakes in writing prior to the mailing of the
Joint Proxy Statement to be elected to the Board of Directors of Crompton as of,
and conditioned upon the occurrence of, the Effective Time. The Great Lakes
Board Designees shall be allocated among the various classes of the Board of
Directors of Crompton in a manner to be reasonably agreed upon by Great Lakes
and Crompton prior to the mailing of the Joint Proxy Statement, provided that
the total number of directors in each of Class I, Class II and Class III shall
be as nearly equal in number as possible.
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(b) As of the 2006 annual meeting of stockholders of Crompton,
Crompton shall cause the number of directors that will comprise the full Board
of Directors of Crompton to be nine. In order to achieve such reduced number of
directors, Crompton shall cause one Great Lakes Board Designee and one of the
Original Crompton Board Members to either resign from or to not seek re-election
to the Board of Directors of Crompton as of or at the 2006 annual meeting of
stockholders of Crompton.
(c) Notwithstanding anything to the contrary in this Section 6.13,
after the Effective Time, Crompton shall have the right, and shall be permitted,
to take any action inconsistent with Sections 6.13(a) and 6.13(b) if, after the
Effective Time, the entire Board of Directors of Crompton unanimously approves
the taking of such action.
SECTION 6.14. Crompton 2004 Indentures. Crompton shall use its
reasonable best efforts to cause the condition to Closing set forth in Section
7.1(f) to be satisfied as soon as reasonably practicable following the date of
this Agreement (it being understood that the use of such reasonable best efforts
shall include the preparation and commencement of the Crompton Consent
Solicitations), and Great Lakes shall use its reasonable best efforts to
cooperate with Crompton in connection therewith. Without limiting the generality
of the foregoing, Crompton shall provide Great Lakes (a) drafts of all consent
solicitation materials that Crompton proposes to send to holders of Crompton's
Senior Floating Rate Notes due 2010 (the "Crompton Floating Rate Notes") or
Crompton's 9-7/8% Senior Notes due 2012 (the "Crompton 9-7/8% Notes" and,
together with the Crompton Floating Rate Notes, the "Crompton Notes") seeking
such holders' consent to one or more amendments or to the waiver of one or more
covenants (the "Merger Amendments") to (i) the Indenture, dated as of August 16,
2004, among Crompton, the guarantors party thereto and Xxxxx Fargo Bank,
National Association, as trustee, relating to the Crompton Floating Rate Notes
(the "Crompton Floating Rate Notes Indenture"), and (ii) the Indenture, dated as
of August 16, 2004, among Crompton, the guarantors party thereto and Xxxxx Fargo
Bank, National Association, as trustee, relating to the Crompton 9-7/8% Notes
(the "Crompton 9-7/8% Notes Indenture" and, together with the Crompton Floating
Rate Notes Indenture, the "Crompton 2004 Indentures") which provide that the
consummation of the Merger and the other transactions contemplated by this
Agreement shall not constitute a Default or an Event of Default under either of
the Crompton 2004 Indentures and (b) a reasonable opportunity to consult with
Crompton as to the form and content of, and a reasonable opportunity to review
and comment on, such consent solicitation materials prior to the time that
Crompton commences such consent solicitations (the "Crompton Consent
Solicitations"). In addition, Crompton shall be entitled to seek in connection
with the Crompton Consent Solicitations the consent of the holders of the
Crompton Notes to one or more other amendments (collectively, the "Discretionary
Amendments") to the Crompton 2004 Indentures so long as Crompton determines in
good faith, after consultation with its financial and legal advisors, that
seeking such Discretionary Amendments would not reasonably be expected to
prevent or materially delay obtaining such holders' consent to the Merger
Amendments; provided, however, that if Crompton elects to seek consent to a
Discretionary Amendment and it thereafter becomes reasonably apparent that such
consent cannot be obtained without preventing or materially delaying the Merger,
Crompton shall promptly eliminate from the Crompton Consent Solicitations the
request for consent to such Discretionary Amendment and continue to seek the
Merger Amendments in accordance with the terms of this Section 6.14.
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SECTION 6.15. Dividend Coordination. Great Lakes shall coordinate
with Crompton the declaration, setting of record dates and payment dates of
dividends on Great Lakes Common Stock so that holders of shares of Great Lakes
Common Stock do not receive a dividend on both Great Lakes Common Stock and
Crompton Common Stock received in the Merger in respect of any calendar quarter
or fail to receive a dividend on either Great Lakes Common Stock or Crompton
Common Stock received in the Merger in respect of any calendar quarter.
SECTION 6.16. Filing of Annual Report on Form 10-X. Xxxxxxxx shall
file its annual report on Form 10-K for the year ended December 31, 2004 on or
prior to March 16, 2005.
SECTION 6.17. Credit Agreement. Crompton shall use its reasonable
best efforts to have in full force and effect as of the Closing Date a new
credit agreement or similar agreement that replaces the Crompton Credit
Agreement (the "New Credit Agreement") under which the execution of this
Agreement and the consummation of the transactions contemplated hereby will not
violate or otherwise cause a default under the New Credit Agreement; provided,
however, that Crompton shall not be required to comply with this Section 6.17 if
it obtains the consent of the requisite percentage of lenders under the Crompton
Credit Agreement to the consummation of the transactions contemplated by this
Agreement. Crompton shall consult with Great Lakes regarding, and shall provide
Great Lakes with a reasonable opportunity to review and comment on, such
proposed New Credit Agreement prior to the execution thereof by Crompton.
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
shall be subject to the satisfaction (or waiver, if permissible under applicable
Law) on or prior to the Closing Date of the following conditions:
(a) Stockholder Approvals. Each of the Great Lakes Stockholder
Approval and the Crompton Stockholder Approval shall have been obtained.
(b) Stock Exchange Listing. The shares of Crompton Common Stock
issuable to the stockholders of Great Lakes as contemplated by this Agreement
(including pursuant to the Merger and the exercise of Great Lakes Stock Options
and Great Lakes Restricted Share Units as adjusted pursuant to Section 2.3)
shall have been approved for listing on the New York Stock Exchange, subject to
official notice of issuance.
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(c) Antitrust. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired, and any regulatory or governmental clearance or approval required
prior to the Closing under any competition, antitrust, merger control or other
similar Law of any other relevant jurisdiction shall have been obtained, any
required notice or filing thereunder shall have been made and any relevant
waiting period thereunder shall have expired or terminated, except where the
failure to obtain such clearance, approval, expiration or termination or to make
such notice or filing would not, individually or in the aggregate, reasonable be
expected to have a Crompton Material Adverse Effect or a Great Lakes Material
Adverse Effect.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other judgment or order issued by any
court of competent jurisdiction or other statute, law, rule, legal restraint or
prohibition (collectively, "Restraints") shall be in effect preventing the
consummation of the Merger.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(f) Crompton 2004 Indentures. The consummation of the Merger and the
other transactions contemplated by this Agreement shall not constitute a Default
or an Event of Default under either of the Crompton 2004 Indentures.
(g) Consent under Crompton Credit Agreement. (i) Crompton shall have
obtained the consent of the requisite percentage of lenders under the Credit
Agreement, dated as of August 16, 2004, among Crompton, various lending
institutions, Deutsche Bank AG, Cayman Islands Branch (as Deposit Bank), and
Deutsch Bank AG New York Branch (as Administrative Agent), as amended (the
"Crompton Credit Agreement"), to the consummation of the transactions
contemplated by this Agreement or (ii) the New Credit Agreement shall be in full
force and effect as of the Closing Date and Crompton shall not be in default
thereunder as of the Closing Date.
SECTION 7.2. Conditions to Obligations of Crompton and Merger Sub.
The obligations of Crompton and Merger Sub to effect the Merger are further
subject to the satisfaction (or waiver, if permissible under applicable Law) on
or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Great Lakes contained in Sections 3.2, 3.3(a), 3.3(b), 3.3(d) and
3.18 that are qualified as to materiality or Great Lakes Material Adverse Effect
shall be true and correct, and the representations and warranties of Great Lakes
contained in Sections 3.2, 3.3(a), 3.3(b), 3.3(d) and 3.18 that are not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as though made on the
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Closing Date, except to the extent such representations and warranties expressly
relate to an earlier date, in which case as of such earlier date and except to
the extent that the failure of such representations and warranties to be true
and correct as of such dates, individually or in the aggregate, would not
reasonably be expected to have a materially detrimental effect on Crompton or
its stockholders, compared to what would be the case if there were no such
failure, if the Merger were consummated and (ii) all other representations and
warranties of Great Lakes contained in this Agreement that are qualified as to
materiality or Great Lakes Material Adverse Effect shall be true and correct,
and the representations and warranties of Great Lakes contained in this
Agreement that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Closing
Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date, and except further to the extent that the facts or
matters as to which such representations and warranties are not so true and
correct as of such dates (without giving effect to any qualifications or
limitations as to materiality or Great Lakes Material Adverse Effect set forth
therein), individually or in the aggregate, have not had and would not
reasonably be expected to have a Great Lakes Material Adverse Effect. Crompton
shall have received a certificate signed on behalf of Great Lakes by an
executive officer of Great Lakes to such effect.
(b) Performance of Obligations of Great Lakes. Great Lakes shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Crompton shall have
received a certificate signed on behalf of Great Lakes by an executive officer
of Great Lakes to such effect.
(c) Tax Opinion. Crompton and Merger Sub shall have received from
Mayer, Brown, Xxxx & Maw LLP, counsel to Crompton and Merger Sub, an opinion
dated as of the Closing Date and stating that the Merger will be treated for
Federal income tax purposes as a "reorganization" within the meaning of Section
368(a) of the Code. In rendering such opinion, Mayer, Brown, Xxxx & Maw LLP may
rely upon the representations and covenants contained in the certificates of
Great Lakes and Crompton referred to in Section 6.10(a).
SECTION 7.3. Conditions to Obligation of Great Lakes. The obligation
of Great Lakes to effect the Merger is further subject to the satisfaction (or
waiver, if permissible under applicable Law) on or prior to the Closing Date of
the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Crompton and Merger Sub contained in Sections 4.2, 4.3(a), 4.3(b),
4.3(d), 4.3(e) and 4.18 that are qualified as to materiality or Crompton
Material Adverse Effect shall be true and correct, and the representations and
warranties of Crompton contained in Sections 4.2, 4.3(a), 4.3(b), 4.3(d), 4.3(e)
and 4.18 that are not so qualified shall be true and correct in all material
65
respects, in each case as of the date of this Agreement and as of the Closing
Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date and except to the extent that the failure of such
representations and warranties to be true and correct as of such dates,
individually or in the aggregate, would not reasonably be expected to have a
materially detrimental effect on Great Lakes or its stockholders, compared to
what would be the case if there were no such failure, if the Merger were
consummated, (ii) the representations and warranties of Crompton contained in
Section 4.20 that are qualified as to materiality or in all substantial respects
shall be true and correct, and the representations and warranties of Crompton
contained in Section 4.20 that are not so qualified shall be true and correct in
all respects, in each case as of the date of this Agreement and as of the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date, and (iii) all other representations and warranties
of Crompton and Merger Sub contained in this Agreement (other than Section 4.21)
that are qualified as to materiality or Crompton Material Adverse Effect shall
be true and correct, and the representations and warranties of Crompton
contained in this Agreement (other than Section 4.21) that are not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Closing Date as though made on the Closing Date,
except to the extent such representations and warranties expressly relate to an
earlier date, in which case as of such earlier date, and except further to the
extent that the facts or matters as to which such representations and warranties
are not so true and correct as of such dates (without giving effect to any
qualifications or limitations as to materiality or Crompton Material Adverse
Effect set forth therein), individually or in the aggregate, have not had and
would not reasonably be expected to have a Crompton Material Adverse Effect.
Great Lakes shall have received a certificate signed on behalf of Crompton by an
executive officer of Crompton to such effect.
(b) Performance of Obligations of Crompton and Merger Sub. Crompton
and Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date, and Great Lakes shall have received a certificate signed on behalf of
Crompton by an executive officer of Crompton to such effect.
(c) Tax Opinion. Great Lakes shall have received from Weil, Gotshal &
Xxxxxx LLP, counsel to Great Lakes, an opinion dated as of the Closing Date and
stating that the Merger will be treated for Federal income tax purposes as a
"reorganization" within the meaning of Section 368(a) of the Code. In rendering
such opinion, Weil, Gotshal & Xxxxxx LLP may rely upon the representations and
covenants contained in the certificates of Great Lakes and Crompton referred to
in Section 6.10(a).
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(d) Certifications. Crompton's principal executive officer and its
principal financial officer, or executive officers performing similar functions,
shall have given, when next due and prior to the Closing and, except as set
forth on Section 7.3(d) of the Crompton Disclosure Schedule, without
qualification, the certifications and related disclosure required by Sections
302 and 906 of Xxxxxxxx-Xxxxx in connection with Crompton's annual report on
Form 10-K for the year ended December 31, 2004 (collectively, the "Sections 302
and 906 Disclosure"). Crompton's management and independent auditor shall have
given, when next due and prior to the Closing and, except as set forth on
Section 7.3(d) of the Crompton Disclosure Schedule, without qualification, (i)
management's report on internal control over financial reporting and related
disclosure required by Section 404(a) of Xxxxxxxx-Xxxxx that concludes that
internal control over financial reporting is effective and (ii) the auditor's
attestation required by Section 404(b) of Xxxxxxxx-Xxxxx that concludes that (A)
Crompton's management maintained, in all material respects, effective internal
control over financial reporting and (B) management's report on internal control
over financial reporting is fairly stated in all material respects
(collectively, the "Section 404 Disclosure").
(e) No Restatement. None of the items set forth on Section 7.3(d) of
the Crompton Disclosure Schedule has caused, nor will cause, a restatement or
other modification of the historical earnings or other financial results of
Crompton and its consolidated Subsidiaries.
SECTION 7.4. Limitations on Certain Conditions to Obligations of
Great Lakes. Notwithstanding anything set forth in Section 7.3 to the contrary,
(i) the conditions set forth in Sections 7.3(a)(ii) and 7.3(d) shall expire, and
may no longer be asserted, after March 23, 2005 if this Agreement has not been
terminated by Great Lakes pursuant to Section 8.1(d)(iii) on or prior to March
23, 2005, and (ii) Crompton's performance or non-performance under Section 6.16
shall be disregarded for purposes of determining whether the condition set forth
in Section 7.3(b) has been satisfied if this Agreement has not been terminated
by Great Lakes pursuant to Section 8.1(d)(iv) on or prior to March 23, 2005.
ARTICLE VIII
Termination; Amendment
----------------------
SECTION 8.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after receipt of the Great
Lakes Stockholder Approval or the Crompton Stockholder Approval:
(a) by the mutual written consent of Great Lakes and Crompton;
(b) by either Great Lakes or Crompton:
(i) if the Merger shall not have been consummated on or before
September 30, 2005; provided, however, that if on such date the
condition to Closing set forth in Section 7.1(c) shall not have been
satisfied, then either Great Lakes or Crompton may cause such date to
be extended to December 31, 2005, upon delivery of written notice to
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the other party; provided further, however, that the right to
terminate this Agreement under this Section 8.1(b)(i) shall not be
available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to be
consummated on or before such date;
(ii) if any Restraint having the effect set forth in Section
7.1(d) shall be in effect and shall have become final and
nonappealable;
(iii) if the Great Lakes Stockholder Approval shall not have been
obtained at the Great Lakes Stockholders Meeting duly convened
therefor or at any adjournment or postponement thereof;
(iv) if the Crompton Stockholder Approval shall not have been
obtained at the Crompton Stockholders Meeting duly convened therefor
or at any adjournment or postponement thereof;
(c) by Crompton, if (i) Great Lakes shall have breached or failed to
perform any of its representations, warranties, covenants or agreements set
forth in this Agreement, which breach or failure to perform (x) would give rise
to the failure of a condition set forth in Section 7.2(a) or 7.2(b) and (y) is
not cured by Great Lakes within 30 calendar days following receipt of written
notice of such breach or failure to perform from Crompton or (ii) a condition
set forth in Section 7.2(a) or 7.2(b) is not reasonably capable of being
satisfied on or prior to the applicable date specified in Section 8.1(b)(i);
(d) by Great Lakes, if (i) Crompton or Merger Sub shall have breached
or failed to perform any of its representations, warranties, covenants or
agreements set forth in this Agreement, which breach or failure to perform (x)
would give rise to the failure of a condition set forth in Section 7.3(a)(i) or
(iii) or 7.3(b) and (y) is not cured by Crompton or Merger Sub within 30
calendar days following receipt of written notice of such breach or failure to
perform from Great Lakes, (ii) a condition set forth in Section 7.3(a)(i) or
(iii) or 7.3(b) is not reasonably capable of being satisfied on or prior to the
applicable date specified in Section 8.1(b)(i), (iii) a condition set forth in
Section 7.3(a)(ii) or 7.3(d) shall not have been satisfied on or prior to March
16, 2005, (iv) the covenant set forth in Section 6.16 has been breached or (v)
the condition set forth in Section 7.3(e) shall not have been satisfied or is
not reasonably capable of being satisfied; provided, however, that Great Lakes
shall only have the right to terminate this Agreement pursuant to clause (iii)
or (iv) above on or prior to March 23, 2005;
(e) by Crompton, (i) in the event that a Great Lakes Adverse
Recommendation Change shall have occurred or (ii) as permitted by, and in
accordance with, Section 5.3(e); or
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(f) by Great Lakes, (i) in the event that a Crompton Adverse
Recommendation Change shall have occurred or (ii) as permitted by, and in
accordance with, Section 5.2(e).
SECTION 8.2. Termination Fee.
(a) In the event that (i) (A) a Great Lakes Adverse Recommendation
Change has occurred that is related to a Great Lakes Takeover Proposal that has
been made to Great Lakes or directly to the stockholders of Great Lakes
generally, in each case prior to the Great Lakes Stockholders Meeting, and (B)
this Agreement is terminated by Crompton pursuant to Section 8.1(e)(i), (ii) (A)
a Great Lakes Adverse Recommendation Change has occurred that is related to a
Great Lakes Takeover Proposal that has been made to Great Lakes or directly to
the stockholders of Great Lakes generally, in each case prior to the Great Lakes
Stockholders Meeting, (B) Crompton has not terminated this Agreement pursuant to
Section 8.1(e)(i) and (C) this Agreement is terminated by Great Lakes or
Crompton pursuant to Section 8.1(b)(iii), (iii) this Agreement is terminated by
Great Lakes pursuant to Section 8.1(f)(ii) or (iv) (A) a Great Lakes Takeover
Proposal shall have been made, and not withdrawn, to Great Lakes or shall have
been made, and not withdrawn, directly to the stockholders of Great Lakes
generally, in each case prior to the Great Lakes Stockholders Meeting, (B) a
Great Lakes Adverse Recommendation Change has not occurred and (C) this
Agreement is terminated by Great Lakes or Crompton pursuant to Section
8.1(b)(iii), then Great Lakes shall pay Crompton a fee equal to (I) in the case
of clause (i), (ii) or (iii) above, $50,000,000 (the "Great Lakes Termination
Fee"), in each case by wire transfer of same-day funds concurrently with any
such termination of this Agreement, or (II) in the case of clause (iv) above,
(x) $25,000,000, by wire transfer of same-day funds concurrently with such
termination of this Agreement, and (y) if within 12 months of such termination
of this Agreement, Great Lakes enters into a definitive agreement to consummate,
or consummates, a Great Lakes Takeover Proposal, $25,000,000, by wire transfer
of immediately available funds concurrently with the consummation of the
transactions contemplated by such Great Lakes Takeover Proposal.
(b) Great Lakes acknowledges and agrees that the agreements contained
in Section 8.2(a) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Crompton would not enter into
this Agreement. If Great Lakes fails promptly to pay the amount due pursuant to
Section 8.2(a), and, in order to obtain such payment, Crompton commences a suit
that results in a judgment against Great Lakes for such amount, Great Lakes
shall pay to Crompton its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) incurred in connection with such suit, together
with interest on such amount from the date such payment was required to be made
until the date of payment at the prime rate of Citibank, N.A. in effect on the
date such payment was required to be made.
(c) In the event that (i) (A) a Crompton Adverse Recommendation
Change has occurred that is related to a Crompton Takeover Proposal that has
been made to Crompton or directly to the stockholders of Crompton generally, in
each case prior to the Crompton Stockholders Meeting, and (B) this Agreement is
terminated by Great Lakes pursuant to Section 8.1(f)(i), (ii) (A) a Crompton
Adverse Recommendation Change has occurred that is related to a Crompton
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Takeover Proposal that has been made to Crompton or directly to the stockholders
of Crompton generally, in each case prior to the Crompton Stockholders Meeting,
(B) Great Lakes has not terminated this Agreement pursuant to Section 8.1(f)(i)
and (C) this Agreement is terminated by Crompton or Great Lakes pursuant to
Section 8.1(b)(iv), (iii) this Agreement is terminated by Crompton pursuant to
Section 8.1(e)(i) or (iv) (A) a Crompton Takeover Proposal shall have been made,
and not withdrawn, to Crompton or shall have been made, and not withdrawn,
directly to the stockholders of Crompton generally, in each case prior to the
Crompton Stockholders Meeting, (B) a Crompton Adverse Recommendation Change has
not occurred and (C) this Agreement is terminated by Crompton or Great Lakes
pursuant to Section 8.1(b)(iv), then Crompton shall pay Great Lakes a fee equal
to (I) in the case of clause (i), (ii) or (iii) above, $50,000,000 (the
"Crompton Termination Fee"), in each case by wire transfer of same-day funds
concurrently with any such termination of this Agreement, or (II) in the case of
clause (iv) above, (x) $25,000,000, by wire transfer of same-day funds
concurrently with such termination of this Agreement, and (y) if within 12
months of such termination of this Agreement, Crompton enters into a definitive
agreement to consummate, or consummates, a Crompton Takeover Proposal,
$25,000,000, by wire transfer of immediately available funds concurrently with
the consummation of the transactions contemplated by such Crompton Takeover
Proposal.
(d) Crompton acknowledges and agrees that the agreements contained in
Section 8.2(c) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Great Lakes would not enter into
this Agreement. If Crompton fails promptly to pay the amount due pursuant to
Section 8.2(c), and, in order to obtain such payment, Great Lakes commences a
suit that results in a judgment against Crompton for such amount, Crompton shall
pay to Great Lakes its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) incurred in connection with such suit, together
with interest on such amount from the date such payment was required to be made
until the date of payment at the prime rate of Citibank, N.A. in effect on the
date such payment was required to be made.
SECTION 8.3. Effect of Termination. In the event of termination of
this Agreement by either Great Lakes or Crompton as provided in Section 8.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Great Lakes, Crompton or Merger Sub,
other than the provisions of Sections 3.18, 4.18, 6.2(b), 6.5, 8.2 and 8.7, this
Section 8.3 and Article IX, which provisions shall survive such termination, and
except that no party shall be relieved or released from any liabilities or
damages arising out of its fraud or its willful breach of this Agreement.
SECTION 8.4. Amendment. At any time prior to the Effective Time,
before or after receipt of the Great Lakes Stockholder Approval or the Crompton
Stockholder Approval, this Agreement may be amended by the parties hereto;
provided, however, that after the Great Lakes Stockholder Approval or the
Crompton Stockholder Approval, as the case may be, has been obtained, there
shall be made no amendment that by Law requires further approval by the
70
stockholders of Great Lakes or the approval of the stockholders of Crompton, as
the case may be, without such approval having been obtained. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
SECTION 8.5. Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) subject to the proviso to the first sentence of Section
8.4, waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
SECTION 8.6. Procedure for Termination or Amendment. A termination of
this Agreement pursuant to Section 8.1 or an amendment of this Agreement
pursuant to Section 8.4 shall, in order to be effective, require, in the case of
Great Lakes or Crompton, action by its Board of Directors or, with respect to
any amendment of this Agreement pursuant to Section 8.4, the duly authorized
committee or other designee of its Board of Directors to the extent permitted by
Law.
SECTION 8.7. Lender Consent Under the Crompton Credit Agreement.
Notwithstanding anything set forth in this Agreement to the contrary, it is
agreed that the consent of the requisite percentage of lenders under the
Crompton Credit Agreement to the consummation of the transactions contemplated
by this Agreement is required to be obtained in connection therewith and to the
extent that such consent is not obtained, neither Crompton nor any of its
Subsidiaries will be required to pay any liquidated or other damages or other
material amounts in connection therewith.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.1. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.2. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of Law or otherwise by any of the parties without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
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SECTION 9.3. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Great Lakes Disclosure Schedule, the Crompton Disclosure Schedule
and the Confidentiality Agreement (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement and the
Confidentiality Agreement and (b) except for the provisions of Article II (only
with respect to the right to receive the Merger Consideration and any amounts
pursuant to Sections 2.2(c) and 2.2(e), and provided that no third party
beneficiary rights exist with respect to Article II unless and until the Merger
has occurred) and Sections 6.4 and 6.13 (provided that no third party
beneficiary rights exist with respect to Sections 6.4 and 6.13 unless and until
the Merger has occurred), are not intended to confer upon any Person, other than
the parties hereto, any rights or remedies.
SECTION 9.4. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware, regardless of
the Laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.5. Specific Enforcement; Consent to Jurisdiction; Waiver of
Jury Trial. The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in any state
court in Wilmington, Delaware, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any Federal
court located in the State of Delaware or of any state court located in
Wilmington, Delaware in the event any dispute arises out of this Agreement or
the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or the transactions contemplated by this Agreement in
any court other than a Federal court located in the State of Delaware or a state
court located in Wilmington, Delaware. Each of the parties hereto hereby
irrevocably waives any and all rights to trial by jury in any legal proceeding
arising out of or related to this Agreement.
SECTION 9.6. Notices. All notices, requests and other communications
to any party hereunder shall be in writing and shall be deemed given if
delivered personally, facsimiled (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses:
If to Crompton or Merger Sub, to:
CROMPTON CORPORATION
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Senior Vice President and
General Counsel
Facsimile: (000) 000-0000
72
with a copy (which shall not constitute notice) to:
Mayer, Brown, Xxxx & Maw LLP
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq., and
D. Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Great Lakes, to:
GREAT LAKES CHEMICAL CORPORATION 0000 Xxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Senior Vice President and
General Counsel
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: R. Xxx Xxxxx, Esq.
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify by
like notice to the other parties hereto. All such notices, requests and other
communications shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. in the place of receipt and such day is a
Business Day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
73
SECTION 9.7. Disclosure Schedules.
(a) Any information which is disclosed in the Great Lakes Disclosure
Schedule shall specifically refer to the Section or subsection of this Agreement
to which the information stated therein relates; provided, however, that any
fact, condition or other information disclosed in any Section of the Great Lakes
Disclosure Schedule in such a way as to make its relevance to a representation
or representations made elsewhere in this Agreement or information called for by
another Section of the Great Lakes Disclosure Schedule reasonably apparent shall
be deemed to be an exception to such representation or representations or to be
disclosed on such other Section of the Great Lakes Disclosure Schedule (whether
or not specific cross references are made).
(b) Any information which is disclosed in the Crompton Disclosure
Schedule shall specifically refer to the Section or subsection of this Agreement
to which the information stated therein relates; provided, however, that any
fact, condition or other information disclosed in any Section of the Crompton
Disclosure Schedule in such a way as to make its relevance to a representation
or representations made elsewhere in this Agreement or information called for by
another Section of the Crompton Disclosure Schedule reasonably apparent shall be
deemed to be an exception to such representation or representations or to be
disclosed on such other Section of the Crompton Disclosure Schedule (whether or
not specific cross references are made).
SECTION 9.8. Definitions.
(a) As used in this Agreement, the following terms have the meanings
ascribed thereto below:
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, or is controlled by, or is under common control with,
such Person. For this purpose, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a Person, whether through the ownership of securities
or partnership or other ownership interests, by contract or otherwise.
"Business Day" means a day except a Saturday, a Sunday or other day
on which the SEC or banks in the City of New York are authorized or required by
Law to be closed.
"Filed Crompton SEC Documents" means the Crompton SEC Documents filed
by Crompton and publicly available prior to the date of this Agreement.
74
"Filed Great Lakes SEC Documents" means the Great Lakes SEC Documents
filed by Great Lakes and publicly available prior to the date of this Agreement.
"GAAP" means generally accepted accounting principles in the United
States.
"Knowledge" of any Person that is not an individual means (i) with
respect to Great Lakes regarding any matter in question, the actual knowledge of
the chief executive officer, chief financial officer, general counsel, chief
environmental officer and chief human resources officer of Great Lakes and (ii)
with respect to Crompton regarding any matter in question, the actual knowledge
of the chief executive officer, chief financial officer, general counsel, vice
president with supervisory power over environmental matters and chief human
resources officer of Crompton.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity, including a
Governmental Authority.
"Subsidiary" when used with respect to any party, means any
corporation, limited liability company, partnership, association, trust or other
entity the accounts of which would be consolidated with those of such party in
such party's consolidated financial statements if such financial statements were
prepared in accordance with GAAP, as well as any other corporation, limited
liability company, partnership, association, trust or other entity of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary voting power (or, in the case of a partnership,
more than 50% of the general partnership interests) are, as of such date, owned
by such party or one or more Subsidiaries of such party or by such party and one
or more Subsidiaries of such party.
(b) The following terms are defined on the page of this Agreement set
forth after such term below:
Adjusted Great Lakes Restricted Share Unit......9 Crompton 2004 Financial Statements.............31
Adjusted Great Lakes Restricted Shares..........9 Crompton 2004 Indentures.......................62
Adjusted Great Lakes Stock Option...............8 Crompton 9-7/8% Notes..........................62
Affected Employees.............................60 Crompton 9-7/8% Notes Indenture................62
Agreement.......................................2 Crompton Adverse Recommendation Change.........51
Certificate.....................................4 Crompton Adverse Recommendation or
Certificate of Merger...........................2 Termination Notice.............................51
Closing.........................................2 Crompton Charter Documents.....................27
Closing Date....................................2 Crompton Common Stock...........................4
Code............................................2 Crompton Consent Solicitations.................62
Confidentiality Agreement......................54 Crompton Credit Agreement......................64
Contract.......................................14 Crompton Disclosure Schedule...................26
Crompton........................................2 Crompton Floating Rate Notes...................62
75
Crompton Floating Rate Notes Indenture.........62 Great Lakes Board Designees....................61
Crompton Material Adverse Effect...............26 Great Lakes Charter Documents..................12
Crompton Material Contracts....................38 Great Lakes Disclosure Schedule................11
Crompton Notes.................................62 Great Lakes Material Adverse Effect............11
Crompton Participating PreferredStock..........27 Great Lakes Material Contracts.................24
Crompton Permits...............................32 Great Lakes Permits............................17
Crompton Plans.................................35 Great Lakes Plans..............................20
Crompton Preferred Stock.......................27 Great Lakes Restricted Share Unit...............9
Crompton Rights................................27 Great Lakes Restricted Shares...................9
Crompton Rights Agreement......................27 Great Lakes SEC Documents......................15
Crompton SEC Documents.........................30 Great Lakes Significant Subsidiaries...........12
Crompton Significant Subsidiaries..............27 Great Lakes Stock Option........................8
Crompton Stock Plans...........................27 Great Lakes Stock Plans.........................8
Crompton Stockholder Approval..................30 Great Lakes Stockholder Approval...............14
Crompton Stockholders Meeting..................53 Great Lakes Stockholders Meeting...............53
Crompton Subsidiary Charter Documents..........29 Great Lakes Subsidiary Charter Documents.......14
Crompton Superior Proposal.....................50 Great Lakes Superior Proposal..................48
Crompton Takeover Proposal.....................50 Great Lakes Takeover Proposal..................48
Crompton Termination Fee.......................70 Great Lakes Termination Fee....................69
DGCL............................................2 Hazardous Materials............................23
Discretionary Amendments.......................62 HSR Act........................................14
Draft Form 10-K................................40 Indemnified Parties............................57
EC Merger Regulation...........................14 Intellectual Property Rights...................25
Effective Time..................................3 Joint Proxy Statement..........................14
Environmental Laws.............................23 Laws...........................................16
Environmental Liabilities......................23 Liens..........................................12
ERISA..........................................20 Merger..........................................2
Excess Shares...................................6 Merger Amendments..............................62
Excess Shares Trust.............................6 Merger Consideration............................4
Exchange Act...................................14 Merger Sub Common Stock........................28
Exchange Agent..................................4 Multiemployer Plan.............................20
Exchange Fund...................................4 New Credit Agreement...........................63
Exchange Ratio..................................4 Original Crompton Board Members................61
Form S-4.......................................18 PBGC...........................................21
Governmental Authority.........................14 Permitted Changes..............................40
Great Lakes.....................................2 Release........................................23
Great Lakes 2004 Audited Representatives................................47
Financial Statements...........................15 Restraints.....................................64
Great Lakes Adverse Recommendation Change......49 Xxxxxxxx-Xxxxx.................................17
Great Lakes Adverse Recommendation or SEC............................................10
Termination Notice.............................49 Section 203....................................26
Section 404 Disclosure.........................67
Sections 302 and 906 Disclosure................67
Securities Act.................................15
Surviving Corporation...........................2
Taxes..........................................19
Title IV Plan..................................20
WARN...........................................22
76
SECTION 9.9. Interpretation.
(a) When a reference is made in this Agreement to an Article, a
Section, Exhibit or Schedule, such reference shall be to an Article of, a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to a Person
are also to its permitted successors and assigns.
(b) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
SECTION 9.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable Law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.11. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
[Signature Page Follows]
77
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
CROMPTON CORPORATION
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
Title: Chairman, President and
Chief Executive Officer
COPERNICUS MERGER CORPORATION
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
Title: President
GREAT LAKES CHEMICAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
EXHIBIT A
TO THE MERGER AGREEMENT
Form of Certificate of Incorporation of the Surviving Corporation
-----------------------------------------------------------------
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
GREAT LAKES CHEMICAL CORPORATION
(formerly Great Lakes Delaware, Inc.,
incorporated on January 26, 1970)
FIRST: The name of the Corporation is Great Lakes Chemical Corporation.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, in the City of
Wilmington, County of New Castle. The name of its registered agent at
such address is Corporation Service Company.
THIRD: The nature of the business to be conducted or promoted and the
purposes of the Corporation are to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock that the Corporation shall
have authority to issue is one thousand (1,000) shares of common
stock, par value $0.01 per share.
FIFTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
(a) to make, alter or repeal the By-laws of the Corporation; and
(b) to authorize and cause to be executed mortgages and liens
upon the real and personal property of the Corporation.
SIXTH: (a) The number of directors shall be not less than one. The
exact number of directors shall be such as from time to time
shall be fixed by, and in a manner set forth in, the By-laws
of the Corporation.
(b) Each director of the Corporation shall hold office until his
or her successor is duly elected and qualified or until his
or her prior death, resignation, retirement or removal from
office. Any vacancy in the Board of Directors or newly
created directorship resulting from any increase in the
number of directors may be filled by a majority of the
directors then in office, excluding any directors who shall
theretofore have resigned as of a future date, although less
than a quorum.
EXHIBIT A
TO THE MERGER AGREEMENT
SEVENTH: The Corporation is to have perpetual existence.
EIGHTH: The books of the Corporation may be kept (except as may be otherwise
required by law) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors or in
the By-laws of the Corporation. Election of directors need not be by
written ballot unless the By-laws of the Corporation shall so provide.
NINTH: The Corporation shall indemnify the directors and officers to the
fullest extent permitted by the General Corporation Law of the State
of Delaware. Directors of the Corporation, to the fullest extent
permitted by the General Corporation Law of the State of Delaware,
shall not be liable to the Corporation or its stockholders for
monetary damages for breach of their fiduciary duty as a director.
TENTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by statute and all rights conferred
upon stockholders herein are granted subject to this reservation.
ELEVENTH: None of the following transactions may be effectuated unless a meeting
of stockholders of the Corporation is held to act thereon and the
votes of the holders of its voting securities representing at least
two-thirds of the votes entitled to be cast are cast in favor thereof:
(a) An acquisition by the Corporation of stock of an Interested
Party;
(b) A sale, lease or exchange of all or the major portion of the
assets of the Corporation of an Interested Party to the
other;
(c) A merger or consolidation to which the Corporation and an
Interested Party are parties; or
(d) An amendment or repeal of this Article.
As used in this Article, "Interested Party" means any person, firm or
corporation, or any group thereof acting in concert, which owns of
record or beneficially, directly or indirectly, more than 10% of any
class of the stock of the Corporation.
EXHIBIT A
TO THE MERGER AGREEMENT
TWELFTH: Notwithstanding any provision of Delaware law, or any other provision
of this Certificate of Incorporation, any action required or permitted
to be taken by the stockholders of the Corporation, whether voting as
a class or otherwise, must be taken at a duly called annual or special
meeting of the stockholders of the Corporation and may not be taken by
consent in writing of such stockholders.
No amendment to this Certificate of Incorporation shall amend, alter,
change or repeal any of the provisions of this Article Twelfth unless
such amendment, in addition to receiving any stockholder vote or
consent required by the laws of the State of Delaware in effect at the
time, shall receive the affirmative vote or consent of the holders of
80% of the outstanding shares of stock of the Corporation entitled to
vote in elections of directors, considered separately for purposes of
this Article Twelfth.
EXHIBIT B
TO THE MERGER AGREEMENT
Form of Affiliate Letterru
Dear Sirs:
The undersigned, a holder of shares of common stock, par value $1.00
per share ("Great Lakes Common Stock"), of GREAT LAKES CHEMICAL CORPORATION, a
Delaware corporation ("Great Lakes"), acknowledges that the undersigned may be
deemed an "affiliate" of Great Lakes within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
by the Securities and Exchange Commission (the "SEC"), although nothing
contained herein should be construed as an admission of such fact. Pursuant to
the terms of the Agreement and Plan of Merger, dated as of March 8, 2005, among
CROMPTON CORPORATION, a Delaware corporation ("Crompton"), COPERNICUS MERGER
CORPORATION, a Delaware corporation and a wholly owned subsidiary of Crompton
("Merger Sub"), and Great Lakes, Merger Sub will be merged with and into Great
Lakes (the "Merger"), and in connection with the Merger, the undersigned is
entitled to receive common stock, par value $0.01 per share ("Crompton Common
Stock"), of Crompton.
If in fact the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the shares of
Crompton Common Stock received by the undersigned in exchange for any shares of
Great Lakes Common Stock in connection with the Merger may be restricted unless
such transaction is registered under the Securities Act or an exemption from
such registration is available. The undersigned understands that such exemptions
are limited and the undersigned has obtained or will obtain advice of counsel as
to the nature and conditions of such exemptions, including information with
respect to the applicability to the sale of such securities of Rules 144 and
145(d) promulgated under the Securities Act. The undersigned understands that
Crompton will not be required to maintain the effectiveness of any registration
statement under the Securities Act for the purposes of resale of Crompton Common
Stock by the undersigned.
The undersigned hereby represents to and covenants with Crompton that
the undersigned will not sell, assign or transfer any of the shares of Crompton
Common Stock received by the undersigned in exchange for shares of Great Lakes
Common Stock in connection with the Merger except (i) pursuant to an effective
registration statement under the Securities Act, (ii) in conformity with the
volume and other limitations of Rule 145 or (iii) in a transaction which, in the
opinion of counsel to the undersigned, or as described in a "no-action" or
interpretive letter from the Staff of the SEC specifically issued with respect
to a transaction to be engaged in by the undersigned, is not required to be
registered under the Securities Act.
In the event of a sale or other disposition by the undersigned of the
shares of Crompton Common Stock pursuant to Rule 145, the undersigned will
supply Crompton with evidence of compliance with such Rule, in the form of a
letter in the form of Annex I hereto or the opinion of counsel or no-action
letter referred to above. The undersigned understands that Crompton may instruct
its transfer agent to withhold the transfer of any shares of Crompton Common
Stock disposed of by the undersigned, but that (provided such transfer is not
prohibited by any other provision of this letter agreement) upon receipt of such
evidence of compliance, Crompton shall cause the transfer agent to effectuate
the transfer of the shares of Crompton Common Stock sold as indicated in such
letter.
EXHIBIT B
TO THE MERGER AGREEMENT
Crompton covenants that it will take all such actions as may be
reasonably available to it to permit the sale or other disposition of the shares
of Crompton Common Stock by the undersigned under Rule 145 in accordance with
the terms thereof.
The undersigned acknowledges and agrees that the legend set forth
below will be placed on certificates representing the shares of Crompton Common
Stock received by the undersigned in connection with the Merger or held by a
transferee thereof, which legend will be removed by delivery of substitute
certificates upon receipt of an opinion from counsel to the effect that such
legend is no longer required for purposes of the Securities Act.
There will be placed on the certificates for Crompton Common Stock
issued to the undersigned in connection with the Merger, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 applies. The shares have not been acquired by the holder with a
view to, or for resale in connection with, any distribution thereof
within the meaning of the Securities Act of 1933. The shares may not
be sold, pledged or otherwise transferred except in accordance with an
exemption from the registration requirements of the Securities Act of
1933."
It is understood and agreed that certificates with the legend set
forth above will be substituted by delivery of certificates without such legends
if (i) one year shall have elapsed from the date the undersigned acquired the
Crompton Common Stock received in the Merger and the provisions of Rule
145(c)(2) are then available, (ii) two years shall have elapsed from the date
the undersigned acquired the Crompton Common Stock received in the Merger and
the provisions of Rule 145(d)(3) are then available or (iii) Crompton has
received either a written opinion of counsel, or a "no action" letter obtained
by the undersigned from the SEC, to the effect that the restrictions imposed by
Rule 145 under the Securities Act no longer apply to the undersigned.
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Crompton
Common Stock and (ii) the receipt by Crompton of this letter is an inducement to
Crompton's obligations to consummate the Merger.
Very truly yours,
Dated:
ANNEX I TO
EXHIBIT B OF THE MERGER AGREEMENT
On [______], the undersigned sold the securities of CROMPTON
CORPORATION ("Crompton") described below in the space provided for that purpose
(the "Securities"). The Securities were received by the undersigned in
connection with the merger of COPERNICUS MERGER CORPORATION, a Delaware
corporation, with and into GREAT LAKES CHEMICAL CORPORATION, a Delaware
corporation.
Based upon the most recent report or statement filed by Crompton with
the Securities and Exchange Commission, the Securities sold by the undersigned
were within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities Act
or in transactions directly with a "market maker" as that term is defined in
Section 3(a) (38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of the
Securities to any person other than to the broker who executed the order in
respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities]
EXHIBIT C
OF THE MERGER AGREEMENT
Form of Great Lakes Tax Certificate
-----------------------------------
GREAT LAKES CHEMICAL CORPORATION
CERTIFICATE
In connection with the merger of Copernicus Merger Corporation
("Merger Sub"), a Delaware corporation and a directly wholly-owned subsidiary of
Crompton Corporation, a Delaware corporation ("Crompton"), with and into Great
Lakes Chemical Corporation, a Delaware corporation ("Great Lakes"), pursuant to
the Agreement and Plan of Merger, dated as of March 8, 2005 (the "Merger
Agreement"), among Crompton, Merger Sub, and Great Lakes, Great Lakes hereby
certifies the following are now true and will continue to be true as of the
Effective Time and thereafter where relevant (any capitalized term used but not
defined herein having the meaning given to such term in the Merger Agreement):
1. The consideration to be received in the Merger by the
stockholders of Great Lakes was the result of arm's-length
bargaining between the managements of Great Lakes and
Crompton. The fair market value of the common stock of
Crompton ("Crompton Common Stock") and any cash received in
lieu of fractional shares to be received by each stockholder
of Great Lakes will be approximately equal to the fair
market value of the common stock of Great Lakes ("Great
Lakes Common Stock") surrendered in the Merger.
2. Prior to and in connection with the Merger, no outstanding
stock of Great Lakes has been or will be (i) redeemed by
Great Lakes, or (ii) acquired by a person related to Great
Lakes (with the meaning of Treasury Regulation Section
1.368-1(e)(3) determined without regard to Treasury
Regulation Section 1.368-1(e)(3)(i)(A)) for consideration
other than Crompton Common Stock or Great Lakes Common
Stock.
3. To the best knowledge of Great Lakes, there is no plan or
intention on the part of any stockholders of Great Lakes to
sell, exchange, or otherwise dispose of Crompton Common
Stock to be received in the Merger by such holder of Great
Lakes Common Stock directly or indirectly to Crompton or to
a person related to Crompton (within the meaning of Treasury
Regulation Section 1.368-1(e)(3)) for consideration other
than Crompton Common Stock.
4. Great Lakes has no outstanding equity interests other than
as described in Section 3.2 of the Merger Agreement. At the
Effective Time and following the Merger, Great Lakes will
not have outstanding any warrants, options, convertible
securities, or any other type of right pursuant to which any
person could acquire stock in Great Lakes that, if exercised
or converted, would affect Crompton's acquisition or
retention of "control" of Great Lakes within the meaning of
Section 368(c) of the Internal Revenue Code of 1986, as
amended (the "Code").
5. Great Lakes has no plan or intention to alter the terms of
the Great Lakes Common Stock or to issue additional shares
of its stock that would result in Crompton losing "control"
of Great Lakes within the meaning of Section 368(c) of the
Code.
6. Holders of Great Lakes Common Stock do not have dissenter's
rights in connection with the Merger.
7. Great Lakes and its stockholders will pay their respective
expenses, if any, incurred in connection with the Merger,
except that the costs and expenses described in Section 6.5
of the Merger Agreement shall be borne by the parties in
accordance therewith.
8. Great Lakes is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
9. Great Lakes is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
10. There is no intercorporate indebtedness existing between
Crompton and Great Lakes or between Merger Sub and Great
Lakes that was issued, acquired, or will be settled at a
discount.
11. In the Merger, shares of Great Lakes Common Stock
representing control of Great Lakes within the meaning of
Section 368(c) of the Code will be exchanged solely for
Crompton Common Stock. In connection with the Merger, no
shares of Great Lakes Common Stock will be exchanged for
cash or other property originating with Crompton or any
person related to Crompton (within the meaning of Treasury
Regulation Section 1.368-1(e)(3)) except for cash received
by holders of Great Lakes Common Stock in lieu of fractional
shares of Crompton Common Stock. Further, no liabilities of
Great Lakes or of the stockholders of Great Lakes will be
assumed by Crompton, nor to the best of the knowledge of the
management of Great Lakes, will any Great Lakes Common Stock
be subject to any liabilities.
12. In connection with the Merger, Great Lakes has not sold,
transferred, or otherwise disposed of any of its assets as
would prevent Crompton or members of its qualified group
(within the meaning of Treasury Regulation
1.368-1(d)(4)(ii)) from causing Great Lakes after the Merger
to continue the historic business of Great Lakes or to use a
significant portion of Great Lakes' historic business assets
in a business.
83
13. On the date of the Merger, the fair market value of the
assets of Great Lakes will exceed the sum of its
liabilities, plus the amount of liabilities, if any, to
which the assets are subject.
14. Following the Merger, Great Lakes will hold at least 90% of
the fair market value of its net assets and at least 70% of
the fair market value of its gross assets held immediately
prior to the Merger. For purposes of this representation,
amounts paid by Great Lakes to Great Lakes stockholders who
receive cash or other property in the Merger, amounts used
by Great Lakes to pay its reorganization expenses and those
of its stockholders, and all redemptions and distributions
(except for regular, normal dividends) made by Great Lakes
will be included as assets of Great Lakes immediately prior
to the Merger.
15. None of the compensation to be received by any
stockholder-employee of Great Lakes in the Merger will be
separate consideration for, or allocable to, any of their
shares of Great Lakes Common Stock; none of the Crompton
Common Stock to be received by any stockholder-employee of
Great Lakes will be separate consideration for, or allocable
to, any employment or consulting agreement; and the
compensation to be paid to any stockholder-employee after
the Merger pursuant to arrangements entered into in
connection with the Merger will be for services actually
rendered and will be commensurate with amounts paid to third
parties bargaining at arm's-length for similar services.
16. All options, warrants, or rights to acquire shares of Great
Lakes Common Stock were issued with an exercise price no
less than fair market value at the time of issue.
17. The Merger is being effected for bona fide business reasons,
as described in the Joint Proxy Statement.
18. The Merger Agreement (including all exhibits and attachments
thereto) represents the full and complete agreement between
Crompton and Great Lakes regarding the Merger, and there are
no other written or oral agreements regarding the Merger.
19. The payment of cash in lieu of fractional shares of Crompton
Common Stock in the Merger is solely for the purpose of
avoiding the expense and inconvenience to Crompton of
issuing fractional shares, if any, and does not represent
separately bargained-for consideration. The total cash
consideration that will be paid in the Merger to holders of
Great Lakes Common Stock in lieu of issuing fractional
shares of Crompton Common Stock will not exceed one percent
(1%) of the total consideration that will be issued in the
Merger to holders of Great Lakes Common Stock in exchange
for their Great Lakes Common Stock.
The undersigned recognizes that opinions issued by counsel of
Crompton and Great Lakes regarding certain federal income tax consequences of
the Merger ("Tax Opinions") will be based on the representations set forth
herein and on the statements contained in the Merger Agreement and documents
related thereto. The Tax Opinions will be subject to certain limitations and
qualifications including that they may not be relied upon if any such
representations are not accurate in all respects.
IN WITNESS WHEREOF, Great Lakes has executed this Certificate on this
__ day of ______, 2005. Great Lakes Chemical Corporation
By:
-------------------------------
Name:
Title:
EXHIBIT D
OF THE MERGER AGREEMENT
Form of Crompton and Merger Sub Tax Certificate
-----------------------------------------------
CROMPTON CORPORATION
CERTIFICATE
In connection with the merger (the "Merger") of Copernicus Merger
Corporation ("Merger Sub"), a Delaware corporation and a direct wholly-owned
subsidiary of Crompton Corporation, a Delaware corporation ("Crompton"), with
and into Great Lakes Chemical Corporation, a Delaware corporation ("Great
Lakes"), pursuant to the Agreement and Plan of Merger, dated as of March 8, 2005
(the "Merger Agreement"), among Crompton, Merger Sub, and Great Lakes, Crompton
hereby certifies, on behalf of Crompton and Merger Sub, the following are now
true and will continue to be true as of the Effective Time and thereafter where
relevant (any capitalized term used but not defined herein having the meaning
given to such term in the Merger Agreement):
1. The consideration to be issued in the Merger to the
stockholders of Great Lakes was the result of arm's-length
negotiation between the managements of Crompton and Great
Lakes. The fair market value of the common stock of Crompton
("Crompton Common Stock") and any cash in lieu of fractional
shares to be received by each stockholder of Great Lakes
will be approximately equal to the fair market value of the
common stock of Great Lakes ("Great Lakes Common Stock")
surrendered in the Merger.
2. In connection with the Merger, none of the Great Lakes
Common Stock will be acquired by Crompton or any person
related to Crompton (within the meaning of Treasury
Regulation Section 1.368-1(e)(3)) for consideration other
than Crompton Common Stock and cash in lieu of fractional
share interests therein.
3. In the Merger, shares of Great Lakes Common Stock
representing control of Great Lakes, as defined in Section
368(c) of the Internal Revenue Code of 1986, as amended (the
"Code"), will be exchanged solely for Crompton Common Stock.
In connection with the Merger, no shares of Great Lakes
Common Stock will be exchanged for cash or other property
originating with Crompton or any person related to Crompton
(within the meaning of Treasury Regulation Section
1.368-1(e)(3)). Further, no liabilities of Great Lakes or of
the stockholders of Great Lakes will be assumed by Crompton,
nor to the best knowledge of the management of Crompton,
will any Great Lakes Common Stock be subject to any
liabilities.
4. Following the Merger, Crompton will cause Great Lakes to
hold at least 90% of the fair market value of its net assets
and at least 70% of the fair market value of its gross
assets held immediately prior to the Merger and at least 90%
of the fair market value of the net assets and at least 70%
of the fair market value of the gross assets of Merger Sub
held immediately before the Merger. For purposes of this
representation, assets transferred from Crompton to Merger
Sub are not included as assets of Merger Sub immediately
before the Merger where such assets are used to pay
reorganization expenses, to pay creditors of Great Lakes or
to enable Merger Sub to satisfy state minimum capitalization
requirements (where the money is returned to Crompton as
part of the transaction).
5. Following the Merger, the historic business of Great Lakes
will be continued by, or a significant portion of Great
Lakes' historic business assets will be used in a business
of, Crompton or a corporation within Crompton's qualified
group (within the meaning of Treasury Regulation Section
1.368-1(d)(4)(ii)).
6. Crompton has no plan or intention to liquidate Great Lakes;
to merge Great Lakes with or into another corporation; to
sell, distribute or otherwise dispose of Great Lakes Common
Stock acquired in the Merger except for transfers or
successive transfers of Great Lakes Common Stock to one or
more corporations controlled (within the meaning of Section
368(c) of the Code) in each case by the transferor; or to
cause Great Lakes to sell or otherwise dispose of any of its
assets or of any of the assets acquired from Merger Sub,
except for dispositions made in the ordinary course of
business or transfers or successive transfers of assets to
one or more corporations controlled (within the meaning of
Section 368(c) of the Code) in each case by the transferor
corporation.
7. In connection with the Merger, neither Crompton nor any
person related to Crompton (within the meaning of Treasury
Regulation Section 1.368-1(e)(3)) will purchase, exchange,
redeem, or otherwise acquire (directly or indirectly) any
Crompton Common Stock issued to holders of Great Lakes
Common Stock in the Merger.
8. Holders of Great Lakes Common Stock do not have dissenter's
rights in connection with the Merger.
9. Crompton and Merger Sub will pay their respective expenses,
if any, incurred in connection with the Merger, except that
the costs and expenses described in Section 6.5 of the
Merger Agreement shall be borne by the parties in accordance
therewith. Crompton will not pay any of the expenses of the
stockholders of Great Lakes incurred in connection with the
Merger.
10. Neither Crompton nor any person related to Crompton (within
the meaning of Treasury Regulation Section 1.368-1(e)(3))
has owned any stock of Great Lakes during the past five (5)
years.
11. Neither Crompton nor Merger Sub is an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
12. At the Effective Time, Crompton will be in control of Merger
Sub within the meaning of Section 368(c) of the Code.
13. Crompton has no plan or intention to cause Great Lakes to
alter the terms of the Great Lakes Common Stock or to issue
additional shares of its stock that would result in Crompton
losing control of Great Lakes within the meaning of Section
368(c) of the Code.
14. There is no intercorporate indebtedness existing between
Crompton and Great Lakes or between Merger Sub and Great
Lakes that was issued, acquired, or will be settled at a
discount.
15. Merger Sub will have no liabilities assumed by Great Lakes,
and will not transfer to Great Lakes any assets subject to
liabilities, in the Merger.
16. None of the compensation to be received by any
stockholder-employee of Great Lakes will be separate
consideration for, or allocable to, any of such person's
shares of Great Lakes Common Stock; none of the shares of
Crompton Common Stock to be received by any
stockholder-employee of Great Lakes in the Merger will be
separate consideration for, or allocable to, any past or
future services; and the compensation to be paid to any
stockholder-employee after the Merger will be for services
actually rendered and will be commensurate with amounts paid
to third parties bargaining at arm's-length for similar
services.
17. The Merger is being effected for bona fide business reasons,
as described in the Joint Proxy Statement.
18. The Merger Agreement (including all exhibits and attachments
thereto) represents the full and complete agreement between
Crompton and Great Lakes regarding the Merger, and there are
no other written or oral agreements regarding the Merger.
19. The payment of cash in lieu of fractional shares of Crompton
Common Stock in the Merger is solely for the purpose of
avoiding the expense and inconvenience to Crompton of
issuing fractional shares, if any, and does not represent
separately bargained-for consideration. The total cash
consideration that will be paid in the Merger to holders of
Great Lakes Common Stock in lieu of issuing fractional
shares of Crompton Common Stock will not exceed one percent
(1%) of the total consideration that will be issued in the
Merger to holders of Great Lakes Common Stock in exchange
for their Great Lakes Common Stock.
20. Crompton Common Stock entitles the holder to vote for the
election of the board of directors of Crompton.
21. No holder of Great Lakes Common Stock is acting as agent for
Crompton in connection with the Merger or approval thereof,
and neither Crompton nor Merger Sub will reimburse any
holder of Great Lakes Common Stock for the Great Lakes
Common Stock such holder may have purchased, or for other
obligations such holder may have incurred, as agent for
Crompton or Merger Sub.
The undersigned recognizes that opinions issued by counsel of
Crompton and Great Lakes regarding certain federal income tax consequences of
the Merger ("Tax Opinions") will be based on the representations set forth
herein and on the statements contained in the Merger Agreement and documents
related thereto. The Tax Opinions will be subject to certain limitations and
qualifications including that they may not be relied upon if any such
representations are not accurate in all respects.
IN WITNESS WHEREOF, Crompton, on behalf of Crompton and Merger Sub,
has executed this Certificate on this day of , 2005. Crompton Corporation
By:
-------------------------------
Name:
Title:
