EXECUTION COPY
PURCHASE AND EXCHANGE AGREEMENT
BY AND BETWEEN
CROMPTON CORPORATION
AND
GENERAL ELECTRIC COMPANY
DATED AS OF APRIL 24, 2003
TABLE OF CONTENTS
PAGE
1. Definitions......................................................2
1.1 Defined Terms..............................................2
1.2 Additional Defined Terms..................................26
1.3 Other Definitional and Interpretive Matters...............30
2. Purchase and Sale of the OSi Business...........................31
2.1 Purchase and Sale of OSi Assets...........................31
2.2 Excluded OSi Assets.......................................32
2.3 Purchase Price; Consideration; Earn-Out Payments..........33
2.4 Assumed OSi Liabilities...................................38
2.5 Excluded Crompton Liabilities.............................39
2.6 Purchase and Sale of SC Assets............................40
2.7 Excluded SC Assets........................................41
2.8 Assumed SC Liabilities....................................43
2.9 Excluded GE Liabilities...................................43
2.10 Net Assets................................................45
2.11 Transferred OSi Subsidiary................................48
2.12 Like-Kind Exchange........................................50
2.13 Further Assurances; Further Conveyances and Assumptions;
Consent of Third Parties..................................50
2.14 No Licenses...............................................54
2.15 Bulk Sales Law............................................54
2.16 Transfer Taxes and VAT....................................55
2.17 Alternative Structures....................................56
3. Representations and Warranties of Crompton......................56
3.1 Organization and Qualification............................57
3.2 Subsidiaries..............................................57
3.3 Authorization; Binding Effect.............................58
3.4 Non-Contravention; Consents...............................59
3.5 Title to Property; Principal Equipment; Sufficiency
of Assets ............................................... 59
3.6 Permits...................................................60
3.7 Real Estate...............................................60
3.8 Compliance With Laws; Litigation..........................62
3.9 OSi Business Employees....................................63
3.10 OSi Contracts.............................................64
3.11 OSi Environmental, Safety and Health Matters..............64
3.12 OSi Financial Statements; Absence of Changes..............65
3.13 OSi Intellectual Property.................................67
3.14 Crompton Brokers..........................................70
3.15 Certain Tax Matters.......................................70
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3.16 Transactions with Affiliates..............................72
3.17 Crompton Intercompany Arrangements........................73
3.18 Relationships with Customers..............................73
3.19 Inventory.................................................73
3.20 Independent Assessment....................................73
3.21 Accounts Receivable and Accounts Payable..................73
3.22 No Other Crompton Representations or Warranties...........74
4. Representations and Warranties of GE............................74
4.1 Organization and Qualification............................74
4.2 Subsidiaries..............................................75
4.3 Authorization; Binding Effect.............................75
4.4 Non-Contravention; Consents...............................76
4.5 Title to Property; Principal Equipment; Sufficiency
of Assets................................................ 76
4.6 Permits...................................................77
4.7 Real Estate...............................................77
4.8 Compliance With Laws; Litigation..........................78
4.9 SC Business Employees.....................................78
4.10 SC Contracts..............................................80
4.11 SC Environmental, Safety and Health Matters...............80
4.12 SC Financial Statements; Absence of Changes...............81
4.13 SC Intellectual Property..................................82
4.14 GE Brokers................................................85
4.15 Certain Tax Matters.......................................85
4.16 Independent Assessment....................................86
4.17 GE Intercompany Arrangements..............................86
4.18 Transactions with Affiliates..............................86
4.19 Inventory.................................................86
4.20 Accounts Receivable and Accounts Payable..................87
4.21 Blendex Agreements; GE Plastics Agreement; GE Betz
Agreement ............................................... 87
4.22 Relationships with Customers..............................88
4.23 Baseline CM...............................................88
4.24 No Other GE Representations or Warranties.................88
5. Certain Covenants...............................................88
5.1 Access and Information....................................88
5.2 Conduct of Business.......................................91
5.3 Environmental Matters.....................................96
5.4 Tax Covenants.............................................96
5.5 Employment of Employees of the OSi and SC Businesses.....100
5.6 Retirement Plans.........................................106
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5.7 Welfare Benefits.........................................108
5.8 Labor Matters............................................112
5.9 Collateral Agreements; Leased Equipment..................113
5.10 Commercially Reasonable Efforts..........................114
5.11 Contacts with Suppliers, Employees and Customers.........116
5.12 Use of Trade or Service Marks............................116
5.13 Non-Solicitation of Employees............................118
5.14 Non-Competition..........................................118
5.15 Certain Business Arrangements............................124
5.16 Notification by the Parties..............................126
5.17 Intercompany Agreements..................................126
5.18 Backing Letters; Letters of Credit; Guarantees...........126
5.19 SC Customer Remittances..................................127
5.20 Delivery of Audited Financial Statements.................127
5.21 Insurance................................................128
5.22 Blendex Agreements.......................................129
5.23 Inventory Count..........................................131
5.24 Certain Intellectual Property Matters....................131
5.25 Provision of Certain Information.........................133
5.26 Accounts Payable and Accounts Receivable.................133
5A. Remediation of OSi Environmental Conditions....................135
5A.1 Crompton's Obligations Regarding Remediation of OSi
Environmental Conditions.................................135
5A.2 Limitations on Crompton's Obligations....................135
5A.3 Solicitation of Remedial Action..........................136
5A.4 Notice...................................................137
5A.5 Remediation Standard.....................................137
5A.6 Fines and Penalties......................................138
5A.7 [Reserved]...............................................138
5A.8 Allocation of Certain Closure Costs......................138
5A.9 Crompton's Option to Obtain No Further Action
Determination ...........................................138
5A.10 [Reserved]...............................................139
5A.11 Responsibility to Direct Work............................139
5A.12 Implementation of Work...................................140
5A.13 Crompton's Access to the OSi Premises....................140
5A.14 Insurance................................................141
5A.15 Non-Applicability........................................142
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5B. Remediation of SC Environmental Conditions.....................142
5B.1 GE's Obligations Regarding Remediation of SC
Environmental Conditions.................................142
5B.2 Limitations on GE's Obligations..........................142
5B.3 Solicitation of Remedial Action..........................143
5B.4 Notice...................................................144
5B.5 Remediation Standard.....................................144
5B.6 Fines and Penalties......................................145
5B.7 [Reserved]...............................................145
5B.8 [Reserved]...............................................145
5B.9 GE's Option to Obtain No Further Action Determination....145
5B.10 [Reserved]...............................................145
5B.11 Responsibility to Direct Work............................145
5B.12 Implementation of Work...................................147
5B.13 GE's Access to the SC Premises...........................147
5B.14 Insurance................................................147
5B.15 Non-Applicability........................................148
6. Confidential Nature of Information.............................148
6.1 Confidentiality Agreements...............................148
6.2 Crompton's and GE's Trade Secrets........................149
7. Closing........................................................150
7.1 Deliveries by Crompton or the OSi Subsidiaries...........150
7.2 Deliveries by GE.........................................151
7.3 Closing Date.............................................152
7.4 Contemporaneous Effectiveness............................152
8. Conditions Precedent to Closing................................152
8.1 General Conditions.......................................152
8.2 Conditions Precedent to GE's Obligations.................153
8.3 Conditions Precedent to Crompton's Obligations...........154
9. Status of Agreements...........................................155
9.1 Survival.................................................155
9.2 Tax Indemnification......................................155
9.3 General Agreement to Indemnify...........................157
9.4 General Procedures for Indemnification...................162
9.5 Dispute Resolution.......................................164
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10. [Reserved].....................................................164
11. Miscellaneous Provisions.......................................164
11.1 Notices..................................................164
11.2 Expenses.................................................165
11.3 Entire Agreement; Modification...........................165
11.4 Assignment; Binding Effect; Severability.................165
11.5 Governing Law............................................166
11.6 Consent to Jurisdiction..................................166
11.7 Waiver of Jury Trial.....................................166
11.8 Execution in Counterparts................................167
11.9 Public Announcement......................................167
11.10 No Third-Party Beneficiaries.............................167
11.11 Designated Affiliates....................................168
12. Termination and Waiver.........................................168
12.1 Termination..............................................168
12.2 Effect of Termination....................................169
12.3 Collateral Agreements; Material to be Returned...........170
12.4 Waiver of Agreement......................................170
12.5 Amendment of Agreement...................................170
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SCHEDULES
SCHEDULE 2.1(A) Assumed OSi Leases
SCHEDULE 2.1(H) OSi Contracts
SCHEDULE 2.1(I) OSi Licenses
SCHEDULE 2.1(J) OSi Governmental Permits
SCHEDULE 2.1(K) Transferred OSi JV Interest
SCHEDULE 2.1(O) Additional Transferred OSi Assets
SCHEDULE 2.2(F) Excluded OSi Contracts
SCHEDULE 2.2(I) Excluded OSi Intellectual Property
SCHEDULE 2.2(L) Additional Excluded OSi Assets
SCHEDULE 2.3(A) Consideration for the Transferred OSi Subsidiary
Shares
SCHEDULE 2.3(C)(1) Earn-Out Accounting Principles
SCHEDULE 2.3(C)(2) Mapping of Accounts
SCHEDULE 2.3(F) Advisory Committee
SCHEDULE 2.6(G) SC Contracts
SCHEDULE 2.6(H) SC Licenses
SCHEDULE 2.6(J) SC Governmental Permits
SCHEDULE 2.6(N) Additional Transferred SC Assets
SCHEDULE 2.7(F) Excluded SC Contracts
SCHEDULE 2.7(K) SC Business Joint Ventures
SCHEDULE 2.7(M) Additional Excluded SC Assets
SCHEDULE 2.10(A)(I) Adjustments to Base OSi Statement
SCHEDULE 2.10(A)(II) Adjustments to Base SC Statement
SCHEDULE 2.12 Like-Kind Exchange Assets
SCHEDULE 3.2(A) OSi Subsidiaries
SCHEDULE 3.2(B) Transferred OSi Subsidiary
SCHEDULE 3.4 OSi Consents
SCHEDULE 3.5(A) Valid Interests
SCHEDULE 3.6 OSi Governmental Permits
SCHEDULE 3.7(A) Transferred Owned OSi Property
SCHEDULE 3.7(B)(I) Assumed OSi Leases
SCHEDULE 3.7(B)(II) Leases Not in Full Force and Effect
SCHEDULE 3.7(B)(III) Defaults in Respect of Assumed OSi Leases and
Tarrytown Lease
SCHEDULE 3.7(B)(IV) Crompton Leases and Subleases
SCHEDULE 3.7(D) Certain Representations in Respect of Transferred
Owned OSi Property, Assumed OSi Leases and Tarrytown
Lease
SCHEDULE 3.8(A) Compliance with Laws
SCHEDULE 3.8(B) OSi Litigation
SCHEDULE 3.9(A) OSi Business Employees
SCHEDULE 3.9(B) Crompton Benefit Plans
SCHEDULE 3.9(C) Triggering Events
SCHEDULE 3.9(D) Labor Matters
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SCHEDULE 3.9(E) Crompton Transferred Non-U.S. Retirement Plans
SCHEDULE 3.9(F) Claims
SCHEDULE 3.10 Material OSi Contracts
SCHEDULE 3.11 OSi Environmental Matters
SCHEDULE 3.12(A) Unaudited OSi Special Purpose Financial Statements
and OSi Accounting Principles
SCHEDULE 3.12(C) Exceptions to Ordinary Course
SCHEDULE 3.13(A)(I)(A) Transferred OSi Intellectual Property
SCHEDULE 3.13(A)(I)(B) OSi Licensed Intellectual Property
SCHEDULE 3.13(D) Material OSi Software
SCHEDULE 3.13(E) OSi Intellectual Property Royalties
SCHEDULE 3.13(H) Challenges to OSi Intellectual Property
SCHEDULE 3.13(L) Additional Exceptions to OSi Intellectual
Property
SCHEDULE 3.13(N) Oppositions of Third-Party Intellectual Property
Rights
SCHEDULE 3.15(B) Audit Reports and Statutes of Limitations
SCHEDULE 3.15(F) Exceptions to Representation Relating to 280G
SCHEDULE 3.15(P) OSi Tax Jurisdictions
SCHEDULE 3.16 Transactions with Affiliates
SCHEDULE 3.17 Intercompany Payables
SCHEDULE 3.18 Relationships with Customers
SCHEDULE 4.2 SC Subsidiaries
SCHEDULE 4.4(A) SC Non-Contravention
SCHEDULE 4.4(B) Required SC Consents
SCHEDULE 4.5(A) Valid Interests
SCHEDULE 4.6 SC Governmental Permits
SCHEDULE 4.7(A) Transferred Owned SC Property
SCHEDULE 4.7(D) Certain Representations in Respect of Transferred
Owned SC Property
SCHEDULE 4.8(A) Compliance with Laws
SCHEDULE 4.8(B) SC Litigation
SCHEDULE 4.9(A) SC Business Employees
SCHEDULE 4.9(B) GE Benefit Plans
SCHEDULE 4.9(C) Triggering Events
SCHEDULE 4.9(D) Labor Matters
SCHEDULE 4.9(E) GE Transferred Non-US Retirement Plans
SCHEDULE 4.9(F) Claims Schedule 4.10 Material SC Contracts
SCHEDULE 4.11 SC Environmental Matters
SCHEDULE 4.12(A) Unaudited SC Special Purpose Financial Statements
and SC Accounting Principles
SCHEDULE 4.12(C) Exceptions to Ordinary Course
SCHEDULE 4.13(A)(I) Transferred SC Intellectual Property
SCHEDULE 4.13(D) Material SC Software
SCHEDULE 4.13(E) SC Intellectual Property Royalties
SCHEDULE 4.13(H) Challenges to SC Intellectual Property
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SCHEDULE 4.13(I) Sufficiency of Transferred SC Intellectual Property
SCHEDULE 4.13(L) Additional Exceptions to SC Intellectual Property
SCHEDULE 4.13(N) Oppositions of Third-Party Intellectual Property
Rights
SCHEDULE 4.15(E) SC Tax Jurisdictions
SCHEDULE 4.17 Intercompany Payables
SCHEDULE 4.18 Transactions with Affiliates
SCHEDULE 4.22 Relationships with Customers
SCHEDULE 4.23 Baseline CM
SCHEDULE 5.2(A) Exceptions to Conduct of OSi Business
SCHEDULE 5.2(A)(VII) OSi Business Capital Budget for 2003
SCHEDULE 5.2(B) Exceptions to Conduct of SC Business
SCHEDULE 5.2(B)(VII) SC Business Capital Budget for 2003
SCHEDULE 5.4 SC Tax Allocation
SCHEDULE 5.5(A)(III) Certain Employees
SCHEDULE 5.5(A)(IV)(A) Excluded OSi Business Employees
SCHEDULE 5.5(A)(IV)(B) Excluded SC Business Employees
SCHEDULE 5.5(F) Employment Agreements
SCHEDULE 5.6(D) Non-U.S. Retirement Plans
SCHEDULE 5.7(D) Relocation Benefits
SCHEDULE 5.8(A)(II)(A) Crompton Works Council Agreements
SCHEDULE 5.8(A)(II)(B) GE Works Council Agreements
SCHEDULE 5.14(A)(I) Exceptions to Crompton Non-Compete
SCHEDULE 5.14(A)(II) Exceptions to GE Non-Compete
SCHEDULE 5.15(B)(I) Certain OSi Business Arrangements
SCHEDULE 5.15(B)(II) Certain SC Business Arrangements
SCHEDULE 5.17(A) Certain Crompton Intercompany Arrangements
SCHEDULE 5.17(B) Certain GE Intercompany Arrangements
SCHEDULE 5.18(A) SC Backing Letters
SCHEDULE 5.18(B) OSi Backing Letters
SCHEDULE 5.22(B)(I) Aggregate Additional Costs for Year 2002
SCHEDULE 5.22(B)(II) Aggregate Additional Costs for Year 2003
SCHEDULE 8.1(B) Antitrust and Competition Approvals and Filings
SCHEDULE 9.3(E)(I)(C) OSi Business Long-Range Capital Plan
SCHEDULE 9.3(E)(II)(C) SC Business Long-Range Capital Plan
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EXHIBITS
EXHIBIT 2.10(C)(III) Arbitration Procedures
EXHIBIT 4.21 Blendex Agreements
EXHIBIT 5.15(C) Term Sheet Regarding Rio Claro, Brazil
EXHIBIT 5.15(D) Term Sheet Regarding Nanjing, China
EXHIBIT A Sublease
EXHIBIT B Form of Transition Services Agreements
EXHIBIT C Shared Services Agreement
EXHIBIT D OSi Manufacturing and Services Agreement
EXHIBIT E SC Manufacturing and Services Agreement
EXHIBIT F GE Phosphites Supply Agreement
EXHIBIT G TMOS Supply Agreement
EXHIBIT H Silwet(R) Surfactant Distribution Agreement
EXHIBIT I Fomrez(R) Distribution Agreement
EXHIBIT J-1 Polybond Fiber Agreement
EXHIBIT J-2 TPV License Agreement
EXHIBIT J-3 TPV Joint Development Agreement
EXHIBITS J-4 - J-7 Transferred Intellectual Property Assignments
EXHIBIT K GE Plastics Agreement
EXHIBIT L GE Betz Agreement
EXHIBIT M Employee Lease Agreement
EXHIBIT N-1 Form of Lease Assignment
EXHIBIT N-2 Form of Sublease Assignment
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PURCHASE AND EXCHANGE AGREEMENT
This PURCHASE AND EXCHANGE AGREEMENT (this "AGREEMENT") is made as of
April 24, 2003 by and between CROMPTON CORPORATION, a Delaware corporation
("CROMPTON"), and GENERAL ELECTRIC COMPANY, a New York corporation ("GE").
R E C I T A L S
WHEREAS, Crompton and the OSi Subsidiaries (as hereinafter defined) are,
among other things, engaged in the worldwide manufacturing, marketing, sales and
distribution of chemical products through its three strategic business units:
Silanes, Specialty Silicones and Urethane Additives; the Silanes business
produces organofunctional silanes that act as coupling agents or crosslinkers in
a variety of end use applications; the Specialty Silicones business produces
organofunctional silicone fluids and formulated products; the Urethane Additives
business produces silicone surfactants and amine catalysts that are used in the
manufacture of urethane foam (collectively, as modified by the immediately
following proviso, the "OSI BUSINESS"); PROVIDED, HOWEVER, that the OSi Business
does not include Crompton's polyurethane dispersions, polyester polyols or
castable urethane prepolymers product lines;
WHEREAS, the OSi Business is conducted with certain assets and liabilities
of Crompton and the OSi Subsidiaries;
WHEREAS, Crompton and the OSi Subsidiaries desire to sell, transfer and
assign to GE (or its designated Affiliate (as hereinafter defined)), and GE (or
its designated Affiliate) desires to purchase, accept and assume from Crompton
and the OSi Subsidiaries, the Transferred OSi Assets (as hereinafter defined)
and the Assumed OSi Liabilities (as hereinafter defined), in each case as more
fully described and upon the terms and subject to the conditions set forth
herein;
WHEREAS, GE and the SC Subsidiaries (as hereinafter defined) are, among
other things, engaged through GE's Specialty Chemicals business in (i) the
worldwide manufacture, marketing, sales, and distribution of (A) phosphite based
polymer antioxidants, including (1) a variety of specialty liquid or solid
phosphites, including phenyl, nonylphenyl, iso-decyl, iso-octyl, di-propylene
glycol, 2-ethylhexyl, BPA, C12-C15 linear alcohol, pentaerythritol, and alkyl
mercaptan esters sold under the WESTON(R) trademark, and (2) solid phosphites
including 641 (2,4,6-tri-tert-butylphenyl-2-butyl-2-ethyl-1,3-propane diol
phosphite), 626 (bis-[2,4-di-tert-butylphenyl] pentaerythritol diphosphite), 668
(tris-2,4-di-t-butylphenylphosphite) sold under the ULTRANOX(R) trademark; and a
proprietary nitrogen based processing stabilizer sold under the GENOX(TM) EP
trademark; and (B) standard and custom blends of plastic additives produced from
such antioxidants and polymer additives from external sources marketed and sold
under the ULTRANOX(R) trademark; and (C) nonylphenol primarily used in the
production of ethoxylate surfactants; and (ii) the worldwide marketing, sales,
and distribution to producers or compounders of plastic resins of impact
modifiers, heat
modifiers, process aids, and specialty modifiers based primarily on ABS, SAN,
ASA, AES, AMSAN, MMASAN, PPE, PC, PS, PTFE/SAN and EBS wax and, in each case,
sold under the BLENDEX(R) trademark; an aliphatic proprietary coupling agent,
XR3430; hindered phenols including 210 (tetrakis [methylene (3,5-di-tert-butyl-
4-hydroxyhydrocinnamate)]), and 276 (octadecyl-3,5-di-tert-butyl-4-
hydroxyhydrocinnamate) sold under the ULTRANOX(R) trademark; sorbitol-based
clarifiers (di-[p-methylbenzlidene] sorbitol); and silver(Ag)ion-based
anti-microbials (collectively, the "SC BUSINESS");
WHEREAS, the SC Business is conducted with certain assets and liabilities
of GE and the SC Subsidiaries;
WHEREAS, GE and the SC Subsidiaries desire to transfer and assign to
Crompton, in partial consideration for the OSi Business, and Crompton desires to
accept and assume from GE and the SC Subsidiaries, the Transferred SC Assets (as
hereinafter defined) and the Assumed SC Liabilities (as hereinafter defined), in
each case as more fully described and upon the terms and subject to the
conditions set forth herein; and
WHEREAS, Crompton and GE desire to exchange all of the right, title and
interest of Crompton and the OSi Subsidiaries in, to and under certain
Transferred OSi Assets (and, possibly, certain Assumed OSi Liabilities) for all
of the right, title and interest of GE and the SC Subsidiaries in, to and under
certain Transferred SC Assets (and, possibly, certain Assumed SC Liabilities) in
a transaction qualifying under Section 1031 of the Code;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
1. DEFINITIONS
1.1 DEFINED TERMS
For the purposes of this Agreement, the following terms shall have the
following meanings:
"ACQUIRED OSI SUBSIDIARIES" shall mean the OSi Business Joint Venture and
the Transferred OSi Subsidiary and each such entity shall be referred to as an
"Acquired OSi Subsidiary."
"ACQUIRED SILICONES BUSINESS" means any silicones related manufacturing,
distribution, supply or marketing business acquired by GE or its Affiliates
following the Closing Date; PROVIDED, HOWEVER, that any reorganization of assets
within the Consolidated Combined Business, including any increase in GE's equity
interest in the GE Silicones Joint Ventures, shall not be deemed an acquisition.
2
"ACTION" means any administrative, regulatory, judicial or other formal
proceeding by or before any Governmental Body or arbitrator.
"AFFILIATE" of any Person means any other Person that, directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with such Person. As used herein, the term "CONTROL"
(including the terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities or other interests, by contract or otherwise.
"ANNUALIZED CM VARIANCE" means the quotient obtained by dividing (i) the
Acquired Business CM or the Divested Business CM, as applicable (calculated on
the basis of four fiscal quarters and in accordance with the Earn-Out Accounting
Principles) by (ii) the Contribution Margin for the four fiscal quarters prior
to the quarter in which the applicable acquisition transaction in respect of an
Acquired Silicones Business or divestiture transaction in respect of a Divested
Silicones Business.
"ANTITRUST LAWS" means the HSR Act, the Sherman Act, as amended, the
Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any
other United States federal or state or foreign statutes, rules, regulations,
orders, decrees, administrative or judicial doctrines or other Laws that are
designed to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
"ASSIGNMENT AND BILL OF SALE" means each agreement for the sale and
assignment of assets pursuant to this Agreement (in such form as reasonably
agreed by the parties).
"ASSUMED OSI LEASES" means the leases or subleases pertaining to real
property and used or held for use by Crompton or the applicable OSi Subsidiary
primarily in the operation or conduct of the OSi Business, to be assumed by GE
pursuant to a Lease Assignment and identified on SCHEDULE 2.1(A).
"ASSUMPTION AGREEMENT" means each agreement for the assumption of
liabilities pursuant to this Agreement (in such form as reasonably agreed by the
parties).
"AUDITED CONTRIBUTION MARGIN" means the calculation of the Contribution
Margin for the Fiscal Year (or the applicable stub portion thereof) set forth on
each Earn-Out Statement.
"BASELINE CM" means Five Hundred Four Million Dollars ($504,000,000), as
such amount may be adjusted from time to time after the Closing Date pursuant to
Section 2.3(e).
"BUSINESS DAY" means a day that is not a Saturday, a Sunday or a
statutory or civic holiday in the State of New York or any other day on which
banks authorized by the Federal Reserve are closed or become closed prior to
2:00 p.m. local time.
3
"CLAIM" or "CLAIMS" means assertions, allegations, complaints, causes of
action, demands, suits, proceedings, notices of actual or potential liability or
responsibility, claims for reimbursement or contribution, orders, judgments,
injunctions, requests or demands under claim of authority to take action or
refrain from taking action, liens, proceedings in condemnation, executions upon
judgment, or other claim, event, information, or occurrence with respect to
which a reasonable person would respond or which a reasonable person would
defend against. Claims shall include claims with or without merit asserting
liability for, among other things, personal injury, death, sickness, disease,
emotional distress, loss of or damage to real or personal property, pollution,
nuisance, environmental or natural resource damage or response action, whether
based on statute, strict liability, violation of any laws and regulations
applicable to the ownership or operations at the OSi Premises or SC Premises
(except as otherwise limited by the definition of Laws hereunder), tort,
warranty, contract, or the status of a party as seller, buyer, owner, operator,
generator, transporter, disposer or otherwise in association with handling
products, facilities or materials.
"CLOSING" means the closing of the transactions described in Article 7.
"CLOSING DATE" means the date of the Closing as determined pursuant to
Section 7.3.
"COBRA COVERAGE" means health continuation coverage as required by Section
4980B of the Code or Part 6 of Title I of ERISA.
"CODE" means the U.S. Internal Revenue Code of 1986, as amended.
"COLLATERAL AGREEMENTS" means
(i) each Assignment and Bill of Sale;
(ii) each Assumption Agreement;
(iii) each Lease Assignment;
(iv) the Sublease attached hereto as EXHIBIT A;
(v) each Real Estate Deed;
(vi) each instrument of conveyance relating to the Transferred OSi JV
Interest;
(vii) the Transition Services Agreement between Crompton and GE
attached hereto as EXHIBIT B;
(viii) the Shared Services Agreement by and between Crompton and GE
(as Purchaser) (with respect to Rio Claro, Brazil) attached hereto as
EXHIBIT C;
4
(ix) the Manufacturing and Services Agreement by and between Crompton
(as Manufacturer) and GE (as Customer) (with respect to Cuautitlan, Mexico;
Rayong, Thailand; and Ansan, Korea) (the "OSI MANUFACTURING AND SERVICES
AGREEMENT") attached hereto as EXHIBIT D;
(x) the Manufacturing and Services Agreement by and between Crompton
(as Customer) and GE (as Manufacturer) (with respect to Bergen op Zoom, The
Netherlands) (the "SC MANUFACTURING AND SERVICES AGREEMENT," and, together with
the OSi Manufacturing and Services Agreement, the "MANUFACTURING AND SERVICES
AGREEMENTS") attached hereto as EXHIBIT E;
(xi) the Agreement between Crompton Vinyl Additives GmbH, a company
organized under the laws of Germany (as Seller), and GE, through its GE
Silicones business unit (as Buyer) for the sale and purchase of Niax(R) Color
Stabilizers (aka GE Phosphites Supply Agreement) attached hereto as EXHIBIT F;
(xii) the Sales Agreement between GE (as Seller) and Crompton GmbH (as
Buyer) for the sale and purchase of TMOS Bulk, also known as tetramethoxysilane
(aka TMOS Supply Agreement) attached hereto as EXHIBIT G;
(xiii) the Agreement between Crompton (as Distributor) and GE for the
distribution and resale of Silwet(R) silicone surfactant products (aka Silwet(R)
Surfactant Distribution Agreement) attached hereto as Exhibit H;
(xiv) the Agreement between Crompton and GE (as Distributor) for the
distribution and resale of Fomrez(R) tin catalysts (aka Fomrez(R) Distribution
Agreement) attached hereto as EXHIBIT I;
(xv) each Intellectual Property Agreement, including (A) the License
Agreement by and between GE and Crompton for the licensing of that certain
patent application relating to a process of making a composite material formed
from natural fiber, polyolefin resin, functionalized polyolefin and
organosilane, as well as the product formed from such process (aka Polybond
Fiber Agreement) attached hereto as EXHIBIT J-1, (B) the License Agreement by
and between GE and Crompton for the licensing of that certain patent relating to
certain thermoplastic vulcanizates (aka TPV License Agreement) attached hereto
as EXHIBIT J-2; (C) the Joint Development Agreement by and between Crompton and
GE, through its GE Silicones business unit for the joint development of certain
thermoplastic vulcanizates (aka TPV Joint Development Agreement) attached hereto
as EXHIBIT J-3; and (D) the assignments of the Transferred OSi Intellectual
Property and the Transferred SC Intellectual Property substantially in the forms
attached hereto as EXHIBITS J-4 through J-7;
(xvi) the Blendex Agreements,
(xvii) the Agreement between GE Specialty Chemicals, Inc. (as Seller)
and GE, through its GE Plastics business unit (as Purchaser) for the sale and
purchase of
5
certain phosphites, process aids and additive blends (the "GE PLASTICS
AGREEMENT") attached hereto as EXHIBIT K;
(xviii) the Agreement between GE Specialty Chemicals, Inc. (as Seller)
and GE Betz, Inc. (as Purchaser) for the sale and purchase of certain
phosphites, impact modifiers and nonylphenol (the "GE BETZ AGREEMENT") attached
hereto as EXHIBIT L;
(xix) the Employee Lease Agreement (the "EMPLOYEE LEASE AGREEMENT")
attached hereto as EXHIBIT M; and
(xx) each other agreement executed and delivered between Crompton or
its Affiliates, on the one hand, and GE or its Affiliates, on the other hand, to
effect the understanding of the parties with respect to the transactions
contemplated hereby.
"CONFIDENTIALITY AGREEMENTS" means the agreements between Crompton and GE
dated July 3, 2002 (as amended December 30, 2002), July 9, 2002, March 19, 2003
and March 24, 2003.
"CONFIDENTIALITY OBLIGATIONS" means any confidentiality obligations set
forth herein or in any other agreement relating to the transactions contemplated
herein to which the parties hereto are parties or by which they are bound,
including the Confidentiality Agreements.
"CONFIDENTIALITY REGULATIONS" means Treasury Regulation Section
1.6011-4(b)(3) or any successor provision of the Treasury Regulations
promulgated under Section 6011 of the Code.
"CONSOLIDATED COMBINED BUSINESS" means the business conducted by GE
Silicones, which shall include: (i) the silicones product lines that generated
the Baseline CM for the 2002 fiscal year and any silicones product lines that
may be developed by or for GE Silicones since the end of the 2002 fiscal year
(regardless of whether any of the above product lines are transferred to a
business conducted by any other division of GE), except to the extent of any
Divested Silicones Business; (ii) following the Closing, the OSi Business to the
extent of the Transferred OSi Assets and the Assumed OSi Liabilities (including
the assets and liabilities of the Transferred OSi Subsidiary) and any product
lines that may be developed by GE Silicones after the Closing based on the
product lines of the OSi Business, except to the extent of any Divested
Silicones Business; and (iii) any Acquired Silicones Business.
"CONTRIBUTION MARGIN" means, for any period, the contribution margin of
the Consolidated Combined Business calculated in accordance with the Earn-Out
Accounting Principles and (i) giving effect to (without duplication of any
procedures and practices set forth in the Earn-Out Accounting Principles) any
insurance proceeds actually received by the Consolidated Business from any
Third-Party insurers (other than a captive or other tax consolidated insurance
Affiliate of GE) that are directly attributable to the Contribution Margin from
any business interruption, Loss or other relevant insurable loss
6
in respect of the Consolidated Combined Business not otherwise resulting from a
breach by Crompton or its Affiliates of its obligations under this Agreement or
any Collateral Agreement, and (ii) excluding any restructuring charges,
including severance costs or costs associated with exiting or reorganizing any
portion of the Consolidated Combined Business (such excluded costs to be deemed
base rather than variable costs pursuant to the Earn-Out Accounting Principles).
"CROMPTON BENEFIT PLAN" means each "employee benefit plan," as defined in
Section 3(3) of ERISA (including any "multiemployer plan" as defined in Section
3(37) of ERISA) and each employment, bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock option, stock
purchase, phantom stock, performance, retirement, thrift, savings, stock bonus,
excess benefit, supplemental unemployment, paid time off, perquisite, fringe
benefit, vacation, sick leave, severance, disability, death benefit,
hospitalization, medical, dental, life insurance, welfare benefit or other plan,
program or arrangement (whether written or unwritten), in each case maintained
or contributed to, or required to be maintained or contributed to, by Crompton
or any of its ERISA Affiliates.
"CROMPTON CREDIT AGREEMENT" means the Five-Year Credit Agreement, dated as
of October 28, 1999, by and among, INTER ALIA, Crompton, J. P. Morgan Chase,
Citicorp USA, Inc., Bank of America, N.A. and Deutsche Bank Securities Inc.
"CROMPTON DISCRETIONARY REMEDIATION" means any Remediation that is
voluntarily undertaken by Crompton at any of the SC Premises and that is not
required (i) for compliance with applicable Laws, (ii) by an Environmental
Agency or a court or (iii) pursuant to a settlement of legal action of Third
Parties mutually acceptable to Crompton and GE, which acceptance shall not be
unreasonably withheld by either party, including Remediation conducted solely to
avoid potential liability under statutory provisions that generally prohibit
releases of materials that could affect the environment or Remediation not
required by Laws or settlement of a legal action of a Third Party or associated
with improving any of the SC Premises' marketability or preparing any of the SC
Premises for sale to a Third Party.
"CROMPTON MATERIAL ADVERSE CHANGE" or "CROMPTON MATERIAL ADVERSE EFFECT"
means any change, effect, event, occurrence or development (or aggregation
thereof) that is materially adverse to the business, assets, financial condition
or results of operations of the OSi Business, taken as a whole (after giving
effect to the exclusion of the Excluded OSi Assets and the Excluded Crompton
Liabilities); PROVIDED, HOWEVER, that for purposes of this Agreement any change,
effect, occurrence or development (i) relating to the United States or foreign
economies or securities markets in general, (ii) relating to the industries in
which the OSi Business operates in general (other than changes, effects,
occurrences or developments specifically relating to, having the effect of
specifically relating to or having a disproportionate effect on the OSi Business
taken as a whole, but only to the extent of the specificity and
disproportionality of such effect over and above the general and proportionate
effect), or (iii) resulting from any actions specifically permitted to be taken
or omitted pursuant to the terms of this Agreement, shall not in any
7
case be taken into account or otherwise considered in determining whether any
Crompton Material Adverse Change or Crompton Material Adverse Effect has
occurred with respect to any of Crompton, the OSi Subsidiaries, the Transferred
OSi Assets or the OSi Business.
"CROMPTON TRANSFERRED NON-U.S. RETIREMENT PLANS" means the Jardine CMG
Pension Program, the Witco Taiwan Limited Retirement Plan, the Defined Benefit
Pension Plan insured by the Rentenanstalt Insurance Company (participated in by
OSi Business Employees in Switzerland), the Defined Benefit Pension Plan
Crompton BVBA, and the Defined Benefit Pension Plan Crompton NV.
"CROMPTON'S KNOWLEDGE" means, with respect to Crompton or any OSi
Subsidiary, the actual knowledge of the following persons: Donald Ferencz, Mary
Gum, Edward Hagen, Dennis Heintzman, Christina Huben, Anthony Lanchak, Joseph
LoMenzo, Charles Marsden, Thomas E. Mignanelli, Ian Moore, James Nortz, Bruce
Orr, Paula Pinto, Bela Prokai, Syl Turicchi, Michael Vagnini, Arthur Wienslaw
and William Wiesner.
"CUMULATIVE BASELINE CM" means, with respect to any fiscal quarter in the
Earn-Out Period, an amount equal to the sum of the Quarterly Baseline CM for
each of the completed fiscal quarters elapsed in the Earn-Out Period (but
excluding such fiscal quarter).
"CUMULATIVE EARN-OUT PAYMENTS" means, as of any determination date, the
sum of all Earn-Out Payments made in each of the previous quarters of the
Earn-Out Period.
"CUMULATIVE INCREMENTAL CONTRIBUTION MARGIN" means, with respect to any
fiscal quarter in the Earn-Out Period, an amount equal to (i) the sum of the
Contribution Margin for each of the completed fiscal quarters elapsed in the
Earn-Out Period (but excluding such fiscal quarter) MINUS (ii) the Cumulative
Baseline CM; PROVIDED, HOWEVER, that the Cumulative Incremental Contribution
Margin shall not under any circumstances be less than zero.
"DIVESTED SILICONES BUSINESS" means any portion of the Consolidated
Combined Business sold, transferred or otherwise divested by GE or its
Affiliates following the Closing Date; PROVIDED, HOWEVER, that any (i)
reorganization of assets within the Consolidated Combined Business, including
any decrease in GE's equity interest in the GE Silicones Joint Ventures or (ii)
any contribution to, or combination of the assets or liabilities of GE Silicones
with, any entity that continues for accounting purposes to be consolidated with
GE Silicones, in each case, shall not be deemed a sale, transfer or other
divestiture; PROVIDED, FURTHER, that a reorganization pursuant to clause (i)
above that result in GE no longer consolidating such equity interests in the
financial results of the Consolidated Combined Business shall be deemed to be a
Divested Silicones Business.
"DIVISION EARNINGS" means the line item of such designation on the Audited
OSi Special Purpose Financial Statements.
8
"EARN-OUT ACCOUNTING PRINCIPLES" means the accounting principles used in
the calculation of the Baseline CM and Contribution Margin as set forth on
SCHEDULE 2.3(C)(1) and the accounting practices, procedures and adjustments as
indicated thereon, all applied on a consistent basis, as such principles may be
adjusted from time to time after the Closing Date pursuant to Section 2.3(h) or
as the parties may otherwise agree. For the avoidance of doubt, the Contribution
Margin for each quarter will be calculated using the same accounting
methodologies and principles (I.E., the Earn-Out Accounting Principles) applied
in a consistent manner, so that any differences between such statements do not
result from changes in the accounting treatment or approach.
"EARN-OUT AMOUNT" means the aggregate amount of the Earn-Out Payments made
by GE during the Earn-Out Period.
"EARN-OUT PERIOD" means the period commencing on the first day of the
fiscal quarter following the fiscal quarter in which the Closing Date occurs and
ending on the last day of the twelfth fiscal quarter following the fiscal
quarter in which the Closing Date occurs.
"EARN-OUT STATEMENT" means a statement prepared by KPMG (or the then
current independent outside accounting firm used by GE Silicones for the
preparation of the audited financial statements of the Consolidated Combined
Business) showing in reasonable detail (i) the line items from the audited
statements of income of the Consolidated Combined Business necessary to derive
the Contribution Margin for each Fiscal Year (or a portion thereof) and (ii) the
calculation used to derive each of the Earn-Out Payments for such Fiscal Year
(or the portion thereof) including, to the extent necessary, the mapping of
accounts of the OSi Business to the applicable variable cost accounts for the
Consolidated Combined Business, as set forth in SCHEDULE 2.3(C)(2).
"EARN-OUT TERMINATION AMOUNT" means, as of any determination date, an
amount equal to the sum of (i) the Earn-Out Payment payable for the fiscal
quarter in which the determination date occurs PLUS (ii) the product of (x)
$18,750,000 MULTIPLIED BY (y) the number of full fiscal quarters remaining in
the Earn Out Period as of such date, PLUS (iii) $10,000,000.
"ENCUMBRANCE" means any lien; charge; title defect, deficiency or
exception; security interest; mortgage; pledge; easement; encroachment;
restriction on use; right of way; right of first refusal; conditional sale or
other title retention agreement; covenant; condition or other similar
restriction or Third-Party right or other encumbrance of any nature whatsoever
affecting the Transferred OSi Assets or Transferred SC Assets.
"ENVIRONMENTAL AGENCY" means any federal, state, local or foreign
governmental regulatory agency with jurisdiction over environmental matters
including those with authority to require Remedial Action.
"ENVIRONMENTAL CLAIM" means a Claim relating to or (1) arising out of an
OSi Environmental Condition or an SC Environmental Condition for which Crompton
or GE
9
has received written notification from an Environmental Agency or Third
Party that Remediation of such OSi Environmental Condition or SC Environmental
Condition is required to comply with Law or (2) arising under Environmental Law.
"ENVIRONMENTAL LAW" means any applicable national, federal, state,
foreign, provincial or local law (including common law), statute, ordinance,
rule, regulation, code, order, judgment, permit, injunction, decree or any other
legal requirement of any country or any political subdivision thereof, relating
to or addressing the environment, health or safety, or natural resources or
occupational, workplace or worker safety and health.
"ENVIRONMENTAL RE-OPENER" means any condition a Governmental Body places
upon a No Further Action Determination that requires a party to perform
additional Remediation of SC Pre-Closing Contamination or OSi Pre-Closing
Contamination at an SC Premises or an OSi Premises after a No Further Action
Determination is issued, including (i) fraud committed in demonstrating
attainment of a standard at any of the Premises that resulted in avoiding the
need for further cleanup at any of the Premises; (ii) new information confirming
the existence of previously unknown Pre-Closing Contamination which contains
Hazardous Substances that have been shown to exceed the standards applied to
previous remediation at any of the Premises; or (iii) failure of the remedy.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations, rulings, agency and court decisions thereunder.
"ERISA AFFILIATE" means any entity which would be aggregated with GE or
Crompton, as applicable, under Section 414 of the Code or Section 4001(b) of
ERISA.
"EXCLUDED OSI CONTRACTS" means those (i) OSi Contracts (A) identified in
SCHEDULE 2.2(F), or (B) under which performance by Crompton or an Affiliate of
Crompton has been completed and for which there is no remaining warranty,
maintenance, or other obligation of Crompton or its Affiliates or any other
party thereto, or (ii) contracts, agreements, understandings or arrangements to
which Crompton or any of its Affiliates is a party that primarily relate to
Excluded OSi Assets or Excluded OSi Liabilities.
"EXCLUDED OSI TAXES" means any liability, obligation or commitment of
Crompton and its Affiliates, whether or not accrued, assessed or currently due
and payable, for any Taxes relating to the OSi Business, the Transferred OSi
Assets or the Acquired OSi Subsidiaries for any Pre-Closing Tax Period,
including any amounts for which Crompton is responsible pursuant to Section 5.4
of this Agreement.
"EXCLUDED SC CONTRACTS" means those (i) SC Contracts (A) identified in
SCHEDULE 2.7(F), or (B) under which performance by GE or an Affiliate of GE has
been completed and for which there is no remaining warranty, maintenance, or
other obligation of GE or its Affiliates or any other party thereto, or (ii)
contracts, agreements, understandings or
10
arrangements to which GE or any of its Affiliates is a party that primarily
relate to Excluded SC Assets or Excluded SC Liabilities.
"EXCLUDED SC TAXES" means any liability, obligation or commitment of GE
and its Affiliates, whether or not accrued, assessed or currently due and
payable, for any Taxes relating to the SC Business or the Transferred SC Assets
for any Pre-Closing Tax Period, including any amounts for which GE is
responsible pursuant to Section 5.4 of this Agreement.
"EXPORT CONTROL REQUIREMENTS" means all applicable Laws of the United
States establishing or pertaining to economic sanctions or export controls,
including all decrees, orders, judgments, permits and licenses of or from
Governmental Bodies relating to the export of goods and services to any foreign
jurisdiction against which the United States or the United Nations maintains
sanctions or export controls.
"FISCAL YEAR" means a calendar year.
"FTC" means the United States Federal Trade Commission.
"GAAP" means United States generally accepted accounting principles.
"GE BENEFIT PLAN" means each "employee benefit plan," as defined in
Section 3(3) of ERISA (including any "multiemployer plan" as defined in Section
3(37) of ERISA) and each employment, bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock option, stock
purchase, phantom stock, performance, retirement, thrift, savings, stock bonus,
excess benefit, supplemental unemployment, paid time off, perquisite, fringe
benefit, vacation, sick leave, severance, disability, death benefit,
hospitalization, medical, dental, life insurance, welfare benefit or other plan,
program or arrangement (whether written or unwritten), in each case maintained
or contributed to, or required to be maintained or contributed to, by GE or any
of its ERISA Affiliates.
"GE DISCRETIONARY REMEDIATION" means any Remediation that is voluntarily
undertaken by GE at any of the OSi Premises and that is not required (i) for
compliance with applicable Laws, (ii) by an Environmental Agency or a court or
(iii) pursuant to a settlement of legal action of Third Parties mutually
acceptable to Crompton and GE, which acceptance shall not be unreasonably
withheld by either party, including Remediation conducted solely to avoid
potential liability under statutory provisions that generally prohibit releases
of materials that could affect the environment or Remediation not required by
Laws or settlement of a legal action of Third Parties or associated with
improving any of the OSi Premises' marketability or preparing any of the OSi
Premises for sale to a Third Party.
"GE MATERIAL ADVERSE CHANGE" or "GE MATERIAL ADVERSE EFFECT" means any
change, effect, event, occurrence or development (or aggregation thereof) that
is materially adverse to the business, assets, financial condition or results of
operations of
11
the SC Business, taken as a whole (after giving effect to the exclusion of the
Excluded SC Assets and the Excluded GE Liabilities); PROVIDED, HOWEVER, that for
purposes of this Agreement any change, effect, occurrence or development (i)
relating to the United States or foreign economies or securities markets in
general, (ii) relating to the industries in which the SC Business operates in
general (other than changes, effects, occurrences or developments specifically
relating to, having the effect of specifically relating to or having a
disproportionate effect on the SC Business taken as a whole, but only to the
extent of the specificity and disproportionality of such effect over and above
the general and proportionate effect), or (iii) resulting from any actions
specifically permitted to be taken or omitted pursuant to the terms of this
Agreement, shall not in any case be taken into account or otherwise considered
in determining whether any GE Material Adverse Change or GE Material Adverse
Effect has occurred with respect to any of GE, the SC Subsidiaries, the
Transferred SC Assets or the SC Business.
"GE SILICONES" means the silicones business of the division of GE Specialty
Materials operated as "GE Silicones" which includes the business conducted
through the GE Silicones Joint Ventures, as well as other Subsidiaries and joint
venture entities, without deduction for any minority interests; PROVIDED,
HOWEVER, that the business conducted by GE Quartz (a division of GE Specialty
Materials) shall not be deemed to be a part of the Consolidated Combined
Business notwithstanding any possible combination of the business conducted by
GE Quartz with the business of GE Silicones.
"GE SILICONES JOINT VENTURES" means each of GE Bayer Silicones and GE
Toshiba Silicones.
"GE TRANSFERRED NON-U.S. RETIREMENT PLAN" means the Stichting GE
Pensioenfonds (GE Pension Foundation).
"GE'S KNOWLEDGE" means, with respect to GE or any GE Subsidiary, the actual
knowledge of the following persons: Michael Burton, William Carstanjen, Kurt
Eichhorn, David Engel, Robert Giglietti, Craig Hardy, Walter Henderson, Andrew
Hogeland, Stan Kranjc, Thad Leister, Marshall Moore, Dennis Murray, Brian
Nailor, John Wood and William Woodburn.
"GOVERNMENTAL BODY" means any legislative, executive, judicial, regulatory
or administrative unit of any governmental entity (multinational, foreign,
federal, state or local) or any department, commission, board, agency, bureau,
ministry, official, arbitrator (public) or other similar body exercising
executive, legislative, regulatory, administrative or judicial authority or
functions of or pertaining to government, including any authority or other
quasi-governmental entity established by a Governmental Body to perform any such
functions.
"GOVERNMENTAL PERMITS" means all permits and licenses, certificates of
inspection, approvals or other authorizations issued by a Governmental Body that
are necessary for the operation or conduct of the OSi Business (the "OSI
GOVERNMENTAL PERMITS") or the
12
SC Business (the "SC GOVERNMENTAL PERMITS") as currently conducted under
applicable Laws.
"HAZARDOUS SUBSTANCES" means any substance, material or waste that is
classified, characterized or regulated as "hazardous," "toxic," "pollutant,"
"contaminant," or words of similar meaning under Environmental Laws, including
asbestos, crude oil or any fraction thereof, refined or partially refined
petroleum products, or any other wastes, materials or pollutants included in the
definition of "hazardous substance," "toxic substance," "hazardous material,"
"hazardous waste," "extremely hazardous waste," "restricted hazardous waste,"
"petroleum substance" or words of similar import under any Environmental Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INCOME BEFORE INCOME TAXES" means the line item of such designation on
the Audited SC Special Purpose Financial Statements
"INDEMNIFIED PARTY" means any Person who is entitled to indemnity under
the terms and subject to the conditions of this Agreement.
"INDEMNIFYING PARTY" means any Person who is obligated to indemnify under
the terms and subject to the conditions of this Agreement.
"INTELLECTUAL PROPERTY AGREEMENT" means any of the agreements in
substantially the forms set forth as EXHIBITS J-1 THROUGH J-7.
"INTELLECTUAL PROPERTY RIGHTS" means all of the rights arising from or in
respect of the following, whether protected, created or arising under any Law:
(i) patents, inventions (whether patentable or unpatentable and whether or not
reduced to practice), invention disclosures, developments, patent applications,
any reissues, reexaminations, divisionals, continuations, continuations-in-part
and extensions thereof, trademarks, service marks, trade names (whether
registered or unregistered), service names, industrial designs, brand names,
brand marks, trade dress rights, Internet domain names, identifying symbols,
logos, emblems, signs or insignia, including all goodwill associated with the
foregoing, copyrights, mask work rights and registrations and applications
therefor, (ii) Trade Secrets, (iii) computer programs, including any and all
Software (as hereinafter defined) implementations of algorithms, models and
methodologies, whether in source code, object code or other form, databases and
compilations, including any and all data and collections of data, descriptions,
flowcharts and other work product used to design, plan, organize and develop any
of the foregoing and all documentation, including user manuals and training
materials, related to any of the foregoing ("SOFTWARE"), (iv) all other
intellectual property and proprietary rights and rights of a similar nature and
(v) all applications, registrations, permits and licenses related to any of the
foregoing clauses (i) through (iv) above.
13
"IRS" means the U.S. Internal Revenue Service.
"LAW" means any multinational, national, federal, state, foreign,
provincial or local law (including common law), statute, ordinance, rule,
regulation, code, order, judgment, permit, injunction, edict, decree or other
provisions having the force or effect of law, of any country or any political
subdivision thereof, including Environmental Law.
"LEASE" means any lease, sublease, license agreement or other arrangement
with respect to the Leased OSi Premises, including, in each case, any amendment,
modification or supplement thereto.
"LEASE ASSIGNMENT" means each assignment agreement with respect to a Lease
in substantially the form set forth as EXHIBIT N-1 and the assignment agreement
with respect to the Sublease in substantially the form set forth as EXHIBIT N-2;
PROVIDED, HOWEVER, that to the extent reasonably required by the lessor pursuant
to the terms of any Lease or by custom or required by applicable Law of the
jurisdiction in which an Assumed OSi Lease is located, each of the parties
hereto or its designated Affiliate shall enter into a separate assignment of
lease in relation to such Assumed OSi Lease, such separate assignment to be
substantially in the same form as the assignment described above, with such
changes as are reasonably required by such lessor or by custom or required by
applicable Law, together with any other transfer declarations or other filings
as are required to give effect to such assignment, PROVIDED that no such
separate assignment or other declaration or filing shall alter the parties'
rights or obligations set forth in this Agreement.
"LEASED OSI EQUIPMENT" means the computers, servers, machinery, equipment,
vehicles, laboratory equipment, shipping containers and other items leased and
used or held for use by Crompton or an OSi Subsidiary primarily in the operation
or conduct of the OSi Business, but excluding any Excluded OSi Assets.
"LEASED OSI PREMISES" means all the real property that is leased by
Crompton or an OSi Subsidiary and used or held for use by Crompton or an OSi
Subsidiary primarily in the operation or conduct of the OSi Business, which real
property is identified on SCHEDULE 3.7(B)(I).
"LEASED SC EQUIPMENT" means the computers, servers, machinery, equipment,
vehicles, laboratory equipment, shipping containers and other items leased and
used or held for use by GE or an SC Subsidiary primarily in the operation or
conduct of the SC Business, but excluding any Excluded SC Assets.
"LOSSES" means all Claims, actions, suits, proceedings, liabilities,
obligations, losses, damages, judgments, equitable relief granted, amounts paid
in settlement, awards (including back-pay awards), demands, offsets, defenses,
counterclaims, interest, penalties, costs and expenses (including reasonable
attorneys' fees, court costs and other reasonable out-of-pocket expenses
incurred by an Indemnified Party in investigating, preparing or defending and
enforcing against the Indemnifying Party any Claim for indemnification),
PROVIDED that "LOSSES" and any indemnification on account thereof will
14
not include any lost profits (to the extent the same would constitute
consequential or like damages) or any special, exemplary, punitive or
consequential or other similar damages, other than exemplary, punitive or
consequential or other similar damages actually awarded to a Third Party in an
Action and PROVIDED, FURTHER, that there shall be no presumption as to whether a
multiple of earnings or similar approach of the type set forth in Section
12.1(e) and Section 12.1(f) will be applied in determining damages or
calculating Losses.
"MATERIAL OSI CONTRACTS" means the following OSi Contracts (other than
Crompton Benefit Plans): (a) customer agreements involving the receipt or
payment in 2002 or thereafter of more than $250,000 annually; (b) contracts
involving the obligation of Crompton or any OSi Subsidiary (with respect to any
portion of the OSi Business) to purchase products, materials, supplies,
advertising, equipment or services for more than $250,000 annually (unless
terminable by Crompton or the OSi Subsidiary with payment or penalty of not more
than $50,000 upon no more than 90 days' notice); (c) joint venture or
partnership agreements and contracts providing for the formation of a joint
venture, long-term alliance or partnership or involving an equity investment by
Crompton or any OSi Subsidiary (with respect to any portion of the OSi
Business); (d) contracts (including employment agreements) that by the express
terms affect or limit the freedom in any material manner of the OSi Business or
any portion thereof, or any of the Transferred OSi Assets, to compete in any
line of business or with any Person or in any geographic area; (e) contracts (or
a group of related contracts) under which Crompton or any OSi Subsidiary (in
each case, with respect to any portion of the OSi Business) has created,
incurred, assumed, or guaranteed any indebtedness or that relates to the lending
of amounts, in each case, in excess of $100,000 or providing for the creation of
any Encumbrance securing an obligation likely to exceed $100,000 upon any asset
of the OSi Subsidiaries or any Transferred OSi Asset; (f) leases, subleases or
similar agreements under which Crompton or any OSi Subsidiary is a lessee or
sublessee of tangible personal property used or held for use in any portion of
the OSi Business, of which the annual rent for such portion is in excess of
$100,000; (g) joint research and development agreements involving expenditures
by the OSi Business in excess of $50,000 in any calendar year; (h) real property
leases with an annual rent in excess of $50,000; (i) contracts concerning the
marketing or distribution by Third Parties of any products or services of the
OSi Business (including contracts requiring the payment of any sales or
marketing or distribution commissions or granting to any Person rights to
market, distribute or sell such products or services) involving sales of
products of more than $250,000 for 2002; (j) other contracts which were entered
into other than in the ordinary course of business (other than this Agreement)
involving annual payments to or from Third Parties in excess of $250,000; (k)
other contracts relating to the OSi Business which involve annual payments in
excess of $250,000 or are not terminable by Crompton or the OSi Subsidiaries
without payment or penalty of not more than $50,000 upon no more than 90 days'
notice; and (l) contracts the absence of which would reasonably be expected to
have a Crompton Material Adverse Effect.
15
"MATERIAL SC CONTRACTS" means the following SC Contracts (other than GE
Benefit Plans): (a) customer agreements involving the receipt or payment in 2002
or thereafter of more than $150,000 annually; (b) contracts involving the
obligation of GE or any SC Subsidiary (with respect to any portion of the SC
Business) to purchase products, materials, supplies, advertising, equipment or
services for more than $150,000 annually (unless terminable by GE or the SC
Subsidiary with payment or penalty of not more than $25,000 upon no more than 90
days' notice); (c) joint venture or partnership agreements and contracts
providing for the formation of a joint venture, long-term alliance or
partnership or involving an equity investment by GE or any SC Subsidiary (with
respect to any portion of the SC Business); (d) contracts (including employment
agreements) that by the express terms affect or limit the freedom in any
material manner of the SC Business or any portion thereof, or any of the
Transferred SC Assets, to compete in any line of business or with any Person or
in any geographic area; (e) contracts (or a group of related contracts) under
which GE or any SC Subsidiary (with respect to any portion of the SC Business)
has created, incurred, assumed, or guaranteed any indebtedness or that relates
to the lending of amounts, in each case, in excess of $50,000 or providing for
the creation of any Encumbrance securing an obligation likely to exceed $50,000
upon any asset of the SC Subsidiaries or any Transferred SC Asset; (f) leases,
subleases or similar agreements under which GE or any SC Subsidiary (in each
case, with respect to any portion of the SC Business) is a lessee or sublessee
of tangible personal property used or held for use in any portion of the SC
Business, of which the annual rent for such portion is in excess of $100,000;
(g) joint research and development agreements involving expenditures by the SC
Business in excess of $100,000 in any calendar year; (h) real property leases
with an annual rent in excess of $50,000; (i) contracts concerning the marketing
or distribution by Third Parties of any products or services of the SC Business
(including contracts requiring the payment of any sales or marketing or
distribution commissions or granting to any Person rights to market, distribute
or sell such products or services) involving sales of products of more than
$100,000 for 2002; (j) the Blendex Agreements; (k) other contracts which were
entered into other than in the ordinary course of business (other than this
Agreement) involving annual payments to or from Third Parties in excess of
$200,000; (l) other contracts relating to the SC Business which involve annual
payments in excess of $200,000 or are not terminable by GE or the SC
Subsidiaries without payment or penalty of not more than $25,000 upon no more
than 90 days' notice; and (m) contracts the absence of which would reasonably be
expected to have a GE Material Adverse Effect.
"MAXIMUM CUMULATIVE EARN-OUT AMOUNT" means, as of any determination date,
an amount equal to the product of (i) Twenty Million Eight Hundred and
Thirty-Three Thousand Dollars ($20,833,000) MULTIPLIED BY (ii) the number of
completed fiscal quarters elapsed in the Earn-Out Period as of such
determination date, PROVIDED, HOWEVER, that the Earn-Out Payment for the first
fiscal quarter of the Earn-Out Period shall be Eight Million Seven Hundred and
Fifty Thousand Dollars ($8,750,000), and PROVIDED, FURTHER, that the Maximum
Cumulative Earn-Out Amount shall not under any circumstances be greater than Two
Hundred and Fifty Million Dollars ($250,000,000).
16
"MINIMUM CUMULATIVE EARN-OUT AMOUNT" means, as of any determination date,
an amount equal to the product of (i) Eight Million Seven Hundred and Fifty
Thousand Dollars ($8,750,000) MULTIPLIED BY (ii) one plus the number of
completed fiscal quarters elapsed in the Earn-Out Period as of such
determination date, PROVIDED, HOWEVER, that the Minimum Cumulative Earn-Out
Amount over the Earn-Out Period shall not under any circumstances be less than
One Hundred and Five Million Dollars ($105,000,000).
"NO FURTHER ACTION DETERMINATION" means a determination by a court or an
Environmental Agency that no further Remediation is required at an OSi Premises
or any portion thereof or an SC Premises, or any portion thereof, although such
a determination may include Environmental Re-openers or OSi Post-Remediation
Care Requirements or SC Post-Remediation Care Requirements.
"OSI ACCOUNTING PRINCIPLES" means GAAP (except as set forth in the
procedures, assumptions, adjustments and qualifications set forth on SCHEDULE
3.12(A)).
"OSI BUSINESS EMPLOYEES" means the employees of Crompton or the OSi
Subsidiaries set forth on SCHEDULE 3.9(A) (such schedule to be updated by
Crompton as of the Closing Date, with the consent of GE, which consent shall not
be unreasonably withheld), whose employment primarily consists of providing
services to the OSi Business.
"OSI BUSINESS RECORDS" means all books, records, ledgers and files or
other similar information used, held for use or intended to be used primarily in
the operation or conduct of the OSi Business, including price lists, customer
lists, customer files and documents (including credit information), vendor
lists, supplier lists, mailing lists, warranty information, catalogs, sales
promotion literature, advertising materials, brochures, promotional materials,
records of operation, general correspondence otherwise included in the business
files, standard forms of documents, manuals of operations or business
procedures, research materials and product testing reports, in each case whether
or not such item is physically located on any of the OSi Premises, but excluding
any such items to the extent (i) they are included in, or primarily related to,
the Excluded OSi Assets or Excluded Crompton Liabilities or (ii) any applicable
Law prohibits their sharing or transfer.
"OSI CONTRACTS" means all contracts, agreements, leases, subleases,
licenses, supply contracts, purchase orders, sales orders and instruments used
or held for use primarily in the operation or conduct of the OSi Business and to
which Crompton or an OSi Subsidiary is a party, including (i) for the lease of
machinery, equipment, motor vehicles, furniture or office equipment, (ii) for
the provision of goods or services to the OSi Business, (iii) for the sale by
the OSi Business of goods or the performance by the OSi Business of services,
(iv) for the sale and distribution of products of the OSi Business, (v) those
set forth on SCHEDULE 2.1(H) or (vi) any such contracts, agreements, instruments
and leases referred to in clauses (i) through (v), inclusive, entered into
between the date hereof and the Closing Date by Crompton or an OSi Subsidiary in
17
accordance with Section 5.2(a), but the term "OSI CONTRACTS" shall exclude the
Excluded OSi Contracts.
"OSI ENVIRONMENTAL CONDITION" means any contamination by a Hazardous
Substance of surface soils, subsurface soils, surface waters, groundwaters,
leachate, streams or other sediments present on, in, under or above any of the
OSi Premises or migrating from any of the OSi Premises.
"OSI FACILITIES" means all of Crompton's right, title and interest
appurtenant in and to the physical assets, buildings, structures and
improvements located in, on or about the OSi Premises and all fixtures and
fittings attached thereto and contained therein.
"OSI INVENTORY" means all inventory, wherever located (including at
customer sites), including raw materials, work in process, recycled materials,
finished products, inventoriable supplies, parts and non-capital spare parts
owned by Crompton or an OSi Subsidiary and used or held for use primarily in the
operation or conduct of the OSi Business, and any rights of Crompton or an OSi
Subsidiary to the warranties received from suppliers and any related Claims,
credits, rights of recovery and setoff arising after the Closing Date with
respect to such OSi Inventory and excluding any inventory primarily related to
Excluded OSi Assets or Excluded Crompton Liabilities.
"OSI LICENSED INTELLECTUAL PROPERTY" means all Intellectual Property
Rights in the Excluded OSi Assets to be licensed by Crompton or any of its
Affiliates to GE pursuant to the terms of an Intellectual Property Agreement.
"OSI LICENSES" means all licenses, agreements and other arrangements
identified on SCHEDULE 2.1(I) under which Crompton or an OSi Subsidiary (a) has
the right to use any Intellectual Property Rights of any Third Party to the
extent used or held for use primarily in the operation or conduct of the OSi
Business, or (b) has provided any Third Party with Intellectual Property Rights
used or held for use primarily in the operation or conduct of the OSi Business.
"OSI POST-REMEDIATION CARE REQUIREMENT" means all requirements specified
by an Environmental Agency to maintain environmental caps, monitor the
environmental condition of the OSi Premises (including periodic groundwater
monitoring) and/or to safeguard or restrict the future use of all or a portion
of any of the OSi Premises pursuant to a RCRA Corrective Action Permit at an OSi
Premises or after a No Further Action Determination has been made and shall
include the operation and maintenance of well #4315 and its associated piping at
the Sistersville plant as per practices prior to the Closing Date; PROVIDED,
HOWEVER, that it shall not include costs and expenses associated with camera
surveys of the Sistersville plant waste water treatment system or cost or
expenses of remediation, treating and disposing of Hazardous Substances
(including costs of designing and constructing treatment systems, operations and
maintenance of treatment systems principally dedicated to addressing OSi
Pre-Closing Contamination, and initial post-remediation confirmatory sampling
and monitoring) that arise as a result
18
of Remediation for which Crompton is responsible under this Agreement relating
to OSi Pre-Closing Contamination.
"OSI PRE-CLOSING CONTAMINATION" means an OSi Environmental Condition that
is present at any of the OSi Premises prior to Closing, but excluding any
migration of such contamination caused directly by the acts of GE or any of its
officers, directors, employees, agents or consultants.
"OSI PREMISES" means the Leased OSi Premises and the Transferred Owned OSi
Property.
"OSI PREMISES POST-CLOSING CONTAMINATION" means any OSi Environmental
Condition at any of the OSi Premises caused by Hazardous Substance releases
which occur after the Closing Date, but are not attributable to solid waste
management units ("SWMUS") or areas of concern ("AOCS") not used or adversely
affected by GE after the Closing Date.
"PERMITTED OSI ENCUMBRANCES" means (a) other than with respect to Real
Property, any (i) liens for Taxes, assessments and other governmental charges,
liens of carriers, warehousemen, mechanics and materialmen incurred in the
ordinary course of business, in each case for sums not yet due and payable or
being contested in good faith and by appropriate proceeding, (ii) liens incurred
or deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return of money bonds
and similar obligations, (iii) implied intellectual property or label licenses
granted by Crompton or an Affiliate in connection with sales of products in the
ordinary course of business, and (iv) any Encumbrances not material in amount
that, individually or in the aggregate, would not reasonably be expected to
materially interfere with the conduct of the OSi Business or with the use of any
material Transferred OSi Asset or the Transferred OSi Assets collectively and
would not reasonably be expected to materially affect the value of any material
Transferred OSi Asset or the Transferred OSi Assets collectively; and (b) with
respect to Real Property, any Permitted Property Encumbrances.
"PERMITTED PROPERTY ENCUMBRANCES" means, with respect to Real Property,
any of the following: (i) liens for Taxes or other assessments or charges by any
Governmental Body that are not yet due and payable, or being contested in good
faith and by appropriate proceedings; (ii) mechanics', carriers', workers',
materialmen's, warehousemen's and similar liens arising or incurred in the
ordinary course of business (x) for sums not due and payable; or (y) which are
being contested in good faith by appropriate proceedings; (iii) (A) with respect
to Real Property included in the Transferred OSi Assets, Encumbrances set forth
on SCHEDULE 3.7(B)(II) or SCHEDULE 3.7(B)(IV); and (B) with respect to Real
Property included in the Transferred SC Assets, Encumbrances set forth on
SCHEDULE 4.7(B)(II) or SCHEDULE 4.7(B)(IV); (iv) any state of facts disclosed on
a survey or that is observable by physical inspection which would not,
19
individually or in the aggregate, reasonably be expected to have a material
effect on any Real Property; (v) zoning, building and other similar restrictions
imposed by any applicable Law; or (vi) any other Encumbrance (excluding monetary
liens, but excepting therefrom the liens provided for in (i) and (ii) above)
that, individually or in the aggregate, would not reasonably be expected to
materially interfere with the conduct of the OSi Business or the SC Business, as
applicable, or with the use of each Real Property.
"PERMITTED SC ENCUMBRANCES" means (a) other than with respect to Real
Property, any (i) liens for Taxes, assessments and other governmental charges,
liens of carriers, warehousemen, mechanics and materialmen incurred in the
ordinary course of business, in each case for sums not yet due and payable or
being contested in good faith and by appropriate proceeding, (ii) liens incurred
or deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return of money bonds
and similar obligations, (iii) implied intellectual property or label licenses
granted by GE or an Affiliate in connection with sales of products in the
ordinary course of business, and (iv) any Encumbrances not material in amount
that, individually or in the aggregate, would not reasonably be expected to
materially interfere with the conduct of the SC Business or with the use of any
material Transferred SC Asset or the Transferred SC Assets collectively and
would not reasonably be expected to materially affect the value of any material
Transferred SC Asset or the Transferred SC Assets collectively; and (b) with
respect to Real Property, any Permitted Property Encumbrances.
"PERSON" means any individual, corporation, partnership, firm,
association, joint venture, joint stock company, trust, unincorporated
organization, Governmental Body or other entity.
"POST-CLOSING TAX PERIOD" means, with respect to, on the one hand, the OSi
Business, the Transferred OSi Assets, or the Acquired OSi Subsidiaries or, on
the other hand, the SC Business or the Transferred SC Assets, any Tax period (or
portion thereof) beginning after the Closing Date.
"PRE-CLOSING TAX PERIOD" means, with respect to, on the one hand, the OSi
Business, the Transferred OSi Assets or the Acquired OSi Subsidiaries or, on the
other hand, the SC Business or the Transferred SC Assets, any Tax period (or
portion thereof) ending on or before the Closing Date. For purposes of this
Agreement, with respect to any taxable year or period of an Acquired OSi
Subsidiary which includes the Closing Date (but does not end on that day), (i)
Property Taxes allocable to a Pre-Closing Tax Period shall be equal to the
amount of such Property Taxes for the entire taxable year or period multiplied
by a fraction, the numerator of which is the number of days during the taxable
year or period that are in the Pre-Closing Tax Period and the denominator of
which is the number of days in the entire taxable year or period, and (ii) Taxes
(other than Property Taxes) for the Pre-Closing Tax Period shall be computed as
if such taxable year or period ended as of the close of business on the Closing
Date; PROVIDED, that exemptions, allowances or deductions that are calculated on
an annual basis (including,
20
but not limited to, depreciation and amortization deductions) shall be allocated
between the period ending on the Closing Date and the period after the Closing
Date in proportion to the number of days in each such period.
"PRINCIPAL OSI EQUIPMENT" means the machinery, plant equipment, laboratory
equipment, scientific instruments, computer hardware, vehicles, shipping
containers and other personal property used or held for use by Crompton or the
applicable OSi Subsidiary primarily in the operation or conduct of the OSi
Business, but not the Leased OSi Equipment or any such items primarily related
to Excluded OSi Assets or Excluded Crompton Liabilities. Principal OSi Equipment
includes rights to the warranties received from the manufacturers and
distributors of such items and to any related Claims, credits, rights of
recovery and setoff arising after the Closing Date with respect to such items,
but only to the extent such rights are assignable.
"PRINCIPAL SC EQUIPMENT" means the machinery, plant equipment, laboratory
equipment, scientific instruments, computer hardware, vehicles, shipping
containers and other personal property used or held for use by GE or the
applicable SC Subsidiary primarily in the operation or conduct of the SC
Business, but not the Leased SC Equipment or any such items primarily related to
Excluded SC Assets or Excluded GE Liabilities. Principal SC Equipment includes
rights to the warranties received from the manufacturers and distributors of
such items and to any related Claims, credits, rights of recovery and setoff
arising after the Closing Date with respect to such items, but only to the
extent such rights are assignable.
"PROPERTY TAXES" means real, personal and intangible ad valorem property
Taxes.
"QUARTERLY BASELINE CM" means, for any fiscal quarter, an amount equal to
twenty five percent (25%) of the Baseline CM in effect during such fiscal
quarter, as more fully described in Section 2.3(e).
"RCRA" means the Resources Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. ss.ss. 6901 through 6992, and any analogous state law.
"REAL ESTATE DEED" means each special warranty deed (or the local
equivalent thereof) with respect to Transferred Owned OSi Property or
Transferred Owned SC Property in the appropriate recordable form for the
jurisdiction in which such property is located, and shall have affixed thereto
any requisite transfer Tax and documentary Tax stamps in the proper amount (with
the cost thereof allocated pursuant to Section 2.15).
"REAL PROPERTY" means the Transferred Owned OSi Property, the Assumed OSi
Leases and the Transferred Owned SC Property.
"REMEDIAL ACTION" or "REMEDIATION" means any action taken to investigate,
clean up or otherwise respond to releases of Hazardous Substances into the
environment, including OSi Post-Remediation Care Requirements and SC
Post-Remediation Care Requirements but does not include: (1) any actions taken
in connection with testing,
21
cleaning, emptying or repairing any fixed assets or fixtures located at either
an OSi Premises or an SC Premises even if such fixed assets or fixtures are, or
may be, contributing to OSi Environmental Conditions or SC Environmental
Conditions, (2) any actions taken to satisfy financial assurance requirements
associated with RCRA Part B permits at either the OSi Premises or SC Premises,
or financial assurance requirements associated with OSi Premises or SC Premises,
or any portion thereof, for which a No Further Action Determination has been
issued.
"REMEDIATION COSTS" means costs and expenses incurred in connection with
the Remedial Action or Remediation of an OSi Environmental Condition or SC
Environmental Condition at any of the OSi Premises, any of the SC Premises or a
Third-Party site for which, and to the extent that, either Crompton or GE is
liable hereunder, including the following: costs and expenses of environmental
consultants; attorney fees, PRP group costs, costs and expenses for sampling and
analysis of soil and groundwater; administrative oversight costs asserted by any
Environmental Agency; costs and expenses for preparation of reports and risk
assessments, costs and expenses of remediation, treating and disposing of
Hazardous Substances (including costs of designing, constructing and operating
treatment systems), costs and expenses to conduct initial post-Remediation
confirmatory sampling and monitoring and OSi Post-Remediation Care Requirement
or SC Post-Remediation Care Requirements. "Remediation Costs" shall not include
costs and expenses associated with: (1) testing, cleaning, emptying, repairing
or taking any other action with respect to any fixed assets or fixtures located
at any of the OSi Premises or SC Premises and which are, or may be, contributing
to soil or groundwater conditions requiring Remediation hereunder, (2)
compliance with Laws relating to the ongoing operations of any of the OSi
Premises or SC Premises or (3) costs and expenses associated with obtaining
and/or maintaining any financial assurance mechanisms required by Law relating
to RCRA Part B Permits at any of the OSi Premises or SC Premises, or financial
assurance mechanisms relating to OSi Premises or SC Premises, or any portion
thereof, for which a No Further Action Determination has been issued.
"SC ACCOUNTING PRINCIPLES" means GAAP (except as set forth in the
procedures, assumptions, adjustments and qualifications set forth on SCHEDULE
4.12(A)).
"SC BUSINESS EMPLOYEES" means the employees of GE or the SC Subsidiaries
set forth on SCHEDULE 4.9(A) (such schedule to be updated by GE as of the
Closing Date, with the consent of Crompton, which consent shall not be
unreasonably withheld), whose employment primarily consists of providing
services to the SC Business.
"SC BUSINESS RECORDS" means all books, records, ledgers and files or other
similar information used, held for use or intended to be used primarily in the
operation or conduct of the SC Business, including price lists, customer lists,
customer files and documents (including credit information), vendor lists,
supplier lists, mailing lists, warranty information, catalogs, sales promotion
literature, advertising materials, brochures, promotional materials, records of
operation, general correspondence otherwise included in the business files,
standard forms of documents, manuals of operations or
22
business procedures, research materials and product testing reports, in each
case whether or not such item is physically located on any of the SC Premises,
but excluding any such items to the extent (i) they are included in, or
primarily related to, the Excluded SC Assets or Excluded GE Liabilities or (ii)
any applicable Law prohibits their sharing or transfer.
"SC CONTRACTS" means all contracts, agreements, leases, subleases,
licenses, supply contracts, purchase orders, sales orders and instruments used
or held for use primarily in the operation or conduct of the SC Business and to
which GE or an SC Subsidiary is a party, including (i) for the lease of
machinery, equipment, motor vehicles, furniture or office equipment, (ii) for
the provision of goods or services to the SC Business, (iii) for the sale by the
SC Business of goods or the performance by the SC Business of services, (iv) for
the sale and distribution of products of the SC Business, (v) those set forth on
SCHEDULE 2.6(G) or (vi) any such contracts, agreements, instruments and leases
referred to in clauses (i) through (v), inclusive, entered into between the date
hereof and the Closing Date by GE or an SC Subsidiary in accordance with Section
5.2(b), but the term "SC CONTRACTS" shall exclude the Excluded SC Contracts.
"SC ENVIRONMENTAL CONDITION" means any contamination by a Hazardous
Substance of surface soils, subsurface soils, surface waters, groundwaters,
leachate, streams or other sediments present on, in, under or above any of the
SC Premises or migrating from any of the SC Premises.
"SC FACILITIES" means all of GE's right, title and interest appurtenant in
and to the physical assets, buildings, structures and improvements located in,
on or about the SC Premises and all fixtures and fittings attached thereto and
contained therein.
"SC INVENTORY" means all inventory, wherever located (including at
customer sites), including raw materials, work in process, recycled materials,
finished products, inventoriable supplies, parts and non-capital spare parts
owned by GE or an SC Subsidiary and used or held for use primarily in the
operation or conduct of the SC Business, and any rights of GE or an SC
Subsidiary to the warranties received from suppliers and any related Claims,
credits, rights of recovery and setoff arising after the Closing Date with
respect to such SC Inventory and excluding any inventory primarily related to
Excluded SC Assets or Excluded GE Liabilities.
"SC LICENSES" means all licenses, agreements and other arrangements
identified on SCHEDULE 2.6(H) under which GE or an SC Subsidiary (a) has the
right to use any Intellectual Property Rights of any Third Party to the extent
used or held for use primarily in the operation or conduct of the SC Business or
(b) has provided any Third Party with Intellectual Property Rights used or held
for use primarily in the operation or conduct of the SC Business.
"SC POST-REMEDIATION CARE REQUIREMENT" means all requirements specified by
an Environmental Agency to maintain environmental caps, monitor the
environmental condition of the SC Premises (including periodic groundwater
monitoring) and/or to
23
safeguard or restrict the future use of all or a portion of any of the SC
Premises pursuant to a RCRA Corrective Action Permit or Consent Order at an SC
Premises or after a No Further Action Determination has been made; PROVIDED,
HOWEVER, that it shall not include costs and expenses of remediation, treating
and disposing of Hazardous Substances (including costs of designing and
constructing treatment systems, operations and maintenance of treatment systems
principally dedicated to addressing SC Pre-Closing Contamination, and initial
post-remediation confirmatory sampling and monitoring) that arise as a result of
Remediation for which GE is responsible under this Agreement relating to SC
Pre-Closing Contamination.
"SC PRE-CLOSING CONTAMINATION" means an SC Environmental Condition that is
present at any of the SC Premises prior to Closing, but excluding any migration
of such contamination caused directly by the acts of Crompton or any of its
officers, directors, employees, agents or consultants.
"SC PREMISES" means the Transferred Owned SC Property.
"SC PREMISES POST-CLOSING CONTAMINATION" means any SC Environmental
Condition at any of the SC Premises caused by Hazardous Substance releases which
occur after the Closing Date, but are not attributable to SWMUs or AOCs not used
or adversely affected by Crompton after the Closing Date.
"SEVERANCE BENEFITS" means severance pay or benefits, advance notice of
termination, pay in lieu of notice, or other similar pay, benefits or rights
required under any applicable GE Benefit Plan, Crompton Benefit Plan, contract
(including collective bargaining agreements or termination agreements), or Law.
"STRADDLE PERIOD RETURN" shall mean any Tax return, report and form
required to be filed by any Acquired OSi Subsidiary relating to a taxable year
or period beginning on or before and ending after the Closing Date; PROVIDED,
HOWEVER, that Straddle Period Return shall not include any Tax return, report or
form described in Section 5.4(a)(i) of this Agreement.
"SUBLEASE" means the sublease of the Tarrytown Lease in substantially the
form set forth as EXHIBIT A.
"SUBSIDIARY" of any entity means, at any date, any Person (i) 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 or more than 50% of the
profits or losses or rights to vote of which are, as of such date, owned,
controlled or held by the applicable Person or one or more subsidiaries of such
entity or (ii) the accounts of which would be consolidated with those of the
applicable entity in such entity's consolidated financial statements in
accordance with GAAP.
24
"TAXES" means all taxes of any kind, and all like charges, customs,
levies, duties, imposts, or other like assessments, including all net income,
capital gains, gross income, gross receipt, property, franchise, sales, use,
excise, withholding, payroll, employment, social security, workers'
compensation, unemployment, occupation, capital stock, ad valorem, value added,
transfer, gains, profits, net worth, asset, transaction, and other taxes, and
any interest, penalties or additions to tax with respect thereto, imposed by any
taxing authority or other Governmental Body under applicable Law, whether
disputed or not and including any obligation to indemnify or otherwise assume or
succeed to the Tax liability of any other Person.
"THIRD PARTY" means any Person not an Affiliate of the other referenced
Person or Persons.
"THIRD-PARTY CLAIM" means any Claim, action, suit or proceeding by a Third
Party in respect of which indemnity may be sought hereunder.
"TRADE SECRET" means proprietary, confidential or non-public processes,
designs, drawings, specifications, technology, formulae, databases, algorithms,
models, methods, research and development, know-how, manufacturing and
production processes and techniques, information about business plans and
strategies, marketing ideas and concepts, especially with respect to unannounced
products and services, present and future product plans, pricing, volume
estimates, financial data, product enhancement information, business plans,
marketing plans, sales strategies, customer information (including customers'
applications and environments), market testing information, development plans,
customer requirements, configurations, plans, apparatus, sketches, data,
prototypes, connecting requirements, inventions, discoveries, concepts, ideas,
trade secrets, technical data and other technical and business proprietary
non-public information.
"TRANSFER TAXES" means all applicable Taxes, including recording and
filing fees, documentary, transfer, sales, use, registration tax, stamp duties,
foreign notary and similar fees and costs that may be imposed, assessed or
payable by reason of the operation or as a result of this Agreement, including
the sales, transfers, leases, rentals, licenses and assignments contemplated
hereby, except for (i) net income and capital gains taxes or franchise or other
taxes based on, or measured by reference to, net income, and (ii) VAT.
"TRANSFERRED OSI INTELLECTUAL PROPERTY" means all Intellectual Property
Rights used or held for use primarily in the OSi Business, including such
Intellectual Property Rights set forth on SCHEDULE 3.13(A)(I)(A).
"TRANSFERRED OSI SUBSIDIARY" means Crompton Specialties S.r.l., an entity
organized under the laws of Italy.
"TRANSFERRED OWNED OSI PROPERTY" means all the real property that is owned
and used or held for use by Crompton or an OSi Subsidiary primarily in the
operation or
25
conduct of the OSi Business, which real property is identified on SCHEDULE
3.7(A), including any and all buildings, improvements, fixtures and
appurtenances located thereon.
"TRANSFERRED OWNED SC PROPERTY" means all the real property that is owned
and used or held for use by GE or an SC Subsidiary primarily in the operation or
conduct of the SC Business, which real property is identified on SCHEDULE
4.7(A), including any and all buildings, improvements, fixtures and
appurtenances located thereon.
"TRANSFERRED SC INTELLECTUAL PROPERTY" means (i) all Intellectual Property
Rights, except for patents, patent applications, invention disclosures,
registered trademarks and applications for trademark registration, which are
covered under clause (ii) of this definition, used or held for use at the SC
Facilities, any Third Party toll manufacturer of the SC Business or at the John
F. Welch Technology Center in Bangalore, India, in each case, primarily for the
conduct of the SC Business and (ii) all Intellectual Property Rights set forth
on SCHEDULE 4.13(A)(I) and SCHEDULE 4.13(D).
"TRANSITION SERVICES AGREEMENT" means the transition services agreement in
a form similar to the form attached hereto as EXHIBIT B.
"VAT" means any value added Tax, goods and services Tax or similar Tax,
including such Tax as may be levied in accordance with (but subject to
derogation from) EEC Directive 77/388/EEC (and other EEC directives relating to
VAT) and/or local legislation imposing value added tax in the relevant
jurisdiction.
"VAT LEGISLATION" shall mean all Laws relating to VAT in any jurisdiction
and all regulations, orders, notices, provisions and conditions made under those
Laws.
"WELFARE BENEFITS" means the type of benefits (other than Severance
Benefits) described in Section 3(1) of ERISA (whether or not covered by ERISA).
1.2 ADDITIONAL DEFINED TERMS
For purposes of this Agreement, the following terms shall have the
meanings specified in the Sections indicated below:
TERM SECTION
"ACQUIRED BUSINESS CM".................................Section 2.3(e)(i)
"ADJUSTED PRICES".....................................Section 5.22(b)(i)
"ADJUSTED TRANSFER PRICES"............................Section 5.22(b)(i)
"ADVISORY COMMITTEE"......................................Section 2.3(f)
"AGREED-UPON PROCEDURES"..............................Section 5.22(b)(i)
"AGREEMENT".....................................................Preamble
"AOCs" .........."Definition of OSi Premises Post-Closing Contamination"
"ASSET ACQUISITION STATEMENTS"............................Section 5.4(c)
26
"ASSUMED OSI LIABILITIES"....................................Section 2.4
"ASSUMED SC LIABILITIES".....................................Section 2.8
"AUDITED OSI SPECIAL PURPOSE FINANCIAL STATEMENTS"....Section 5.20(a)(i)
"AUDITED SC SPECIAL PURPOSE FINANCIAL STATEMENTS".....Section 5.20(b)(i)
"BASE OSI NET ASSETS".................................Section 2.10(a)(i)
"BASE OSI STATEMENT"..................................Section 2.10(a)(i)
"BASE SC NET ASSETS".................................Section 2.10(a)(ii)
"BASE SC STATEMENT"..................................Section 2.10(a)(ii)
"BLENDEX AGREEMENTS"........................................Section 4.21
"CAPITAL MARKETS ACTIVITY"............................Section 5.14(c)(i)
"CLOSING DATE"...............................................Section 7.3
"CLOSING OSI NET ASSETS"..............................Section 2.10(a)(i)
"CLOSING OSI STATEMENT"...............................Section 2.10(a)(i)
"CLOSING SC NET ASSETS"..............................Section 2.10(a)(ii)
"CLOSING SC STATEMENT"...............................Section 2.10(a)(ii)
"CONTINUING EMPLOYEES".................................Section 5.5(a)(v)
"CROMPTON"......................................................Preamble
"CROMPTON ACQUIRED COMPANY"...........................Section 5.14(a)(i)
"CROMPTON ACQUIRING ENTITY"...........................Section 5.14(a)(i)
"CROMPTON ESOP"...........................................Section 5.6(c)
"CROMPTON FLEX PLAN"..................................Section 5.7(b)(ii)
"CROMPTON FLEX PLANS FOR SC COVERED EMPLOYEES".........Section 5.7(b)(i)
"CROMPTON 401(K) PLAN"....................................Section 5.6(c)
"CROMPTON INTERCOMPANY ARRANGEMENT".........................Section 3.17
"CROMPTON POST-CLOSING PLANS".............................Section 5.5(b)
"CROMPTON REQUESTED ACTIONS".........................Section 2.13(d)(ii)
"CROMPTON RESTRICTED ACTIVITIES"......................Section 5.14(a)(i)
"CROMPTON SUBLEASE"...................................Section 3.7(b)(iv)
"DEFAULT RECOVERY ACTIVITIES"........................Section 5.14(c)(ii)
"DE MINIMIS BUSINESS"...............................Section 5.14(c)(iii)
"DIRECTING PARTY".........................Sections 5A.11(a) and 5B.11(a)
"DISPUTED DETERMINATION".............................Section 5.22(d)(ii)
"DISPUTED STATEMENT".................................Section 2.10(c)(ii)
"DIVESTED BUSINESS CM".................................Section 2.3(e)(i)
"EARN-OUT DISPUTED DETERMINATION".........................Section 2.3(k)
"EMPLOYEE LEASE AGREEMENT".........Definition of "Collateral Agreements"
"EMPLOYEES"...............................................Section 5.5(a)
"ESAS".................................................Section 5.1(c)(i)
"ESR BLENDEX AGREEMENT"..................................Section 4.21(a)
"EXCHANGED OSI ASSETS AND ASSUMED OSI LIABILITIES"..........Section 2.12
"EXCHANGED SC ASSETS AND ASSUMED SC LIABILITIES"............Section 2.12
"EXCLUDED CROMPTON LIABILITIES"..............................Section 2.5
"EXCLUDED CROMPTON MARKS"..........................Section 5.12(a)(i)(B)
"EXCLUDED GE LIABILITIES"....................................Section 2.9
"EXCLUDED GE MARKS"................................Section 5.12(a)(i)(A)
27
"EXCLUDED MARKS"...................................Section 5.12(a)(i)(B)
"EXCLUDED OSI ASSETS"........................................Section 2.2
"EXCLUDED OSI BUSINESS EMPLOYEES".....................Section 5.5(a)(iv)
"EXCLUDED SC BUSINESS EMPLOYEES"......................Section 5.5(a)(iv)
"EXCLUDED SC ASSETS".........................................Section 2.7
"EXEMPTION CERTIFICATES".................................Section 2.16(b)
"FILING PARTY"........................................Section 5.4(a)(vi)
"FINAL DETERMINATION"...............................Section 5.22(d)(iii)
"FINAL OSI STATEMENT"...............................Section 2.10(c)(iii)
"FINAL SC STATEMENT"................................Section 2.10(c)(iii)
"FINANCIAL SERVICES BUSINESS"........................Section 5.14(c)(iv)
"FINANCING"...........................................Section 5.14(c)(v)
"GE"............................................................Preamble
"GE ACQUIRED COMPANY"................................Section 5.14(a)(ii)
"GE ACQUIRING ENTITY"................................Section 5.14(a)(ii)
"GE BETZ AGREEMENT"................Definition of "Collateral Agreements"
"GE FLEX PLAN".........................................Section 5.7(b)(i)
"GE FLEX PLANS FOR OSI COVERED EMPLOYEES".............Section 5.7(b)(ii)
"GE 401(K) PLAN"..........................................Section 5.6(f)
"GE INTERCOMPANY ARRANGEMENT"............................Section 4.17(b)
"GEP"....................................................Section 4.21(a)
"GE PLASTICS AGREEMENT"............Definition of "Collateral Agreements"
"GE POST-CLOSING PLANS"...................................Section 5.5(b)
"GE REQUESTED ACTIONS"................................Section 2.13(d)(i)
"GE RESTRICTED ACTIVITIES"...........................Section 5.14(a)(ii)
"GESC"...................................................Section 4.21(a)
"INDEPENDENT ARBITRATOR"..................................Section 5.4(c)
"INITIAL TERMINATION DATE"...............................Section 12.1(g)
"INSURANCE"..........................................Section 5.14(c)(vi)
"ITALIAN EMPLOYEES"......................................Section 2.11(b)
"KPMG"......................................................Section 2.10
"LEASING"...........................................Section 5.14(c)(vii)
"LEAVE"................................................Section 5.5(a)(i)
"MANUFACTURING AGREEMENT EMPLOYEES"...................Section 5.5(a)(ii)
"MANUFACTURING AND SERVICES
AGREEMENTS"......................Definition of "Collateral Agreements"
"NEW CROMPTON 401(K) PLAN"................................Section 5.6(g)
"NEW GE 401(K) PLAN"......................................Section 5.6(g)
"NONASSIGNABLE ASSETS"...................................Section 2.13(c)
"NONASSIGNABLE OSI ASSETS"...............................Section 2.13(c)
"NONASSIGNABLE OSI PERMITS"...........................Section 2.13(d)(i)
"NONASSIGNABLE SC PERMITS"...........................Section 2.13(d)(ii)
"NON-COMPETITION PERIOD"..............................Section 5.14(a)(i)
"ON-LEAVE EMPLOYEE"....................................Section 5.5(a)(v)
"OSI BARGAINING EMPLOYEES".............................Section 5.5(a)(i)
"OSI BARGAINING COVERED EMPLOYEES"....................Section 5.7(b)(iv)
28
"OSI BARGAINING EMPLOYEE TRANSFERRED
ACCOUNT BALANCES"..................................Section 5.7(b)(iv)
"OSI BUSINESS JOINT VENTURE"..............................Section 2.1(k)
"OSI BUSINESS"..................................................Recitals
"OSI CLOSING INVENTORY COUNT"............................Section 5.23(a)
"OSI COLLECTIVE BARGAINING AGREEMENT"...............Section 5.2(a)(viii)
"OSI CONTINUING EMPLOYEES".............................Section 5.5(a)(v)
"OSI COVERED EMPLOYEES"...............................Section 5.7(b)(ii)
"OSI COVERED EMPLOYEES TRANSFERRED ACCOUNT BALANCES"..Section 5.7(b)(ii)
"OSI FACILITIES".......................................Section 5.1(a)(i)
"OSI MANUFACTURING AGREEMENT EMPLOYEES"................Section 5.5(a)(i)
"OSI MANUFACTURING AND SERVICES
AGREEMENT"......................Definition of "Collateral Agreements"
"OSI PERMITS"................................................Section 3.6
"OSI RETIREMENT PLAN".....................................Section 5.6(b)
"OSI SUBSIDIARIES"........................................Section 3.2(a)
"OTHER FINANCIAL SERVICES ACTIVITIES"..............Section 5.14(c)(viii)
"OTHER PARTY".............................Sections 5A.11(a) and 5B.11(a)
"PAYING PARTY"........................................Section 5.4(a)(vi)
"POLYMERADDITIVES PRODUCTS"...........................Section 5.15(a)(i)
"PURCHASE PRICE"..........................................Section 2.3(a)
"REFEREE"...........................................Section 2.10(c)(iii)
"RETURN-FROM-LEAVE DATE"...............................Section 5.5(a)(v)
"SC BUSINESS"...................................................Recitals
"SC CLOSING INVENTORY COUNT".............................Section 5.23(b)
"SC CONTINUING EMPLOYEES"..............................Section 5.5(a)(v)
"SC COVERED EMPLOYEES".................................Section 5.7(b)(i)
"SC COVERED EMPLOYEES TRANSFERRED ACCOUNT BALANCES"....Section 5.7(b)(i)
"SC EARNINGS".........................................Section 12.1(f)(i)
"SC FACILITIES".......................................Section 5.1(a)(ii)
"SC INSURANCE PAYMENTS"..................................Section 5.21(b)
"SC MANUFACTURING AGREEMENT EMPLOYEES"................Section 5.5(a)(ii)
"SC MANUFACTURING AND SERVICES
AGREEMENT".......................Definition of "Collateral Agreements"
"SC PERMITS".................................................Section 4.6
"SC SUBSIDIARIES"............................................Section 4.2
"SECURITIES ACTIVITY"................................Section 5.14(c)(ix)
"SOFTWARE"..................Definition of "Intellectual Property Rights"
"SWMUS" .........Definition of "OSi Premises Post-Closing Contamination"
"TARRYTOWN LEASE".....................................Section 3.7(b)(ii)
"TAX PROCEEDING"......................................Section 9.2(d)(ii)
"TRANSFER DATE".......................................Section 5.5(a)(vi)
"TRANSFERRED LEASED OSI EQUIPMENT".....................Section 5.9(b)(i)
"TRANSFERRED LEASED SC EQUIPMENT".....................Section 5.9(b)(ii)
"TRANSFERRED OSI ASSETS".....................................Section 2.1
"TRANSFERRED OSI JV INTEREST".............................Section 2.1(k)
"TRANSFERRED OSI SUBSIDIARY SHARES".......................Section 3.2(b)
"TRANSFERRED SC ASSETS"......................................Section 2.6
29
"UNAUDITED CONTRIBUTION MARGIN"...........................Section 2.3(d)
"UNAUDITED OSI SPECIAL PURPOSE FINANCIAL STATEMENTS".....Section 3.12(a)
"UNAUDITED SC SPECIAL PURPOSE FINANCIAL STATEMENTS"......Section 4.12(a)
"VAT PAYEE"..............................................Section 2.16(c)
"VAT PAYOR"..............................................Section 2.16(c)
"WARN"....................................................Section 3.9(f)
"YEAR 2002"...........................................Section 5.22(b)(i)
"YEAR 2003"..........................................Section 5.22(b)(ii)
1.3 OTHER DEFINITIONAL AND INTERPRETIVE MATTERS
Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:
CALCULATION OF TIME PERIOD. When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded. If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business Day.
GENDER AND NUMBER. Any reference in this Agreement to gender shall include
all genders, and words imparting the singular number only shall include the
plural and vice versa.
HEADINGS. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any "Section" are to the corresponding Section of this Agreement
unless otherwise specified.
HEREIN. The words such as "HEREIN," "HEREINAFTER," "HEREOF" and
"HEREUNDER" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.
INCLUDING AND OR. The word "INCLUDING" or any variation thereof means
"INCLUDING, WITHOUT LIMITATION" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it. The word "OR" is not exclusive.
SCHEDULES AND EXHIBITS. The Schedules and Exhibits attached to this
Agreement shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein. Any matter
disclosed by Crompton or GE on any one Schedule shall be deemed disclosed for
purposes of all other Schedules, so long as it is reasonably apparent that such
matter is responsive to any such other Schedule.
30
AGREEMENTS. Unless otherwise expressly provided herein or in any
Collateral Agreement, any agreement or instrument (other than Laws) defined or
referred to herein or therein means such agreement as from time to time amended,
modified, supplanted or supplemented in accordance with its terms.
2. PURCHASE AND SALE OF THE OSI BUSINESS
2.1 PURCHASE AND SALE OF OSI ASSETS
Upon the terms and subject to the conditions of this Agreement and in
reliance on the representations and warranties contained herein, on the Closing
Date, upon receipt of the Purchase Price, Crompton shall, or shall cause one or
more of the OSi Subsidiaries to, sell, transfer, assign, convey and deliver to
GE (or its designated Affiliate), and GE (or its designated Affiliate) shall
purchase, acquire and accept from Crompton or the applicable OSi Subsidiary, all
of Crompton's or the applicable OSi Subsidiary's right, title and interest in,
to and under the Transferred OSi Assets free and clear of all Encumbrances other
than and subject to Permitted OSi Encumbrances. For purposes of this Agreement,
the term "TRANSFERRED OSI ASSETS" means all the assets, properties and rights
used or held for use by Crompton or the applicable OSi Subsidiary primarily in
the operation or conduct of the OSi Business, whether tangible or intangible,
real, personal or mixed, including such assets, properties and rights set forth
or described below (except for the Excluded OSi Assets), as the same shall exist
on the Closing Date:
(a) the Assumed OSi Leases;
(b) the OSi Business Records;
(c) the Transferred Owned OSi Property;
(d) the OSi Facilities;
(e) the Principal OSi Equipment and the Transferred Leased OSi Equipment;
(f) the OSi Inventory;
(g) the Transferred OSi Intellectual Property;
(h) the OSi Contracts;
(i) the OSi Licenses;
(j) the OSi Governmental Permits that are identified on SCHEDULE 2.1(J);
(k) all equity interests held by Crompton or any Affiliate of Crompton in
the joint venture identified on SCHEDULE 2.1(K) (such equity interests being
referred to as the "TRANSFERRED OSI JV INTEREST" and such joint venture being
referred to herein as an "OSI BUSINESS JOINT VENTURE");
31
(l) all rights of Crompton or any Affiliate of Crompton under or pursuant
to all warranties, representations and guaranties made by suppliers,
manufacturers and contractors to the extent relating to other Transferred OSi
Assets;
(m) rebates and similar items, prepaid expenses and deposits to the extent
primarily related to the Transferred OSi Assets;
(n) the Transferred OSi Subsidiary Shares; and
(o) those assets listed on SCHEDULE 2.1(O).
2.2 EXCLUDED OSI ASSETS
Notwithstanding anything in Section 2.1 to the contrary, it is hereby
expressly acknowledged and agreed that the Transferred OSi Assets shall not
include, and neither Crompton nor any of the OSi Subsidiaries is selling,
transferring, assigning, conveying or delivering to GE, and GE is not
purchasing, acquiring or accepting from Crompton or any of the OSi Subsidiaries,
any of the rights, properties or assets, whether tangible or intangible, real,
personal or mixed, set forth or described below (the rights, properties and
assets expressly excluded by this Section 2.2 or otherwise excluded by the terms
of Section 2.1 from the Transferred OSi Assets, being referred to herein as the
"EXCLUDED OSI ASSETS"):
(a) any receivables (including accounts receivable, notes receivable,
customer receivables and employee receivables), cash, cash equivalents,
marketable securities, bank deposits or similar cash items or employee
receivables of Crompton or any Affiliate of Crompton (including the OSi
Subsidiaries);
(b) any Intellectual Property Rights of Crompton or any Affiliate of
Crompton, other than the Transferred OSi Intellectual Property;
(c) any (i) medical or other records pertaining to any OSi Business
Employee that Crompton is required by Law or pursuant to existing Crompton
policies to keep confidential; (ii) other books and records that Crompton or any
Affiliate of Crompton is required by Law to retain; PROVIDED, HOWEVER, that GE
shall have the right to make copies of any portions of such retained books and
records that relate to the OSi Business or any of the Transferred OSi Assets or
any of the OSi Continuing Employees; and (iii) information management system of
Crompton or any Affiliate of Crompton, other than those used or held for use
primarily in the operation or conduct of the OSi Business;
(d) any Claim, right or interest of Crompton or any Affiliate of Crompton
in or to any refund, rebate, abatement or other recovery for Taxes, together
with any interest due thereon or penalty rebate arising therefrom, for any
Pre-Closing Tax Period;
32
(e) subject to Section 5.12, all sales and marketing or packaging
materials, samples, prototypes, other sales and marketing or packaging materials
bearing an Excluded Crompton Mark;
(f) the Excluded OSi Contracts and any Claim, right or interest of Crompton
or any Affiliate of Crompton in and to the OSi Contracts to the extent not
related to the OSi Business;
(g) any insurance policies or rights of proceeds thereof (except as set
forth in Section 5.21(a));
(h) except as specifically provided in Sections 5.5 through 5.8, all the
assets of the Crompton Benefit Plans;
(i) the Intellectual Property Rights set forth on SCHEDULE 2.2(I);
(j) except as provided in Sections 2.1(l) and 2.1(m), any rights, Claims or
causes of action of Crompton or any Affiliate of Crompton against Third Parties
relating to the assets, properties, business or operations of Crompton or any
Affiliate of Crompton arising out of the operation of the OSi Business prior to
the Closing Date, PROVIDED that this paragraph is subject to the allocation of
such rights, Claims or causes of action in Sections 5.5 through 5.8 and, with
respect to Tax or environmental matters, elsewhere in this Agreement;
(k) except as provided in Section 2.1(k), all intercompany assets of the
OSi Business;
(l) all of the assets, properties, interests or rights of Crompton or any
Affiliate of Crompton listed on SCHEDULE 2.2(L); and
(m) all other assets, properties, interests and rights of Crompton or any
Affiliate of Crompton not included in the Transferred OSi Assets.
2.3 PURCHASE PRICE; CONSIDERATION; EARN-OUT PAYMENTS
(a) PURCHASE PRICE. In consideration of the sale, transfer, assignment,
conveyance and delivery by Crompton and the OSi Subsidiaries of the Transferred
OSi Assets to GE, and in addition to assuming the Assumed OSi Liabilities, (i)
(x) GE shall pay to Crompton, at Closing, an amount equal to Six Hundred and
Forty-Five Million Dollars ($645,000,000) (the "PURCHASE PRICE"), in cash by
wire transfer of immediately available funds to an account or accounts
designated by Crompton's written instructions to GE at least two Business Days
prior to Closing and (y) GE shall pay to Crompton, at the times set forth in and
subject to the provisions of Sections 2.3 (c), (d) and (e), the Earn-Out Amount
and (ii) as set forth more fully in Sections 2.6 through 2.9 herein, at Closing,
GE shall transfer, assign, convey and deliver to Crompton all of the right,
title and interest in, to and under the Transferred SC Assets that GE and the SC
Subsidiaries
33
possess and have the right to transfer, as the same shall exist on the Closing
Date, which Transferred SC Assets are stipulated for purposes of this Agreement
to have a fair market value of One Hundred and Sixty Million Dollars
($160,000,000), and Crompton shall assume the Assumed SC Liabilities. The
exchange of certain of the Transferred OSi Assets (and, possibly, certain
Assumed OSi Liabilities) for certain of the Transferred SC Assets (and,
possibly, certain Assumed SC Liabilities) will be effected as a like-kind
exchange of properties pursuant to Section 1031 of the Code. The parties agree
that consideration for the Transferred OSi Subsidiary Shares shall be equal to
the amount set forth on SCHEDULE 2.3(A), which amount is included in the
Purchase Price.
(b) ADJUSTMENT OF THE PURCHASE PRICE. The Purchase Price shall be subject
to adjustment pursuant to Sections 2.10, 12.1(e) and 12.1(f).
(c) EARN-OUT PAYMENTS. Subject to Sections 2.3(d) and (e), GE shall pay to
Crompton as follows:
(i) for each fiscal quarter during the Earn-Out Period an amount equal to
(x) the product of (A) 0.243 multiplied by (B) the Cumulative Incremental
Contribution Margin PLUS (y) Eight Million Seven Hundred and Fifty Thousand
Dollars ($8,750,000) MINUS (z) the sum of the Earn-Out Payments made in each of
the previous fiscal quarters of the Earn-Out Period (the "EARN-OUT PAYMENT") and
(ii) in the fiscal quarter following the end of the Earn-Out Period an
additional amount equal to (x) the product of (A) 0.243 multiplied by (B) the
Cumulative Incremental Contribution Margin MINUS (y) the sum of the Earn-Out
Payments previously made;
PROVIDED, HOWEVER, that, with respect to clauses (i) and (ii) above, the
Cumulative Earn-Out Payments as of any fiscal quarter (after giving effect to
the Earn-Out Payment for such fiscal quarter) shall neither exceed the Maximum
Cumulative Earn-Out Amount nor be less than the Minimum Cumulative Earn-Out
Amount. Each Earn-Out Payment shall be made two Business Days prior to the last
day of each fiscal quarter. Notwithstanding the foregoing, the Earn-Out Payment
for the first fiscal quarter of the Earn-Out Period shall be Eight Million Seven
Hundred and Fifty Thousand Dollars ($8,750,000).
(d) AUDITED CONTRIBUTION MARGINS. GE shall deliver to Crompton, at GE's
cost and expense, (i) within fifteen (15) days following the end of each fiscal
quarter of the Earn-Out Period, the internally reported, unaudited calculation
of the Contribution Margin for such fiscal quarter together with a statement
showing in reasonable detail the calculation of the Earn-Out Payment for such
fiscal quarter and (ii) within ninety (90) days following the end of each Fiscal
Year (or the stub portion of such Fiscal Years) and the end of the Earn-Out
Period, an Earn-Out Statement. In the event that (x) the Audited Contribution
Margin is greater than the Contribution Margin that was used by GE to determine
the Earn-Out Payments for such Fiscal Year (or any stub portion thereof) (the
"UNAUDITED CONTRIBUTION MARGIN"), GE shall add to the amount of the next
Earn-Out Payment due to Crompton an additional amount equal to the product of
0.243 multiplied
34
by such excess or (y) the Unaudited Contribution Margin is greater than the
Audited Contribution Margin, GE shall subtract from the amount of the next
Earn-Out Payment due to Crompton an amount equal to the product of 0.243
multiplied by such excess; PROVIDED, HOWEVER, that the Cumulative Earn-Out
Payments as of any fiscal quarter (after giving effect to such addition or
subtraction) shall neither exceed the Maximum Cumulative Earn-Out Amount nor be
less than the Minimum Cumulative Earn-Out Amount. If there are no further
Earn-Out Payments to which such adjustment amount can be applied, then the party
from which the adjusted amount is due shall make a cash payment to the other
party within fifteen (15) days following the delivery of the applicable Earn-Out
Statement. All amounts due and payable under Sections 2.3(c), 2.3(d) and
2.3(e)(iii) shall be made by wire transfer of immediately available funds to an
account designated in writing by the payment recipient. In addition to the
foregoing, all such amounts shall be paid on the date they become due and
payable, with interest thereon accruing from such date to the date of payment at
the "target" federal funds rate reported in the "Money Rates" section of the
Eastern Edition of THE WALL STREET JOURNAL published for the Business Day
immediately prior to the date of payment.
(e) ACQUISITIONS AND DIVESTITURES. (i) Within fifteen (15) days following
the closing of a transaction which results in the acquisition by GE or its
Affiliates of an Acquired Silicones Business or the divestiture by GE or its
Affiliates of a Divested Silicones Business, GE shall provide Crompton with a
notice of such acquisition or divestiture together with a statement showing in
reasonable detail, as applicable, (x) a calculation of the contribution margin
of the Acquired Silicones Business (calculated in accordance with the Earn-Out
Accounting Principles, applied on a consistent basis) and using the same
accounting methodologies and principles applied in the same manner as used to
prepare each Earn-Out Statement) for the four fiscal quarters prior to the
quarter in which such acquisition transaction closes (without giving effect in
such calculation to any synergies that would accrue from such addition)
("ACQUIRED BUSINESS CM") or (y) a calculation of the contribution margin
attributable to the Divested Silicones Business for the four fiscal quarters
preceding the quarter in which such divestiture transaction closes ("DIVESTED
BUSINESS CM") and (z) with respect to an Acquired Silicones Business or a
Divested Silicones Business, the supporting work papers detailing the
adjustments and mapping of the accounts from such Acquired Silicones Business'
or such Divested Silicones Business' accounting records.
(ii) If the Annualized CM Variance resulting from an acquisition
transaction in respect of an Acquired Silicones Business or divestiture
transaction in respect of a Divested Silicones Business is less than 0.5, the
Baseline CM for each remaining Fiscal Year in the Earn-Out Period following such
acquisition or divestiture shall be adjusted by adding the Acquired Business CM
or subtracting the Divested Business CM, as applicable. For each fiscal quarter
of the Earn-Out Period following the quarter in which such an acquisition or
divesture occurs, the Baseline CM (and, accordingly, the Cumulative Baseline CM)
shall be adjusted to reflect a pro-rata amount of the Acquired Business CM or
the Divested Business CM for such fiscal quarter (calculated as the amount equal
to the product of (x) the number of quarters (excluding
35
the quarter in which the acquisition or divestiture transaction closes)
remaining or elapsed, as applicable, in such Fiscal Year divided by four
MULTIPLIED BY (y) the Acquired Business CM or the Divested Business CM, as
applicable).
(iii) If (x) the Annualized CM Variance resulting from an acquisition
transaction in respect of an Acquired Silicones Business or divestiture
transaction in respect of a Divested Silicones Business is equal to or greater
than 0.5 or (y) a transaction or series of transactions is consummated as a
result of which more than fifty percent (50%) of the voting equity interest of
the Consolidated Combined Business is owned by an entity or entities not
otherwise directly or indirectly controlled by GE, GE will pay to Crompton in
immediately available funds the Earn-Out Termination Amount. The Earn-Out
Termination Amount shall be due and payable on the fifteenth (15th) Business Day
following the consummation of an event described in clause (x) or (y) above.
(f) ADVISORY COMMITTEE. During the Earn-Out Period, GE shall constitute an
advisory committee (the "ADVISORY COMMITTEE") consisting of two members
designated by GE and one member designated by Crompton, which Advisory Committee
shall meet once each fiscal quarter for the purpose of discussing current
operating results and reviewing the current year forecast and the annual long
term strategic plan of the Consolidated Combined Business. The Advisory
Committee shall determine the time, manner, place and any other matters relevant
to the conduct of its meetings. The designees of the Advisory Committee on the
Closing Date are listed on SCHEDULE 2.3(F). If any member dies or resigns from
the Advisory Committee, the party who appointed such member shall have sole
discretion to determine his or her successor. For the avoidance of doubt, the
Advisory Committee shall act in an advisory capacity only and shall have no
power, authority or discretion to take any action in respect of the Consolidated
Combined Business or with respect to the management of the Consolidated Combined
Business.
(g) REVIEW RIGHTS; ACCESS. Crompton and its accountants shall have the
opportunity (subject to execution by Crompton and its accountants of such
documents as reasonably requested by KPMG) to consult with and examine the work
papers, schedules and other documents prepared by KPMG in connection with the
preparation of each Earn-Out Statement. If the parties disagree as to the
Earn-Out Statement, they shall negotiate in good faith to resolve such dispute.
If the parties cannot reach agreement within 45 days, the dispute shall be
resolved in accordance with Section 2.3(k).
(h) ACCOUNTING PRINCIPLES. In the event GE changes its accounting
principles (including the incorporation of any new accounting pronouncements),
GE shall provide Crompton (i) a calculation of the contribution margin for the
Combined Consolidated Business for each fiscal quarter or portion thereof
remaining in the Earn-Out Period following such change after giving effect to
such change in GE's accounting principles, (ii) a calculation of the
Contribution Margin for each fiscal quarter or portion thereof remaining in the
Earn-Out Period following such change based on the Earn-Out Accounting
Principles without giving effect to such change in GE's accounting principles
and (iii) an accounting reconciliation of the calculations in clauses (i) and
(ii) above. GE
36
shall pay to Crompton the Earn-Out Payments for each fiscal quarter or portion
thereof remaining in the Earn-Out Period following such change in GE's
accounting principles, calculated pursuant to the Earn-Out Accounting Principles
and without giving effect to such change in GE's accounting principles.
(i) CONDUCT OF GE SILICONES. If (x) GE determines to make any change in the
transfer pricing policies between the Consolidated Combined Business, on the one
hand, and GE or any other GE Affiliate, on the other hand and (y) such change or
any series of changes result, in GE's good faith judgment, in an increase or
reduction over the term of such changes in the Contribution Margin for four
fiscal quarters by an amount greater than One Million Dollars ($1,000,000) in
the aggregate, GE shall make a presentation to Crompton as to the proposed
transfer pricing policy changes and the impact, if any, on the Contribution
Margin. GE and Crompton shall negotiate in good faith to agree as to the impact,
if any, such transfer pricing policy changes will have on the Contribution
Margin. If the parties cannot reach agreement within forty five (45) days, the
dispute shall be resolved in accordance with Section 2.3(k).
(j) SET-OFF. Notwithstanding anything else in this Agreement to the
contrary, payments owed by GE to Crompton pursuant to Sections 2.3(c), (d) and
(e) shall be subject to set-off or deduction only for those payments owed by
Crompton to GE pursuant to any other provision of this Agreement or any
Collateral Agreement that have been determined by court of competent
jurisdiction or a duly appointed arbitrator (including the Referee) to be due
and payable.
(k) PROCEDURES FOR EARN-OUT DISPUTE RESOLUTION. In the event that Crompton
and GE have any dispute with respect to the matters set forth in Section 2.3(d)
or Section 2.3(i) (the "EARN-OUT DISPUTED DETERMINATION"), such Earn-Out
Disputed Determination shall be resolved in the following manner:
(i) if such Earn-Out Disputed Determination cannot be resolved as
provided in the applicable provision of this Section 2.3, either party may
notify the other party in writing on the last day of such time period, which
notice shall specify in reasonable detail the nature of the dispute including,
(x) the disputed term or calculation (y) the basis for the dispute with respect
to each term or such calculation, and (z) the adjustments sought with respect to
each such term or calculation and each such dispute; and
(ii) if, at the end of the period specified in subsection (i) above,
the parties shall have failed to reach a written accord with respect to the
Earn-Out Disputed Determination, the disputed issues shall be arbitrated by the
Referee, in accordance with the arbitration procedures set forth on EXHIBIT
2.10(C)(III) hereto. The Referee shall act as an expert to determine, based on
the presentations by the parties as well as on the Referee's independent review,
those items or calculations in dispute, and shall have access to the work
papers, schedules and other documents prepared by the auditors with respect to
Section 2.3(d) or by GE in respect to Section 2.3(i). If the Referee determines
in its reasonable judgment based on the work papers, schedules or documents
prepared by
37
the auditors, or the presentations of the parties, that it does not have
sufficient information to make a determination of those items or calculations in
dispute, the Referee may request that the auditors produce such further
information needed and available to make such a determination or to clarify any
missing or unclear items in such work papers, schedules or documents. GE will
cause the auditors to produce such additional information or documents, except
to the extent that, in GE's judgment, such production may violate, infringe or
waive any attorney-client or like privilege of GE. The parties acknowledge that
in submitting disputed items to the Referee, neither party shall be entitled to
present items not disputed in the notice of dispute delivered in accordance with
Section 2.10(c)(ii). The determination of the Referee with respect to those
items in dispute, which shall be made within thirty (30) days of its selection,
shall be set forth in a written statement delivered to Crompton and GE. The
decision of the Referee in accordance with the provisions hereof shall be final
and binding, and there shall be no right of appeal therefrom except in the event
of any fraud or material misrepresentation to the Referee. Each party shall bear
the costs, fees and expenses of its own accountants and the costs, fees and
expenses of or related to the Referee shall be borne equally, one-half by
Crompton and one-half by GE.
2.4 ASSUMED OSI LIABILITIES
On the Closing Date, GE (or its designated Affiliate) shall execute and
deliver to Crompton one or more Assumption Agreements and one or more Lease
Assignments or Subleases pursuant to which GE (or its designated Affiliate)
shall accept, assume and agree to pay, perform or otherwise discharge, effective
as of the Closing Date, in accordance with the respective terms and subject to
the respective conditions thereof, the liabilities and obligations of Crompton
or an OSi Subsidiary pursuant to and under the Assumed OSi Liabilities. For
purposes of this Agreement, the term "ASSUMED OSI LIABILITIES" includes all
liabilities and obligations primarily (or if not primarily, to the extent)
related to the operation or conduct of the OSi Business and set forth or
described below (except for the Excluded Crompton Liabilities):
(a) subject to Section 2.1, the liabilities and obligations arising out of
or in connection with the operation of the OSi Business after the Closing Date,
including with respect to the Assumed OSi Leases, OSi Contracts, OSi Licenses,
OSi Governmental Permits, Transferred OSi Intellectual Property, and the other
Transferred OSi Assets, PROVIDED that this paragraph is subject to the
allocation of such rights, Claims or causes of action in Sections 5.5 through
5.8 and, with respect to Tax or environmental matters, elsewhere in this
Agreement;
(b) with respect to the OSi Business, any product liabilities arising out
of or in connection with products included in the OSi Inventory shipped after
the Closing Date;
(c) all obligations and liabilities that are allocated to or assumed by GE
and/or its Affiliates pursuant to Sections 5.5 through 5.8 of this Agreement, as
well as all other obligations and liabilities relating to or arising out of any
employment-related Claims made by OSi Continuing Employees (or their dependents
or beneficiaries) or labor
38
organizations, unions or associations representing OSi Continuing Employees that
are based on, arise out of, or result from (i) the operation of the OSi Business
after the Closing Date, including any such Claims based upon the transactions
contemplated hereby, or (ii) GE's and/or its Affiliates' selection of, efforts
to engage, or other treatment of, OSi Continuing Employees;
(d) rebates and similar items due to customers to the extent primarily
related to the Transferred OSi Assets; and
(e) indebtedness of the Transferred OSi Subsidiary in an aggregate
principal amount not to exceed $4,000,000 incurred in connection with the
purchase of equipment located at the Transferred OSi Subsidiary's facility at
Termoli, Italy (it being understood that GE will satisfy its obligation under
this paragraph by purchasing the Transferred OSi Subsidiary Shares and the
above-described debt being satisfied).
2.5 EXCLUDED CROMPTON LIABILITIES
GE shall not assume or be obligated to pay, perform or otherwise assume or
discharge any liabilities or obligations of Crompton or any Affiliate of
Crompton, whether direct or indirect, known or unknown, absolute or contingent,
pursuant to and under the Excluded Crompton Liabilities. For purposes of this
Agreement, the term "EXCLUDED CROMPTON LIABILITIES" means those liabilities set
forth or described below:
(a) any Excluded OSi Taxes;
(b) all (i) accounts payable of the OSi Business and (ii) the accrued
liabilities of the OSi Business reflected in the line item titled "Accounts
Payable and Accrued Liabilities" on the Audited OSi Special Purpose Financial
Statements;
(c) Losses and Claims arising out of or attributable to Hazardous
Substances present at, on or under property other than any of the OSi Premises
(and including Hazardous Substances migrating from the OSi Premises) as a result
of Crompton or OSi Business operations at any of the OSi Premises or otherwise
related to the OSi Business prior to the Closing Date, including Losses
associated with (i) Third-Party disposal or treatment sites and (ii) Claims for
natural resource damages, personal injuries, or property damages associated with
such Hazardous Substances;
(d) fines and penalties arising out of violations of Environmental Laws by
the OSi Business prior to the Closing Date;
(e) all Claims, liabilities or obligations arising out of, under or in
connection with (i) contracts, agreements or arrangements that are not OSi
Contracts, (ii) the OSi Contracts to the extent not related to the OSi Business
or (iii) the Excluded OSi Assets;
(f) other than as set forth in Sections 2.4(b), 2.4(d) and 2.4(e), all
Claims, liabilities or obligations arising out of the operation of the OSi
Business prior to the
39
Closing Date, including with respect to (i) the Assumed OSi Leases, OSi
Contracts, OSi Licenses, OSi Governmental Permits, Transferred OSi Intellectual
Property and the other Transferred OSi Assets and (ii) any civil, criminal or
administrative action, suit, investigation or proceeding (including any
counterclaims or crossclaims), PROVIDED that this paragraph is subject to the
allocation of such rights, Claims or causes of action in Sections 5.5 through
5.8 and, with respect to Tax or environmental matters, elsewhere in this
Agreement;
(g) except as specifically provided in Section 2.4(c) and in Sections 5.5
through 5.8, all obligations and liabilities relating to or arising out of any
employment-related Claims made by OSi Business Employees (or their dependents or
beneficiaries) or by labor organizations, unions or associations representing
OSi Business Employees that arise out of the operation of the OSi Business prior
to the Closing Date;
(h) except as specifically provided in Sections 5.5 through 5.8, all
liabilities in respect of the Crompton Benefit Plans;
(i) all indebtedness of the OSi Business or Crompton or any of its
Affiliates for borrowed money, except as and to the extent provided in Section
2.4(e) (and, for the avoidance of doubt, indebtedness shall not include any
Assumed OSi Lease);
(j) all intercompany liabilities of the OSi Business; and
(k) all other liabilities and obligations of Crompton or any of its
Affiliates, including pursuant to this Agreement, other than the Assumed OSi
Liabilities.
2.6 PURCHASE AND SALE OF SC ASSETS
Upon the terms and subject to the conditions of this Agreement and in
reliance on the representations and warranties contained herein, on the Closing
Date, GE shall, or shall cause one or more of the SC Subsidiaries to, sell,
transfer, assign, convey and deliver to Crompton, and Crompton shall purchase,
acquire and accept from GE or the applicable SC Subsidiary, all of GE's or the
applicable SC Subsidiary's right, title and interest in, to and under the
Transferred SC Assets, free and clear of all Encumbrances other than Permitted
SC Encumbrances. For purposes of this Agreement, the term "TRANSFERRED SC
ASSETS" means all the assets, properties and rights used or held for use by GE
or the applicable SC Subsidiary primarily in the operation or conduct of the SC
Business, whether tangible or intangible, real, personal or mixed, including
such assets, properties and rights, set forth or described below (except in each
case for the Excluded SC Assets) as the same shall exist on the Closing Date:
(a) [Reserved];
(b) the Transferred Owned SC Property;
(c) the SC Facilities;
40
(d) the Principal SC Equipment and the Transferred Leased SC Equipment;
(e) the SC Inventory;
(f) the Transferred SC Intellectual Property;
(g) the SC Contracts;
(h) the SC Licenses;
(i) the SC Business Records;
(j) the SC Governmental Permits that are identified on SCHEDULE 2.6(J);
(k) all physical assets, including the Principal SC Equipment, the Leased
SC Equipment and the SC Inventory, located at or used in connection with the SC
Business at the GE facility in Bergen op Zoom, The Netherlands;
(l) all rights of GE or any Affiliate of GE under or pursuant to all
warranties, representations and guaranties made by suppliers, manufacturers and
contractors to the extent relating to other Transferred SC Assets;
(m) rebates and similar items, prepaid expenses and deposits to the extent
primarily related to the Transferred SC Assets; and all receivables (including
accounts receivable, notes receivable, customer receivables, employee
receivables and intercompany receivables arising in the ordinary course of the
SC Business); and
(n) those assets listed on SCHEDULE 2.6(N).
2.7 EXCLUDED SC ASSETS
Notwithstanding anything in Section 2.6 to the contrary, it is hereby
expressly acknowledged and agreed that the Transferred SC Assets shall not
include, and neither GE nor any of the SC Subsidiaries is selling, transferring,
assigning, conveying or delivering to Crompton, and Crompton is not purchasing,
acquiring or accepting from GE or any of the SC Subsidiaries, any of the rights,
properties or assets, whether tangible or intangible, real, personal or mixed,
set forth or described below (the rights, properties and assets expressly
excluded by this Section 2.7 or otherwise excluded by the terms of Section 2.6
from the Transferred SC Assets being referred to herein as the "EXCLUDED SC
ASSETS"):
(a) any cash, cash equivalents, marketable securities, bank deposits or
similar cash items of GE or any Affiliate of GE (including the SC Subsidiaries);
(b) any Intellectual Property Rights of GE or any Affiliate of GE, other
than the Transferred SC Intellectual Property, including the Intellectual
Property Rights set forth on SCHEDULE 4.13(I);
41
(c) any (i) medical or other records pertaining to any SC Business Employee
that GE is required by Law or pursuant to existing GE policies to keep
confidential; (ii) other books and records that GE or any Affiliate of GE is
required by Law to retain; PROVIDED, HOWEVER, that Crompton shall have the right
to make copies of any portions of such retained books and records that relate to
the SC Business or any of the Transferred SC Assets or any of the SC Continuing
Employees; and (iii) information management system of GE or any Affiliate of GE,
other than those used or held for use primarily in the operation or conduct of
the SC Business;
(d) any Claim, right or interest of GE or any Affiliate of GE in or to any
refund, rebate, abatement or other recovery for Taxes, together with any
interest due thereon or penalty rebate arising therefrom, for any Pre-Closing
Tax Period;
(e) subject to Section 5.12, all sales and marketing or packaging
materials, samples, prototypes, other sales and marketing or packaging materials
bearing an Excluded GE Mark;
(f) the Excluded SC Contracts, any Claim, right or interest of GE or any
Affiliate of GE in and to the SC Contracts to the extent not related to the SC
Business;
(g) any insurance policies or rights of proceeds thereof (except as set
forth in Section 5.21(b));
(h) except as specifically provided in Sections 5.5 through 5.8, all the
assets of the GE Benefit Plans;
(i) [Reserved];
(j) except as provided in Sections 2.6(l) and 2.6(m), any rights, Claims or
causes of action of GE or any Affiliate of GE against Third Parties relating to
the assets, properties, business or operations of GE or any Affiliate of GE
arising out of the operation of the SC Business prior to the Closing Date,
PROVIDED that this paragraph is subject to the allocation of such rights, Claims
or causes of action in Sections 5.5 through 5.8 and, with respect to Tax or
environmental matters, elsewhere in this Agreement;
(k) all equity interests held by GE or any of its Affiliates in the joint
ventures related to the SC Business identified on SCHEDULE 2.7(K);
(l) except as provided in Section 2.6(m), all intercompany assets of the SC
Business;
(m) all of the assets, properties, interests or rights of GE or any
Affiliate of GE listed on SCHEDULE 2.7(M); and
(n) all other assets, properties, interests and rights of GE or any
Affiliate of GE not otherwise included in the Transferred SC Assets.
42
2.8 ASSUMED SC LIABILITIES
On the Closing Date, Crompton shall execute and deliver to GE one or more
Assumption Agreements and one or more Lease Assignments or Subleases pursuant to
which Crompton shall accept, assume and agree to pay, perform or otherwise
discharge, effective as of the Closing Date, in accordance with the respective
terms and subject to the respective conditions thereof, the liabilities and
obligations of GE or an SC Subsidiary pursuant to and under the Assumed SC
Liabilities. For purposes of this Agreement, the term "ASSUMED SC LIABILITIES"
includes all liabilities and obligations primarily (or if not primarily, to the
extent) related to the operation or conduct of the SC Business and set forth or
described below (except for the Excluded GE Liabilities):
(a) subject to Section 2.7, the liabilities and obligations arising out of
or in connection with the operation of the SC Business after the Closing Date,
including with respect to the SC Contracts, SC Licenses, SC Governmental
Permits, Transferred SC Intellectual Property and the other Transferred SC
Assets, PROVIDED that this paragraph is subject to the allocation of such
rights, Claims or causes of action in Sections 5.5 through 5.8 and, with respect
to Tax or environmental matters, elsewhere in this Agreement;
(b) with respect to the SC Business, any product liabilities arising out of
or in connection with products included in the SC Inventory shipped after the
Closing Date;
(c) all obligations and liabilities that are allocated to or assumed by
Crompton and/or its Affiliates pursuant to Sections 5.5 through 5.8 of this
Agreement, as well as all other obligations and liabilities relating to or
arising out of any employment-related Claims made by SC Continuing Employees (or
their dependents or beneficiaries) or labor organizations, unions or
associations representing SC Continuing Employees that are based on, arise out
of, or result from (i) the operation of the SC Business after the Closing Date,
including any such Claims based upon the transactions contemplated hereby, or
(ii) Crompton's and/or its Affiliates' selection of, efforts to engage, or other
treatment of, SC Continuing Employees;
(d) rebates and similar items due to customers to the extent primarily
related to the Transferred SC Assets; and
(e) except as provided in Sections 5.5 through 5.8, all liabilities of the
SC Business reflected in the line items titled "accounts payable" and "accrued
discounts" and "payroll liabilities" and "other current liabilities" on the
Audited SC Special Purpose Financial Statements and intercompany payables
arising in the ordinary course of the SC Business.
2.9 EXCLUDED GE LIABILITIES
Crompton shall not assume or be obligated to pay, perform or otherwise
assume or discharge any liabilities or obligations of GE or any Affiliate of GE,
whether direct or indirect, known or unknown, absolute or contingent, pursuant
to and under the Excluded
43
GE Liabilities. For purposes of this Agreement, the term "EXCLUDED GE
LIABILITIES" means those liabilities set forth or described below:
(a) any Excluded SC Taxes;
(b) all indebtedness of the SC Business or GE or its Affiliates for
borrowed money;
(c) Losses and Claims arising out of or attributable to Hazardous
Substances present at, on or under property other than any of the SC Premises
(and including Hazardous Substances migrating from the SC Premises) as a result
of GE or SC Business operations at any of the SC Premises or otherwise related
to the SC Business prior to the Closing Date, including Losses associated with
(i) Third-Party disposal or treatment sites, (ii) Claims for natural resource
damages, personal injuries, or property damages associated with such Hazardous
Substances and (iii) the Ordinance Works Disposal Areas Superfund site in
Morgantown, West Virginia;
(d) fines and penalties arising out of violations of Environmental Laws by
the SC Business prior to the Closing Date;
(e) all Claims, liabilities or obligations arising out of, under or in
connection with (i) contracts, agreements or arrangements that are not SC
Contracts, (ii) the SC Contracts to the extent not related to the SC Business or
(iii) the Excluded SC Assets;
(f) other than as set forth in Sections 2.8(b), 2.8(d) and 2.8(e), all
Claims, liabilities or obligations arising out of the operation of the SC
Business prior to the Closing Date, including with respect to (i) the SC
Contracts, SC Licenses, SC Governmental Permits, Transferred SC Intellectual
Property and the other Transferred SC Assets and (ii) any civil, criminal or
administrative action, suit, investigation or proceeding (including any
counterclaims or crossclaims), PROVIDED that this paragraph is subject to the
allocation of such rights, Claims or causes of action in Sections 5.5 through
5.8 and, with respect to Tax or environmental matters, elsewhere in this
Agreement;
(g) except as specifically provided in Section 2.8(c) and in Sections 5.5
through 5.8, all obligations and liabilities relating to or arising out of any
employment-related Claims made by SC Business Employees (or their dependents or
beneficiaries) or by labor organizations, unions or associations representing SC
Business Employees that arise out of the operation of the SC Business prior to
the Closing Date;
(h) except as specifically provided in Sections 5.5 through 5.8, all
liabilities in respect of the GE Benefit Plans;
(i) except as provided in Section 2.8(e), all intercompany liabilities of
the SC Business; and
44
(j) all other liabilities and obligations of GE or any of its Affiliates,
including pursuant to this Agreement, other than the Assumed SC Liabilities.
2.10 NET ASSETS
The amount of the Purchase Price shall be adjusted following the Closing
Date as follows:
(a) SPECIAL PURPOSE STATEMENTS.
(i) (A) Attached as SCHEDULE 2.10(A)(I) is a special purpose statement
of the net assets of the OSi Business as of December 31, 2002 (the "BASE OSI
STATEMENT"), prepared from the OSi Combined Statement of Net Assets as of
December 31, 2002 contained in the Unaudited OSi Special Purpose Financial
Statements and adjusted as described on SCHEDULE 2.10(A)(I) to reflect in the
last column thereof the adjusted net assets of the OSi Business (the "BASE OSI
NET ASSETS"). Within ninety (90) days after the Closing Date, Crompton shall
provide GE with (and GE shall cooperate with Crompton to the extent reasonably
requested by Crompton in preparing) a special purpose statement of net assets of
the OSi Business as of the Closing Date (the "CLOSING OSI STATEMENT"),
consisting of the same line items (to the extent of the Transferred OSi Assets
and the Assumed OSi Liabilities) set forth on SCHEDULE 2.10(A)(I), prepared from
the books and records of Crompton and the OSi Business in accordance with the
OSi Accounting Principles and the adjustments set forth on SCHEDULE 2.10(A)(I)
to reflect in the last column thereof the adjusted net assets of the OSi
Business (the "CLOSING OSI NET ASSETS"). For the avoidance of doubt, the Base
OSi Statement and the Closing OSi Statement shall be prepared using the same
accounting methodologies and principles (I.E., the OSi Accounting Principles)
applied in a consistent manner, so that any differences between such statements
do not result from changes in accounting treatment or approach.
(B) The Closing OSi Statement shall be accompanied by a report of
KPMG ("KPMG") to the effect that the Closing OSi Statement (x) has been audited
in accordance with United States generally accepted auditing standards, (y)
fairly presents in all material respects the Transferred OSi Assets and Assumed
OSi Liabilities as of the Closing Date to the extent properly within the
accounts comprising such line items (as the same is to be conveyed on the
Closing Date under this Agreement) in accordance with the OSi Accounting
Principles and the adjustments set forth on SCHEDULE 2.10(A)(I), and (z) was
prepared using the same accounting methodologies and principles as those used in
preparing the Base OSi Statement (I.E., the OSi Accounting Principles), applied
in a consistent manner, so that any differences between such statements do not
result from changes in accounting treatment or approach.
(C) GE and its accountants shall (subject to execution by GE and its
accountants of such documents as reasonably requested by KPMG) have the
opportunity to consult with and to examine the work papers, schedules and other
documents prepared or reviewed by KPMG in connection with the preparation of
their report on the Closing OSi Statement and the Closing OSi Net Assets.
45
(ii) Attached as Schedule 2.10(A)(II) is a special purpose statement
of the net assets of the SC Business as of December 31, 2002 (the "BASE SC
STATEMENT"), prepared from the SC Combined Statement of Net Assets as of
December 31, 2002 contained in the Unaudited SC Special Purpose Financial
Statements and adjusted as described on SCHEDULE 2.10(A)(II) to reflect in the
last column thereof the adjusted net assets of the SC Business (the "BASE SC NET
ASSETS"). Within ninety (90) days after the Closing Date, GE shall provide
Crompton with (and Crompton shall cooperate with GE to the extent reasonably
requested by GE in preparing) a special purpose statement of net assets of the
SC Business as of the Closing Date (the "CLOSING SC STATEMENT"), consisting of
the same line items (to the extent of the Transferred SC Assets and the Assumed
SC Liabilities) set forth on SCHEDULE 2.10(A)(II), prepared from the books and
records of GE and the SC Business in accordance with the SC Accounting
Principles and the adjustments set forth on SCHEDULE 2.10(A)(II) to reflect in
the last column thereof the adjusted net assets of the SC Business (the "CLOSING
SC NET ASSETS"). For the avoidance of doubt, the Base SC Statement and the
Closing SC Statement shall be prepared using the same accounting methodologies
and principles (I.E., the SC Accounting Principles) applied in a consistent
manner, so that any differences between such statements do not result from
changes in accounting treatment or approach.
(B) The Closing SC Statement shall be accompanied by a report of
KPMG to the effect that the Closing SC Statement (x) has been audited in
accordance with United States generally accepted auditing standards, (y) fairly
presents in all material respects the Transferred SC Assets and Assumed SC
Liabilities as of the Closing Date to the extent properly within the accounts
comprising such line items (as the same is to be conveyed on the Closing Date
under this Agreement) in accordance with the SC Accounting Principles and the
adjustments set forth on SCHEDULE 2.10(A)(II) and (z) was prepared using the
same accounting methodologies and principles as those used in preparing the Base
SC Statement (I.E., the SC Accounting Principles), applied in a consistent
manner, so that any differences between such statements do not result from
changes in accounting treatment or approach.
(C) Crompton and its accountants shall (subject to execution by
Crompton and its accountants of such documents as reasonably requested by KPMG)
have the opportunity to consult with and to examine the work papers, schedules
and other documents prepared or reviewed by KPMG in connection with the
preparation of their report on the Closing SC Statement and the Closing SC Net
Assets.
(b) PURCHASE PRICE ADJUSTMENT. Following delivery of the Final OSi
Statement or the Final SC Statement in accordance with Section 2.10(c)(iii)
hereof:
(i) If the Closing OSi Net Assets reflected on the Final OSi Statement
are less than the Base OSi Net Assets, Crompton shall pay to GE, within five
Business Days of the delivery of the Final OSi Statement, by wire transfer of
immediately available funds, the difference between the Closing OSi Net Assets
and the Base OSi Net Assets.
46
(ii) Not later than five Business Days after the delivery of the Final
OSi Statement, Crompton shall pay to GE, by wire transfer of immediately
available funds, $400,000 in respect of the closure of active surface
impoundments at the OSi Business facility in Sistersville, West Virginia.
(iii) If the Closing SC Net Assets reflected on the Final SC Statement
are less than the Base SC Net Assets, GE shall pay to Crompton, within five
Business Days of the delivery of the Final SC Statement, by wire transfer of
immediately available funds, the difference between the Closing SC Assets and
the Base SC Net Assets.
(c) PROCEDURES FOR DISPUTE RESOLUTION.
If the parties have any dispute with regard to the Closing OSi Statement
or the Closing SC Statement, the undisputed amount (if any) owed by a party
pursuant to this Section 2.10(c) shall be paid promptly, by wire transfer of
immediately available funds, and the amount of the disputed portion(s) shall be
determined in the following manner:
(i) during the 60 days after receipt of the Closing OSi Statement or
the Closing SC Statement, each party shall in good faith attempt to resolve any
disputes with respect to the Closing OSi Statement or the Closing SC Statement,
as applicable;
(ii) if such dispute(s) cannot be resolved within the time period set
forth in Section 2.10(c)(i), the party contesting the Closing OSi Statement or
the Closing SC Statement (each, if contested, the "DISPUTED STATEMENT") shall
notify the other party in writing on the last day of such time period, which
notice shall specify in reasonable detail the nature of the dispute including,
(i) the disputed line item or calculation, (ii) the basis for the dispute with
respect to each line item or such calculation, and (iii) the adjustments sought
with respect to each such line item or calculation and each such dispute; and
(iii) if, at the end of the 60-day period specified in subsection (i)
above, the parties shall have failed to reach a written accord with respect to
the Disputed Statement, the disputed issues shall be arbitrated by the New York,
New York office of a mutually agreed upon neutral nationally recognized
accounting firm located in New York, New York (the "REFEREE"), in accordance
with the arbitration procedures set forth on EXHIBIT 2.10(C)(III) hereto. The
Referee shall act as an expert to determine, based solely on the presentations
by the parties, and not by independent review, only those items or calculations
in dispute. The parties acknowledge that in submitting disputed items to the
Referee, neither party shall be entitled to present items not disputed in the
notice of dispute delivered in accordance with Section 2.10(c)(ii). The
determination of the Referee with respect to those items in dispute, which shall
be made as set forth on EXHIBIT 2.10(C)(III), shall be set forth in a written
statement delivered to Crompton and GE and together with those items accepted by
the parties (not otherwise affected by this Section 2.10(c)(iii)) or otherwise
resolved between Crompton and GE, shall become the "FINAL OSI STATEMENT" or the
"FINAL SC STATEMENT," as the case may be. The decision of the Referee in
accordance with the provisions hereof shall be final and binding, and there
shall be no right of appeal therefrom except in the event of any fraud
47
or material misrepresentation to the Referee. Each party shall bear the costs,
fees and expenses of its own accountants, and the costs, fees and expenses of or
related to the Referee shall be borne equally, one-half by Crompton and one-half
by GE. All amounts due and payable under this Section 2.10 shall be paid within
five Business Days following the date of the determination of the Referee, with
interest thereon accruing from the Closing Date to the date of payment at the
"target" federal funds rate reported in the "Money Rates" section of the Eastern
Edition of THE WALL STREET JOURNAL published for the Business Day immediately
prior to the date of payment.
(d) From the Closing Date until the final determination of the Final OSi
Statement or Final SC Statement, each party will grant to the other and its
respective representatives reasonable access during usual business hours to
agents and employees of such party and to the books, records and files of the
OSi Business or the SC Business, as applicable, in its possession to enable such
party to review and otherwise satisfy itself as to the accuracy of the Closing
OSi Statement and the Closing SC Statement and the preparation thereof. Crompton
and GE shall use their respective commercially reasonable efforts to cause
Crompton's accountants and GE's accountants to cooperate with each other in
connection with all of their activities undertaken in connection with this
Section 2.10.
2.11 TRANSFERRED OSI SUBSIDIARY
(a) For the avoidance of doubt, the parties have agreed that:
(i) Certain Italian operations of the OSi Business are to be conveyed
by Crompton to GE through the transfer of the Transferred OSi Subsidiary Shares
to GE rather than a direct conveyance of particular assets or liabilities of the
Transferred OSi Subsidiary.
(ii) Nonetheless, the parties intend that the transfer of the
Transferred OSi Subsidiary Shares shall result in an indirect transfer of only
those assets of the Transferred OSi Subsidiary that would otherwise (that is, if
the parties were transferring assets of the Transferred OSi Subsidiary and not
its shares) fall within the definition of "Transferred OSi Assets," and in an
indirect transfer of only those liabilities of the Transferred OSi Subsidiary
that would otherwise fall within the definition of "Transferred OSi
Liabilities." Likewise, the parties intend that the assets and liabilities of
the Transferred OSi Subsidiary that would otherwise fall within the definitions
of Excluded OSi Assets and Excluded Crompton Liabilities will either be
transferred to or assumed by Crompton prior to the Closing in accordance with
Section 2.11(c) or will be transferred to or assumed by Crompton after the
Closing in accordance with Section 2.13(b).
(iii) However, when categorizing the assets and liabilities of the
Transferred OSi Subsidiary in accordance with paragraph (ii) above, the
following assets and liabilities (which would, in accordance with paragraph (ii)
above, be Excluded OSi Assets or Excluded Crompton Liabilities) will be treated
as Transferred OSi Assets or
48
Transferred OSi Liabilities. These assets and liabilities of the Transferred OSi
Subsidiary are the following: (A) receivables (including accounts receivable,
notes receivable, customer receivables and employee receivables, but excluding
intercompany receivables), (B) accounts payable and accrued liabilities (but
excluding intercompany accounts payable) and (C) indebtedness to the extent set
forth in Section 2.4(e). These items will not be transferred to GE directly, but
will be transferred indirectly as a result of the transfer of the Transferred
OSi Subsidiary Shares; and a corresponding adjustment has been made to the Base
OSi Statement.
(iv) In addition, notwithstanding anything to the contrary in this
Agreement, it is understood and agreed that (A) GE will be solely responsible
for all payments pursuant to the Trattamento di Fine Rapporto payable as a
result of the termination of the employment of any Italian Employee on or after
the Closing Date and (B) Crompton will retain as Excluded Liabilities any
obligations or liabilities of the Transferred OSi Subsidiary in respect of any
Claim or Action by a Governmental Body against Crompton or its Affiliates
arising from any pre-Closing operations of the OSi Business.
(b) It is understood and agreed by the parties that the employees of the
Transferred OSi Subsidiary (the "ITALIAN EMPLOYEES") will remain employed by the
Transferred OSi Subsidiary immediately following the Closing, so that the offer
of employment that GE is required to make to the Italian Employees pursuant to
Section 5.5(a) will be an offer of continued employment with the Transferred OSi
Subsidiary. The Italian Employees (including any On-Leave Employees) shall be
considered to become OSi Continuing Employees automatically as of the Closing.
For all purposes of this Agreement, the Italian Employees shall be considered
OSi Business Employees.
(c) Prior to the Closing Date, Crompton agrees to use commercially
reasonable efforts to transfer out of the Transferred OSi Subsidiary (without
recourse to the Transferred OSi Subsidiary or, after Closing, GE) certain assets
and liabilities so that the assets and liabilities of the Transferred OSi
Subsidiary on the Closing Date are consistent with the agreement of the parties
as set forth in Sections 2.1, 2.2, 2.4 and 2.5 and this Section 2.11; PROVIDED,
that to the extent the transfer of assets and liabilities that would be
necessary to effect the agreement of the parties as set forth in Sections 2.1,
2.2, 2.4 and 2.5 and this Section 2.11 cannot be accomplished using commercially
reasonable efforts or would generate adverse Tax consequences, GE and Crompton
agree to cooperate in entering into alternative commercially reasonable
arrangements to achieve the same result. In furtherance of the foregoing, if any
assets of the Transferred OSi Subsidiary that, consistent with Sections 2.1 and
2.2, should not be Transferred OSi Assets are transferred to GE indirectly
through the transfer of the Transferred OSi Subsidiary Shares, such assets shall
be deemed to be Excluded OSi Assets, and if any liabilities of the Transferred
OSi Subsidiary that, consistent with Sections 2.4 and 2.5, should not be
Transferred OSi Liabilities are transferred to GE indirectly through the
transfer of the Transferred OSi Subsidiary Shares, such liabilities shall be
deemed to be Excluded Crompton Liabilities (except as otherwise provided in
Section 2.11(a)(iii)).
49
2.12 LIKE-KIND EXCHANGE
To the extent permitted by Section 1031 of the Code and any comparable
state, local or foreign Tax law provisions, the transfer of certain of the
Transferred OSi Assets and, possibly, certain Assumed OSi Liabilities set forth
on SCHEDULE 2.12 (the "EXCHANGED OSI ASSETS AND ASSUMED OSI LIABILITIES") in
exchange for some or all of the Transferred SC Assets and, possibly, certain
Assumed SC Liabilities set forth on SCHEDULE 2.12 (the "EXCHANGED SC ASSETS AND
ASSUMED SC LIABILITIES") shall be treated as a like-kind exchange. SCHEDULE
2.12, which shall be agreed by the parties hereto within 120 days after the date
of this Agreement, sets forth each like-kind exchange between GE or one of its
Affiliates, on the one hand, and Crompton or one of its Affiliates, on the other
hand, and identifies the appropriate asset and/or product class (as such classes
are defined in Treasury Regulation Section 1.1031(a)-2) or exchange group (as
such term is defined in Treasury Regulation Section 1.1031(j)) for the Exchanged
OSi Assets and the Exchanged SC Assets that are the subject of each such
exchange, as well as any liabilities to be assumed and, where appropriate, any
cash or other property (including any portion of the Earn-Out Amount) exchanged
in connection with the like-kind exchange. Each of Crompton and GE will file,
and will cause each of their respective Affiliates that is a party to a
like-kind exchange to file, all Tax returns, reports, forms and any other
documents (including any amended or supplemental forms) required to be filed in
connection with the like-kind exchange, consistent with SCHEDULE 2.12 and shall
take no position inconsistent therewith. The sale of the remainder of the
Transferred OSi Assets and Assumed OSi Liabilities for the cash consideration
provided herein plus the remainder of the Transferred SC Assets and Assumed SC
Liabilities shall be treated in the manner described in Section 5.4 of this
Agreement. Notwithstanding the foregoing, no party is relieved of any
representation, warranty, covenant or obligation which is to survive the Closing
pursuant to the terms of this Agreement.
2.13 FURTHER ASSURANCES; FURTHER CONVEYANCES AND ASSUMPTIONS; CONSENT OF
THIRD PARTIES
(a) From time to time from the date hereof, to the extent reasonable,
Crompton and GE shall, or shall cause their Affiliates to, make available to the
other party such non-confidential data in personnel records of OSi Continuing
Employees or SC Continuing Employees as may be reasonably necessary for GE and
Crompton to transition such employees into their records.
(b) From time to time following the Closing, Crompton and GE shall, and
shall cause their respective Affiliates to (at each party's own cost and
expense), execute, acknowledge and deliver all reasonable further conveyances,
notices, assumptions, releases and acquittances and such instruments, and shall
take such reasonable actions as may be necessary or appropriate to make
effective the transactions contemplated hereby and thereby as may be reasonably
requested by the other party (including (i) transferring back to Crompton or the
applicable OSi Subsidiary any asset or liability not contemplated by this
Agreement to be a Transferred OSi Asset or an Assumed OSi Liability,
respectively, which asset or liability was transferred to GE at the Closing,
(ii) transferring
50
to GE any asset or liability contemplated by this Agreement to be a Transferred
OSi Asset or an Assumed OSi Liability, respectively, which was not transferred
to GE at the Closing, (iii) transferring back to GE any asset or liability not
contemplated by this Agreement to be a Transferred SC Asset or an Assumed SC
Liability, respectively, which asset or liability was transferred to Crompton at
the Closing, and (iv) transferring to Crompton any asset or liability
contemplated by this Agreement to be a Transferred SC Asset or an Assumed SC
Liability, respectively, which was not transferred to Crompton at the Closing).
(c) Nothing in this Agreement nor the consummation of the transactions
contemplated hereby shall be construed as an attempt or agreement to assign, or
as an assignment of, any Transferred OSi Asset or Transferred SC Asset,
including any OSi or SC Contract, Lease, License, Governmental Permit,
certificate, approval, authorization or other right, which by its terms or by
Law is nonassignable or nontransferable without the consent of a Third Party or
a Governmental Body or is cancelable or otherwise materially impaired by a Third
Party in the event of an assignment or transfer ("NONASSIGNABLE ASSETS") unless
and until such consent shall have been obtained. Crompton and GE shall, and
shall cause their Affiliates to, use commercially reasonable efforts to, and
shall cooperate with the other party in endeavoring to, promptly obtain such
consents from such Third Parties or Governmental Bodies; PROVIDED, HOWEVER, that
such cooperation shall not require such party to remain secondarily liable or to
make any payment or concession to obtain any such consent with respect to any
Nonassignable Asset. The parties hereby confirm that consents of a Third Party
or Governmental Body may be required in connection with the proposed (x)
Sublease by Crompton to GE of the Tarrytown Lease, (y) arrangements described in
Section 5.15(c), and (z) arrangements described in Section 5.15(d), and such
proposed transactions shall be deemed to be included in the definition of
"NONASSIGNABLE OSI ASSETS."
(d) (i) To the extent permitted by applicable Law, in the event consents to
the assignment thereof (or such other consents) have not been obtained, such
Nonassignable OSi Assets (other than OSi Governmental Permits that are not
assignable without the consent of a Governmental Body ("NONASSIGNABLE OSI
PERMITS")) shall be held, as of and from the Closing Date, by Crompton or the
applicable Affiliate of Crompton for GE (or its designated Affiliate) and the
covenants and obligations thereunder shall be performed by GE (or its designated
Affiliate) in Crompton's or such Affiliate's name and all benefits and
obligations existing thereunder shall be for the account of GE (or its
designated Affiliate). Crompton shall take or cause to be taken at GE's expense
such actions (in its name or otherwise) as GE (or its designated Affiliate) may
reasonably request (such actions, "GE REQUESTED ACTIONS") so as to provide GE
(or its designated Affiliate) with the benefits of the Nonassignable OSi Assets
and to effect collection of money or other consideration that becomes due and
payable under the Nonassignable OSi Assets, and Crompton or the applicable
Affiliate of Crompton shall promptly pay over to GE (or its designated
Affiliate) all money or other consideration received by it in respect of all
Nonassignable OSi Assets. Without prejudice to Section 2.13(c), GE shall
indemnify and hold harmless Crompton or its Affiliates from and
51
against any Claims (including reasonable attorneys' fees) incurred by Crompton
or its Affiliates arising out of, resulting from, based upon, in connection with
or relating to any GE Requested Action.
(ii) To the extent permitted by applicable Law, in the event consents
to the assignment thereof (or such other consents) have not been obtained, such
Nonassignable SC Assets (other than SC Governmental Permits that are not
assignable without the consent of a Governmental Body ("NONASSIGNABLE SC
PERMITS")) shall be held, as of and from the Closing Date, by GE or the
applicable Affiliate of GE for Crompton and the covenants and obligations
thereunder shall be performed by Crompton in GE's or such Affiliate's name and
all benefits and obligations existing thereunder shall be for Crompton's
account. GE (or its designated Affiliate) shall take or cause to be taken at
Crompton's expense such actions (in its name or otherwise) as Crompton may
reasonably request (such actions, "CROMPTON REQUESTED ACTIONS") so as to provide
Crompton with the benefits of the Nonassignable SC Assets and to effect
collection of money or other consideration that becomes due and payable under
the Nonassignable SC Assets, and GE or the applicable Affiliate of GE shall
promptly pay over to Crompton all money or other consideration received by it in
respect of all Nonassignable SC Assets. Without prejudice to Section 2.13(c),
Crompton shall indemnify and hold harmless GE and its Affiliates from and
against any Claims (including reasonable attorneys' fees) incurred by GE or its
Affiliates arising out of, resulting from, based upon, in connection with or
relating to any Crompton Requested Action.
(e) (i) If any of the Nonassignable OSi Permits included in the Transferred
OSi Assets are not assignable or transferable without obtaining a replacement
permit, GE (or its designated Affiliate) shall use its commercially reasonable
efforts, and Crompton shall cooperate with GE to obtain such replacement permit,
PROVIDED that Crompton shall not be obligated to incur any cost or expense in
connection therewith, other than time and reasonable out-of-pocket expenses
incurred in connection with the cooperation of Crompton's employees, to obtain
replacement permits issued in the name of GE (or its designated Affiliate).
(ii) If any such replacement permit cannot be obtained prior to the
Closing, Crompton agrees to allow GE (or its designated Affiliate) to operate
under Crompton's permits if permitted by Law for a period of up to three months
after the Closing (or such longer period as may be reasonably necessary for GE
(or its designated Affiliate), using its commercially reasonable efforts to
obtain the replacement permits), PROVIDED that (1) GE (or its designated
Affiliate) is in compliance with Section 5.3(a) of this Agreement; (2) Crompton
shall not be obligated to incur any cost or expense in connection therewith,
other than time and reasonable out-of-pocket expenses incurred in connection
with the cooperation of Crompton's employees in connection therewith; (3)
Crompton agrees to continue to maintain financial assurances, in bonds (at GE's
sole cost and expense) required by Law for the OSi Governmental Permits in the
name of Crompton or its applicable Affiliate until such permits are transferred
or reissued to GE (or its designated Affiliate); and (4) GE shall indemnify and
hold harmless Crompton and
52
its Affiliates against any Losses (including reasonable attorneys' fees) arising
in connection with GE's operating under Crompton's permits.
(f) (i) If any of the Nonassignable SC Permits included in the Transferred
SC Assets are not assignable or transferable without obtaining a replacement
permit, Crompton shall use its commercially reasonable efforts, and GE (or its
designated Affiliate) shall cooperate with Crompton to obtain such replacement
permit, PROVIDED that GE (or its designated Affiliate) shall not be obligated to
incur any cost or expense in connection therewith, other than time and
reasonable out-of-pocket expenses incurred in connection with the cooperation of
GE's employees, to obtain replacement permits issued in Crompton's name.
(ii) If any such replacement permit cannot be obtained prior to the
Closing, GE agrees to allow Crompton to operate under GE's (or its designated
Affiliate's) permits if permitted by Law for a period of up to three months
after the Closing (or such longer period as may be reasonably necessary for
Crompton, using its commercially reasonable efforts to obtain the replacement
permits), PROVIDED that (1) Crompton is in compliance with Section 5.3(b) of
this Agreement; (2) GE (or its designated Affiliate) shall not be obligated to
incur any cost or expense in connection therewith, other than time and
reasonable out-of-pocket expenses incurred in connection with the cooperation of
GE's (or its designated Affiliate's) employees in connection therewith; (3) GE
(or its designated Affiliate) agrees to continue to maintain financial
assurances, in bonds (at Crompton's sole cost and expense) required by Law for
the SC Governmental Permits in the name of GE or its applicable Affiliate until
such permits are transferred or reissued to Crompton; and (4) Crompton shall
indemnify and hold harmless GE and its Affiliates against any Losses (including
reasonable attorneys' fees) arising in connection with Crompton's operating
under GE's permits.
(g) (i) If GE and Crompton determine that there are contracts, agreements
or arrangements of Crompton or its Affiliate that are not OSi Contracts but that
are material to the operation of the OSi Business, Crompton shall use
commercially reasonable efforts to, and shall cooperate with GE in endeavoring
to, provide GE with the benefit of such contracts, agreements or arrangements,
PROVIDED that Crompton shall not be obligated to incur any cost or expense in
connection therewith, other than reasonable out-of-pocket expenses incurred in
connection with the time and efforts of Crompton's employees, and PROVIDED,
FURTHER, that GE shall indemnify and hold harmless Crompton and its Affiliates
from and against any and all Losses (including reasonable attorneys' fees)
incurred by Crompton or its Affiliates arising in connection with any action
taken by Crompton in accordance with this Section 2.13(g)(i).
(ii) If Crompton and GE determine that there are contracts, agreements
or arrangements of GE or its Affiliate that are not SC Contracts but that are
material to the operation of the SC Business, GE shall use commercially
reasonable efforts to, and shall cooperate with Crompton in endeavoring to,
provide Crompton with the benefit of such contracts, agreements or arrangements,
PROVIDED that GE shall not be obligated to incur any cost or expense in
connection therewith, other than reasonable out-of-pocket
53
expenses incurred in connection with the time and efforts of GE's employees, and
PROVIDED, FURTHER, that Crompton shall indemnify and hold harmless GE and its
Affiliates from and against any and all Losses (including reasonable attorneys'
fees) incurred by GE or its Affiliates arising in connection with any action
taken by GE in accordance with this Section 2.13(g)(ii).
2.14 NO LICENSES
(a) Unless expressly set forth in this Agreement or in an Intellectual
Property Agreement, no title, right or license of any kind is granted to GE (or
its designated Affiliate) pursuant to this Agreement with respect to any
Intellectual Property Rights of Crompton or any Affiliate of Crompton, either
directly or indirectly, by implication, by estoppel or otherwise.
(b) Unless expressly set forth in this Agreement or in an Intellectual
Property Agreement, no title, right or license of any kind is granted to
Crompton pursuant to this Agreement with respect to any Intellectual Property
Rights of GE or any Affiliate of GE, either directly or indirectly, by
implication, by estoppel or otherwise.
2.15 BULK SALES LAW
(a) GE hereby waives compliance by Crompton and each of the OSi
Subsidiaries with the requirements and provisions of any "bulk-transfer" Laws of
any jurisdiction, including Article 6 of the New York Commercial Code, that may
otherwise be applicable with respect to the sale of any or all of the
Transferred OSi Assets to GE; PROVIDED, HOWEVER, Crompton and its Affiliates
shall indemnify and hold harmless GE and any other Indemnified Party of GE from
and against any and all Losses incurred or suffered by such Indemnified Party
arising out of, resulting from, or relating to Crompton and its Affiliates'
failure to comply with the terms and conditions of any applicable bulk sales or
bulk transfer or similar Laws of any jurisdiction that may be applicable to the
sale or transfer of any or all of the Transferred OSi Assets to GE (or its
designated Affiliates).
(b) Crompton hereby waives compliance by GE and each of the SC Subsidiaries
with the requirements and provisions of any "bulk-transfer" Laws of any
jurisdiction, including Article 6 of the New York Commercial Code, that may
otherwise be applicable with respect to the sale of any or all of the
Transferred SC Assets to Crompton; PROVIDED, HOWEVER, GE and its Affiliates
shall indemnify and hold harmless Crompton and any other Indemnified Party of
Crompton from and against any and all Losses incurred or suffered by such
Indemnified Party arising out of, resulting from, or relating to GE and its
Affiliates' failure to comply with the terms and conditions of any applicable
bulk sales or bulk transfer or similar Laws of any jurisdiction that may be
applicable to the sale or transfer of any or all of the Transferred SC Assets to
Crompton.
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2.16 TRANSFER TAXES AND VAT
(a) Each of Crompton and GE shall be responsible for and shall pay fifty
percent (50%) of the aggregate Transfer Taxes due in connection with the
transactions contemplated by this Agreement, in each case regardless of the
Person liable for such Taxes under applicable Law.
(b) The parties hereto shall take those actions reasonably necessary to
reduce or eliminate any potential Transfer Taxes associated with the
transactions contemplated by this Agreement, including obtaining all available
Transfer Tax exemption certificates (such as sales and use Tax blanket exemption
certificates) from the applicable state, local and foreign taxing jurisdictions
(collectively referred to as "EXEMPTION CERTIFICATES"). All available Exemption
Certificates shall be (i) delivered no later than the Closing Date to the party
receiving the assets to which the Exemption Certificate relates and (ii) dated
within ten (10) Business Days prior to the Closing Date and in form and
substance reasonably acceptable to both parties.
(c) The amount of any payment for a supply of goods and services or the
value of any supply made or deemed to be made by Crompton or any of the OSi
Subsidiaries, on the one hand, or by GE or any of the SC Subsidiaries, on the
other hand, pursuant to this Agreement or pursuant to any Collateral Agreement
that is intended to effect the transfer of assets and liabilities pursuant to
this Agreement (including any Assignment and Bill of Sale, Assumption Agreement,
Lease Assignment, Sublease, Real Estate Deed, instrument of conveyance relating
to the Transferred OSi JV Interest, Intellectual Property Agreement (to the
extent it provides for a royalty-free license), or any similar instrument of
conveyance or assignment executed and delivered between Crompton or its
Affiliates, on the one hand, and GE or its Affiliates, on the other hand) shall
be exclusive of any VAT properly chargeable on the supply, and the amount of
such VAT shall be paid by the recipient of such supply (the "VAT PAYOR") in
addition to any payment due under this Agreement (provided that the party making
the supply of goods or services (the "VAT PAYEE") has issued a proper VAT
invoice), or if no payment is due, shall be paid at the time a proper VAT
invoice is issued. The parties intend that the Transferred OSi Assets and the
Transferred SC Assets shall, wherever possible, be sold as a going concern for
purposes of any applicable VAT Legislation, so that such sale is outside the
scope of VAT, and, in each jurisdiction where the parties consider this
possible, Crompton or the relevant Crompton Affiliate, and GE or the relevant GE
Affiliate shall use reasonable efforts to secure the availability of such
treatment.
(d) In the event that a VAT Payor (or another member of such VAT Payor's
VAT group) has not obtained the benefit of a refund, offset, or credit of the
full amount of VAT paid by such VAT Payor to the relevant VAT Payee pursuant to
this Agreement within one year of the date such VAT was paid, the ultimate
parent of such VAT Payee (I.E., GE or Crompton, as the case may be) shall pay to
the ultimate parent of such VAT Payor 50% of the amount of any VAT for which no
such refund, offset, or credit was obtained. In the event that a VAT Payor (or
another member of such VAT Payor's VAT group) subsequently receives the benefit
of a refund, offset, or credit relating to such
55
VAT, the ultimate parent of such VAT Payor shall promptly pay to the ultimate
parent of the relevant VAT Payee 50% of any such refund, offset, or credit. The
relevant VAT Payor shall provide the relevant VAT Payee every three months with
a reasonably detailed written account of each refund, repayment, or credit of
VAT paid pursuant to this Agreement obtained by the VAT Payor.
(e) Each VAT Payor and VAT Payee shall use commercially reasonable efforts
to obtain and maximize the recovery of all refunds, offsets or credits relating
to VAT payable pursuant to this Agreement and to minimize the amount of
nonrecoverable VAT. Subject to the foregoing, (i) the relevant VAT Payor shall
control the preparation of all Tax returns relating to VAT payable pursuant to
this Agreement, and (ii) any Tax Proceeding relating to VAT payable pursuant to
this Agreement or any refund, offset, or credit of such VAT shall be conducted
in accordance the principles set forth in Section 9.2(d)(iv), treating the
relevant VAT Payor as the controlling party.
(f) Except as otherwise provided in the Collateral Agreements to which this
Section 2.16(f) applies, the amount of any payment for a supply of goods or
services or the value of any supply made or deemed to be made pursuant to any
such agreement shall be exclusive of VAT properly chargeable on the supply, and
the amount of such VAT shall be paid by the recipient of such supply in addition
to any payment due under such Collateral Agreement upon issuance of a proper VAT
invoice. Sections 2.16(d) and (e) shall not apply to any VAT paid pursuant to
any Collateral Agreement to which this Section 2.16(f) applies. This Section
2.16(f) shall apply to all Collateral Agreements other than those described in
Section 2.16(c).
2.17 ALTERNATIVE STRUCTURES
The parties agree that between the date of this Agreement and the Closing
Date, they will consider alternative acquisition structures (including the
acquisition or sale of the stock or equity interests of any of the various
Subsidiaries or Affiliates or any other acquisition structure that may fail to
satisfy the requirements of Section 1031 of the Code) to the extent that such
alternative structures may address the objectives of either party and be
mutually beneficial. In the event that alternative structures are identified and
agreed to prior to the Closing Date, the parties shall reflect the alternative
structures (and any other modifications to the Agreement agreed to in connection
with such alternative structures) either in an amendment to the Agreement that
complies with the requirements of Section 12.5 or in a schedule to be executed
by the parties at Closing.
3. REPRESENTATIONS AND WARRANTIES OF CROMPTON
Except as set forth in Schedules attached hereto, Crompton represents and
warrants to GE that:
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3.1 ORGANIZATION AND QUALIFICATION
Crompton is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware, and Crompton or the applicable
OSi Subsidiary has all requisite corporate power and authority to carry on the
OSi Business as currently conducted and to own, lease, use and operate the
Transferred OSi Assets. The Transferred OSi Subsidiary is an entity duly
organized, validly existing and in good standing under the Laws of Italy.
Crompton or the applicable OSi Subsidiary is duly qualified to do business and
is in good standing as a foreign corporation (in any jurisdiction that
recognizes such concept) in each jurisdiction where the ownership or operation
of the Transferred OSi Assets or the operation or conduct of the OSi Business
requires such qualification, except where the failure to be so 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.
3.2 SUBSIDIARIES
(a) SCHEDULE 3.2(A) sets forth a list of each Crompton Subsidiary, each OSi
Business Joint Venture and each other Affiliate of Crompton that is engaged in
the operation or conduct of the OSi Business or that has title to any asset
reasonably expected to be a Transferred OSi Asset or an obligation reasonably
expected to be an Assumed OSi Liability, together with its jurisdiction of
organization and, in the case of each OSi Business Joint Venture, its authorized
and outstanding capital stock or other equity interests as of the date hereof
(collectively, the "OSI SUBSIDIARIES"). Other than with respect to the OSi
Business Joint Venture and except as set forth on SCHEDULE 3.2(A), each OSi
Subsidiary is duly organized and validly existing under the Laws of its
jurisdiction of organization and has all requisite corporate or similar power
and authority to own, lease, use and operate the Transferred OSi Assets owned,
leased, used or operated by it and to carry on its portion of the OSi Business
as presently conducted and is duly qualified to do business and is in good
standing as a foreign corporation or other entity (in any jurisdiction that
recognizes such concept) in each jurisdiction where the ownership, lease, use or
operation of its properties and assets or the conduct of its business requires
such qualification, except where the failure to be so duly organized, validly
existing, 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.
(b) All of the outstanding equity interests (QUOTA) of the Transferred OSi
Subsidiary (the "TRANSFERRED OSI SUBSIDIARY SHARES") are duly authorized,
validly issued, fully paid and nonassessable, not issued in violation of any
preemptive or similar rights and owned beneficially and of record by Crompton or
the Affiliate of Crompton identified in SCHEDULE 3.2(B), and upon transfer of
the Transferred OSi Subsidiary Shares, GE will acquire good and valid title
thereto, free and clear of any Encumbrances. SCHEDULE 3.2(B) sets forth the
location of the registered office and the registration number with the Register
of Companies for the Transferred OSi Subsidiary. Except as set forth on SCHEDULE
3.2(B), there are no outstanding subscriptions, options, warrants, puts, calls,
agreements, understandings, claims or other commitments or rights of any type or
other
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securities (i) requiring the issuance, sale, transfer, repurchase, redemption or
other acquisition of any of the Transferred OSi Subsidiary Shares, (ii)
restricting the transfer of any of the Transferred OSi Subsidiary Shares, or
(iii) relating to the voting of any of the Transferred OSi Subsidiary Shares.
(c) The Transferred OSi Subsidiary has not at any time been engaged in any
business other than the OSi Business.
(d) The Transferred OSi JV Interest is validly issued, fully paid and
nonassessable and owned beneficially and of record by Crompton or the Affiliate
of Crompton identified in SCHEDULE 2.1(K), and upon delivery of the Transferred
OSi JV Interest, GE will acquire good and valid title thereto, free and clear of
any Encumbrances. The authorized capital stock of, or other equity interest in,
as the case may be, each Transferred OSi JV Interest, the issued and outstanding
shares of stock of, or other equity interest in, each such Transferred OSi JV
Interest and the name of each Person who owns of record any of such shares of
stock or equity interest is set forth in SCHEDULE 2.1(K). The Transferred OSi JV
Interest was not issued in violation of any preemptive or similar rights, and
the consummation of the transactions contemplated by this Agreement and the
Collateral Agreements will not give rise to any preemptive or similar rights in
respect of such Transferred OSi JV Interest or OSi Business Joint Venture,
except as set forth on SCHEDULE 2.1(K). There are no outstanding subscriptions,
options, warrants, puts, calls, agreements, understandings, claims or other
commitments or rights of any type or other securities (i) requiring the
issuance, sale, transfer, repurchase, redemption or other acquisition of the
Transferred OSi JV Interest, (ii) restricting the transfer of any Transferred
OSi JV Interest, or (iii) relating to the voting of the Transferred OSi JV
Interest.
3.3 AUTHORIZATION; BINDING EFFECT
(a) (i) Crompton has all requisite corporate power and authority to execute
and deliver this Agreement and the Collateral Agreements to which it will be a
party and to effect the transactions contemplated hereby and thereby, and the
execution, delivery and performance of this Agreement and the Collateral
Agreements to which it will be a party, and the transactions contemplated hereby
and thereby, have been duly authorized by all requisite corporate or shareholder
action.
(ii) Each OSi Subsidiary that has title to any Transferred OSi Asset
or an Assumed OSi Liability has all requisite corporate power and authority to
execute and deliver the Collateral Agreements to which it will be a party and to
effect the transactions contemplated thereby, and the execution, delivery and
performance of such agreements have been duly authorized by all requisite
corporate or shareholder action.
(b) This Agreement has been duly executed and delivered by Crompton and
this Agreement is, and the Collateral Agreements to which Crompton and each OSi
Subsidiary that has title to any Transferred OSi Asset or an Assumed OSi
Liability will be a party, when duly executed and delivered by Crompton or such
OSi Subsidiary, will
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be, valid and legally binding obligations of Crompton or such OSi Subsidiary,
enforceable against Crompton or such OSi Subsidiary, as applicable, in
accordance with their respective terms.
3.4 NON-CONTRAVENTION; CONSENTS
(a) Except as set forth on SCHEDULE 3.4, neither the execution and delivery
of this Agreement or the Collateral Agreements, nor the performance by Crompton
and the OSi Subsidiaries hereunder or thereunder (including consummation of the
transactions contemplated hereby and thereby), will violate, conflict with or
result in the material breach of or material 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 material obligation or to a loss of a
material benefit under, or give rise to any material obligation of Crompton or
any OSi Subsidiary to make any payment under, or to the increased, additional,
accelerated, guaranteed material rights or material entitlements of any Person
under, or result in the creation of any material Encumbrances upon any
Transferred OSi Asset, and such performance will not be materially limited or
materially prohibited by, any provision of (i) the governing documents or bylaws
of Crompton or the applicable OSi Subsidiary, (ii) any material Assumed OSi
Lease, Material OSi Contract or other material instrument binding on Crompton,
the applicable OSi Subsidiary or any of the properties or assets of Crompton or
any OSi Subsidiary (including the Transferred OSi Assets) or to which any of
their respective properties or assets (including the Transferred OSi Assets) may
be bound, or (iii) any applicable Law.
(b) Except for (i) consents and authorizations of any Governmental Body
pursuant to the HSR Act or with respect to the jurisdictions set forth on
SCHEDULE 8.1(B) and (ii) matters set forth on SCHEDULE 3.4, to Crompton's
Knowledge no material notice to, filing with, license of, authorization of,
exemption by, or consent of, any Person, Governmental Body or other Third Party
is required to be made or obtained in connection with the execution, delivery
and performance of this Agreement and the Collateral Agreements or the
consummation of the transactions contemplated on its part hereby and thereby.
3.5 TITLE TO PROPERTY; PRINCIPAL EQUIPMENT; SUFFICIENCY OF ASSETS
(a) Except as set forth on SCHEDULE 3.5(A), and except with respect to real
property, Crompton or an OSi Subsidiary has and at the Closing will have good
and valid title to, or a valid and binding leasehold interest or license in, or
other rights to use, all Transferred OSi Assets free and clear of any
Encumbrance other than Permitted OSi Encumbrances.
(b) Each material item of Principal OSi Equipment is in reasonable
operating condition and in a state of good maintenance and repair (ordinary wear
and tear in light of its age excepted) and is suitable for the purposes for
which it is currently being used, in each case sufficient to conduct in all
material respects the OSi Business as currently conducted by Crompton.
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(c) The Excluded OSi Assets, the Transferred OSi Assets, the OSi Business
Employees and the rights to be acquired under this Agreement and the Collateral
Agreements (after giving effect to the receipt by GE and its Affiliates of the
services to be provided pursuant to the Transition Services Agreement)
constitute all of the assets, properties, personnel and rights necessary for, or
used or held for use by Crompton and the OSi Subsidiaries primarily in, the
operation or conduct of the OSi Business, and are sufficient in all material
respects for the conduct of the OSi Business immediately following the Closing
as currently conducted.
3.6 PERMITS
Except as set forth on SCHEDULE 3.6 and except with respect to
environmental, health and safety matters, Crompton and the OSi Subsidiaries are
in possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and
orders necessary to own, lease, use and operate its properties and assets to
carry on the OSi Business as currently conducted (the "OSI PERMITS"). There is
no Action or Claim pending, or, to Crompton's Knowledge, threatened, regarding
any of the OSi Permits and each such OSi Permit is in full force and effect.
Neither Crompton nor any OSi Subsidiary is in conflict with, or in default with,
or in violation of, any of the OSi Permits.
3.7 REAL ESTATE
(a) OWNED REAL PROPERTY.
(i) SCHEDULE 3.7(A) contains a complete and accurate list of the
Transferred Owned OSi Properties.
(ii) Each of Crompton and the OSi Subsidiaries holds good, marketable
and indefeasible fee simple title to the Transferred Owned OSi Property that is
located in the United States, free and clear of all Encumbrances other than and
subject to Permitted Property Encumbrances. With respect to the Transferred
Owned OSi Property that is located outside the United States, each of Crompton
and the OSi Subsidiaries holds good and indefeasible fee simple title, or its
reasonable equivalent, free and clear of all Encumbrances other than and subject
to Permitted Property Encumbrances.
(b) LEASES.
(i) SCHEDULE 3.7(B)(I) contains a complete and accurate list of the
Assumed OSi Leases.
(ii) Each of Crompton or the applicable OSi Subsidiary has good and
valid leasehold title (or its reasonable equivalent outside of the United
States) to all Assumed OSi Leases and that certain Lease dated December 8, 1997
between Eastview Holdings, LLC, as landlord, and Crompton Corporation, as
tenant, covering certain
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premises located in Tarrytown, New York (the "TARRYTOWN LEASE") and in all
material respects, all Assumed OSi Leases and the Tarrytown Lease are valid and
binding on Crompton or the applicable OSi Subsidiary and on any other party
thereto. Each Assumed OSi Lease and the Tarrytown Lease are enforceable against
Crompton or the applicable OSi Subsidiary and, to Crompton's Knowledge, the
other parties thereto in accordance with its terms, and, except as set forth in
SCHEDULE 3.7(B)(II), each Assumed OSi Lease and the Tarrytown Lease are in full
force and effect. Each of Crompton and the OSi Subsidiaries has actual
possession of the premises leased pursuant to each Assumed OSi Lease and the
Tarrytown Lease, free and clear of all Encumbrances other than and subject to
Permitted Property Encumbrances.
(iii) Except as set forth in SCHEDULE 3.7(B)(III), no event has
occurred which, with due notice or lapse of time or both, would constitute a
material default in respect of any Assumed OSi Lease or the Tarrytown Lease and
as of the date hereof, none of Crompton or the OSi Subsidiaries has received a
written notice of such a default. To Crompton's Knowledge, no other party to any
Assumed OSi Lease or the Tarrytown Lease is in material default in respect
thereof, and no event has occurred which, with due notice or lapse of time or
both, would constitute such a default.
(iv) SCHEDULE 3.7(B)(IV) contains a complete and accurate list of the
leases, subleases, licenses or occupancy agreements executed by Crompton or any
OSi Subsidiary, as lessor, with respect to any Transferred Owned OSi Property or
Assumed OSi Lease and which are being assigned to GE at Closing (each, a
"CROMPTON SUBLEASE", collectively, the "CROMPTON SUBLEASES"). Except as set
forth in SCHEDULE 3.7(B)(IV), no event has occurred which, with due notice or
lapse of time or both, would constitute a material default in respect of any
Crompton Sublease, and as of the date hereof none of Crompton or the OSi
Subsidiaries has received a written notice of such default. To Crompton's
Knowledge, no other party to any Crompton Sublease is in material default in
respect thereof, and no event has occurred which, with due notice or lapse of
time or both, would constitute such a default. Except as set forth in the
Crompton Subleases, there are no leasing commissions or tenant allowances now or
hereafter payable by Crompton or any OSi Subsidiary with respect to any Crompton
Sublease. Either Crompton or the OSi Subsidiary, as applicable, shall deliver at
Closing (or, alternatively, provide for an adjustment of such amounts at
Closing) any and all security deposits held by Crompton or the OSi Subsidiary
pursuant to the terms of such Crompton Subleases.
(c) All of the material buildings, fixtures and improvements included on or
in the Transferred OSi Assets (other than Assumed OSi Leases used solely for
sales purposes) and owned or leased by Crompton or any OSi Subsidiary, or leased
pursuant to the Tarrytown Lease, are in satisfactory condition and repair for
the continued use in the ordinary course of business consistent with past
practices. No person or entity has any option, right of first refusal or other
contractual right or obligation to acquire fee title to any Transferred Owned
OSi Property or any portion thereof. Neither Crompton nor any OSi Subsidiary has
granted any person or entity any option, right of first refusal or other
contractual right or obligation to acquire leasehold title to any material
Assumed OSi Lease or the Tarrytown Lease.
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(d) Except as set forth on SCHEDULE 3.7(D), (i) there does not exist any
actual or, to Crompton's Knowledge, threatened condemnation or eminent domain
proceedings that affect any Transferred Owned OSi Property, Assumed OSi Lease or
the Tarrytown Lease; and (ii) the current use and occupancy of the Transferred
Owned OSi Property and the improvements located thereon are not in violation of
any recorded covenants, conditions, restrictions, reservations, easements or
agreements affecting such property which, in the case of clause (i) and (ii)
above, individually or in the aggregate, would reasonably be expected to
materially affect the (A) conduct of the OSi Business or (B) continued use of
the affected Transferred Owned OSi Property, Assumed OSi Lease or the Tarrytown
Lease in the ordinary course of business consistent with past practice.
(e) To Crompton's Knowledge, there are sufficient water, gas and other
utilities lines and contracts to enable the Transferred Owned OSi Properties to
continue to be used and operated in the ordinary course of business, consistent
with past practices. Based on Crompton's current operations as tenant under the
Assumed OSi Leases or the Tarrytown Lease, to Crompton's Knowledge, there are
sufficient water, gas and other utilities to enable the premises leased pursuant
to the Assumed OSi Leases or the Tarrytown Lease to continue to be used and
operated in the ordinary course of business, consistent with past practices.
3.8 COMPLIANCE WITH LAWS; LITIGATION
(a) Except as set forth on SCHEDULE 3.8(A), and except with respect to
environmental, health and safety matters, with respect to the OSi Business
conducted by it and the OSi Subsidiaries, Crompton and each OSi Subsidiary and
their respective properties is, and at all times since January 1, 2002 has been,
in compliance in all material respects with all applicable Laws and all decrees,
orders, judgments, permits and licenses of or from Governmental Bodies.
(b) Except as set forth on SCHEDULE 3.8(B), and except with respect to
environmental, health and safety matters, (i) as of the date hereof there is no
material action, suit, proceeding or governmental investigation pending or, to
Crompton's Knowledge, threatened by or against Crompton or any of the OSi
Subsidiaries relating to the OSi Business or affecting the Transferred OSi
Assets or that seeks to impair, prohibit or restrain the ability of Crompton or
any OSi Subsidiary to enter into this Agreement or any Collateral Agreement, as
applicable, or to consummate any of the transactions contemplated hereby or
thereby and (ii) neither Crompton nor any OSi Subsidiary is subject to any
order, writ, judgment, injunction, decree, stipulation, determination or award
entered by or with a Governmental Body, and, to Crompton's Knowledge, there are
no orders, writs, judgments, injunctions, decrees, stipulations, determinations
or awards entered by or with a Governmental Body threatened to be imposed on
Crompton or any OSi Subsidiary in respect of the OSi Business.
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3.9 OSI BUSINESS EMPLOYEES
(a) SCHEDULE 3.9(A) sets forth for each OSi Business Employee the position
held by such OSi Business Employee and the annual base salary of such OSi
Business Employee as of December 31, 2002, and there have been no changes since
such date, other than in the ordinary course of business consistent with past
practices.
(b) SCHEDULE 3.9(B) lists each material Crompton Benefit Plan maintained or
contributed to, or required to be maintained or contributed to, by Crompton or
any of its Affiliates for the benefit of any OSi Business Employee as of the
date hereof. With respect to each of the Crompton Benefit Plans identified on
SCHEDULE 3.9(B), Crompton has made available to GE true and complete copies of
the most recent summary plan description, if any. Each Crompton Benefit Plan
identified on SCHEDULE 3.9(B) has been operated in material compliance with all
applicable Laws, including ERISA to the extent applicable.
(c) Except as set forth in SCHEDULE 3.9(C), as required by applicable Law,
or as expressly contemplated by this Agreement, the consummation of the
transactions contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events such as a termination of
employment) constitute an event under any Crompton Benefit Plan, trust, or loan
that, with respect to any OSi Business Employee, will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits, or obligation to fund
benefits.
(d) Except as set forth on SCHEDULE 3.9(D), none of the OSi Business
Employees are covered by any union contract, collective bargaining agreement,
works council agreement, or other similar labor agreement. With respect to the
OSi Business, there is not pending or existing, and to Crompton's Knowledge,
there is not threatened, (i) any strike, slowdown, picketing or work stoppage or
(ii) any application for certification of a collective bargaining agent.
(e) Except as set forth on SCHEDULE 3.9(E), with respect to each Crompton
Transferred Non-U.S. Retirement Plan:
(i) all material employer and employee contributions to each plan
required by Law or by the terms of such plan have been made, or, if applicable,
accrued in accordance with normal accounting practices;
(ii) the fair market value of the assets of each funded plan, the
liability of each insurer for any plan funded through insurance or the book
reserve established for any plan, together with any accrued contributions, is
sufficient to procure or provide for the accrued benefit obligations, as of the
Closing Date, with respect to all current or former participants in such plan
according to the actuarial assumptions and valuations most recently used to
determine employer contributions to such plan and no transaction
63
contemplated by this Agreement shall cause such assets or insurance obligations
to be less than such benefit obligations; and
(iii) each plan required to be registered has been registered and has
been maintained in good standing in all material respects with applicable
regulatory authorities.
(f) With respect to the OSi Business Employees and except as set forth on
SCHEDULE 3.9(F), to Crompton's Knowledge, (i) there are no material complaints,
charges or claims against Crompton or any of its Affiliates pending with any
public or governmental authority, arbitrator or court based on, arising out of,
in connection with, or otherwise relating to the employment by Crompton or any
of its Affiliates of, the termination of employment by Crompton or any of its
Affiliates of, or the failure by Crompton or any of its Affiliates to employ,
any individual; (ii) except for immaterial non-compliance, Crompton is in
compliance with all laws, regulations and orders relating to the employment of
labor, including all such laws, regulations and orders relating to wages, hours,
the Worker Adjustment and Retraining Notification Act and any similar state or
local "mass layoff" or "plant closing" law ("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; (iii) no OSi Business Employee is a target or subject of any
governmental investigation relating to Crompton and its Affiliates, including
any current, ongoing governmental investigation by the Department of Justice
relating to antitrust violations; and (iv) there has been no "mass layoff" or
"plant closing" as defined by WARN within the six (6) months prior to Closing.
3.10 OSI CONTRACTS
SCHEDULE 3.10 contains a complete and accurate list of all Material OSi
Contracts as of the date hereof. Except as set forth on SCHEDULE 3.10, (a)
neither Crompton nor any OSi Subsidiary nor, to Crompton's Knowledge, any other
party to any Material OSi Contract is in material default under any provision
thereof, and no condition or set of facts exists that, with notice or lapse of
time, or both, would constitute such a default, and (b) in all material
respects, all Material OSi Contracts are valid and binding on Crompton or the
applicable OSi Subsidiary and on any other party thereto, and each Material OSi
Contract is enforceable against Crompton or the applicable OSi Subsidiary and,
to Crompton's Knowledge, the other parties thereto in accordance with its terms,
and is in full force and effect.
3.11 OSI ENVIRONMENTAL, SAFETY AND HEALTH MATTERS
Except as set forth in SCHEDULE 3.11, with respect to the OSi Business:
(a) Crompton and each OSi Subsidiary has obtained all Governmental Permits
relating to environmental, health and safety matters necessary for the operation
or conduct of the OSi Business at such OSi Premises, and all such Governmental
Permits
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are in good standing and the OSi Business at such OSi Premises is in compliance
with all terms and conditions of such Governmental Permits and Environmental
Laws, in all material respects;
(b) none of the OSi Premises included in the Transferred OSi Assets is
subject to any on-going investigation by, order from or agreement with any
Person relating to (i) any Environmental Law or (ii) any remedial action arising
from the release or threatened release of a Hazardous Substance into the
environment;
(c) neither Crompton nor any OSi Subsidiary is subject to any judicial or
administrative proceeding, order, judgment, decree or settlement alleging or
addressing a violation of, or liability under, any Environmental Law;
(d) Crompton or each applicable OSi Subsidiary has filed all material
notices required to be filed under any Law indicating past or present treatment,
storage or disposal of a Hazardous Substance or reporting a spill or release of
a Hazardous Substance into the environment;
(e) neither Crompton nor any OSi Subsidiary has received any written notice
to the effect that it is or may be liable to any Person as a result of the
release or threatened release of a Hazardous Substance, except for any such
notices relating to matters that, individually or in the aggregate, would not be
material to the OSi Business;
(f) Crompton has delivered to GE true and complete copies in all material
respects of all asbestos and other environmental reports in Crompton's
possession that have been prepared within the last five (5) years and disclose
the presence of asbestos or other Hazardous Substances at any OSi Premises
included in the Transferred OSi Assets; and
(g) the OSi Business has not manufactured or distributed or otherwise
incorporated into any product it manufactured or distributed any asbestos or
asbestos-containing materials.
3.12 OSI FINANCIAL STATEMENTS; ABSENCE OF CHANGES
(a) SCHEDULE 3.12(A) contains the unaudited statements (including the
notes, schedules and exhibits thereto) at and for the 12-month periods ended
December 31, 2001 and December 31, 2002, comprised of: (1) the OSi Combined
Statement of Net Assets; and (2) the related OSi Combined Statement of Revenues
and Expenses (the "UNAUDITED OSI SPECIAL PURPOSE FINANCIAL STATEMENTS"). The
Unaudited OSi Special Purpose Financial Statements were prepared from the books
and records of Crompton and the OSi Business and in accordance with the OSi
Accounting Principles and present fairly in all material respects the net
assets, revenues and expenses of the OSi Business as of December 31, 2002 and
2001, on a basis consistent with the OSi Accounting Principles at the dates or
for the periods indicated, in each case, except as otherwise set forth in such
Unaudited OSi Special Purpose Financial Statements. The parties acknowledge and
65
agree that the Unaudited OSi Special Purpose Financial Statements have been
prepared in accordance with the OSi Accounting Principles consistent with
historical practices of the OSi Business, which may not be the same as those
used to prepare the financial statements of Crompton and its consolidated
subsidiaries.
(b) Except (i) as and to the extent disclosed or reserved against on the
OSi Combined Statement of Net Assets, (ii) as incurred after the date of the OSi
Combined Statement of Net Assets in the ordinary course of business, consistent
with past practices of the OSi Business, PROVIDED that such liability was not
incurred in violation of Section 5.2 as if Section 5.2 had been effective as of
December 31, 2002, (iii) as shall be reflected in the Closing OSi Statement or
(iv) as is not required to be recorded on a balance sheet in accordance with
GAAP, the Assumed OSi Liabilities do not include any indebtedness, material
obligations or material liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due).
(c) Since September 30, 2002, Crompton and the OSi Subsidiaries have
conducted and operated the OSi Business in the ordinary course (except in
connection with the sale of the OSi Business or as otherwise contemplated by
this Agreement) and there has not been any Crompton Material Adverse Change or
any Crompton Material Adverse Effect. Without limiting the foregoing, except as
set forth on SCHEDULE 3.12(C), since September 30, 2002 through the date hereof,
except as expressly contemplated by this Agreement and the Collateral
Agreements:
(i) Crompton and the OSi Subsidiaries have not sold, leased,
transferred or assigned any of their respective assets of the OSi Business
(whether tangible or intangible) having a value in excess of $100,000, other
than inventory sold for fair consideration in the ordinary course of business
consistent with past practices;
(ii) no Person (including Crompton and the OSi Subsidiaries) other
than a customer has accelerated, terminated, modified, or canceled any contract
(or series of related contracts with the same party) relating to any portion of
the OSi Business involving more than $500,000 per year individually or
$3,000,000 per year for a series of related contracts with the same party;
(iii) there has not been any material damage, destruction or loss,
whether or not covered by insurance, exceeding $100,000 individually or $500,000
in the aggregate, with respect to the Transferred OSi Assets;
(iv) None of Crompton or the OSi Subsidiaries has committed to make
any capital expenditures or capital additions in respect of the OSi Business
which have not yet been made in excess of $250,000 in the aggregate;
(v) Crompton and the OSi Subsidiaries have not (A) entered into any
employment, deferred compensation, severance or similar agreement (or amended
any such agreement) in excess of $100,000 per year with respect to any OSi
Business Employee, (B) agreed, other than in the ordinary course of business
consistent with past
66
practice, to increase the compensation payable or to become payable by it to any
of its OSi Business Employees or agents or representatives employed in any
portion of the OSi Business or (C) increased (other than pursuant to the terms
of any plans, contracts or arrangements in effect on December 31, 2002) or
agreed to increase the coverage or benefits available to any class or group of
OSi Business Employees, generally, under any severance pay, termination pay,
vacation pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance, pension
or other employee benefit plan, payment or arrangement made to, for or with such
employees, agents or representatives in connection with any portion of the OSi
Business.
3.13 OSI INTELLECTUAL PROPERTY
(a) (i) SCHEDULE 3.13(A)(I)(A) sets forth a true and complete list, as of
the date hereof, of all internet domain names, patents, patent applications,
invention disclosures, registered trademarks, applications for trademark
registration, registered copyrights and applications for copyright registration
included in the Transferred OSi Intellectual Property and SCHEDULE 3.13(A)(I)(B)
sets forth a true and complete list, as of the date hereof, of all patents,
patent applications, invention disclosures, trademarks and copyrights included
in the OSi Licensed Intellectual Property. SCHEDULE 3.13(A)(I)(A) and SCHEDULE
3.13(A)(I)(B) list, as of the date hereof, the jurisdictions in which each such
Intellectual Property Right has been issued, registered or recorded or in which
any application for such issuance, registration or recordation has been filed.
(ii) Crompton or one of the OSi Subsidiaries is the legal and
beneficial owner of all right, title and interest in and to such Transferred OSi
Intellectual Property and OSi Licensed Intellectual Property, free and clear of
all Encumbrances (other than Permitted OSi Encumbrances).
(b) SCHEDULE 2.1(I) sets forth a true and complete list, as of the date
hereof, of all OSi Licenses.
(c) The use, practice or other commercial exploitation of the Transferred
OSi Intellectual Property and the OSi Licensed Intellectual Property and the OSi
Business, and the business practices and methods of the OSi Business, as
presently conducted, do not infringe, constitute an unauthorized use of, or
violate any valid and enforceable patent, copyright, trade secret or other
Intellectual Property Right of any Third Party in existence on the date hereof
or on the Closing Date (including under any non-disclosure agreements), or those
of any present or former employees, or the former employers of such Third Party,
which, in the case of infringement, unauthorized use or a violation, either
individually or in the aggregate, would reasonably be expected to materially
affect the conduct of the OSi Business.
(d) SCHEDULE 3.13(D) sets forth a true and complete list, as of the date
hereof, of (i) all material Software owned exclusively by Crompton and its
Subsidiaries (including the OSi Subsidiaries), and (ii) all material Software
used by Crompton and its
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Subsidiaries (including the OSi Subsidiaries) that is not exclusively owned by
Crompton or such Subsidiaries, in each case, that is included in the Transferred
OSi Intellectual Property and the OSi Licensed Intellectual Property, excluding
licenses of off-the-shelf Software available on commercial terms.
(e) Except pursuant to the agreements listed in SCHEDULE 3.13(E), none of
Crompton, its Affiliates or the OSi Subsidiaries is, as of the date hereof,
required, obligated, or under any liability whatsoever, to make any payments in
an amount exceeding $100,000 per annum by way of royalties, fees or otherwise to
any Third Party with respect to the use of any Intellectual Property Rights of
such Third Party in connection with the operation of the OSi Business.
(f) Neither the execution nor delivery of this Agreement, nor the operation
of nor the carrying on of the OSi Business, nor the conduct of the OSi Business
as presently conducted, will materially conflict with or result in a material
breach of the terms, conditions or provisions of, or constitute a material
default under, any material contract, covenant, agreement or instrument with
respect to any of the Transferred OSi Intellectual Property or the OSi Licensed
Intellectual Property under which any of Crompton or its Subsidiaries (including
the OSi Subsidiaries) are now obligated.
(g) Except as set forth in SCHEDULE 2.1(I), neither Crompton nor its
Subsidiaries (including the OSi Subsidiaries) have granted to any Third Party
any explicit material right, license or permission, to use or to exercise any
rights under any of the Transferred OSi Intellectual Property or the OSi
Licensed Intellectual Property, nor has Crompton or its Subsidiaries (including
the OSi Subsidiaries) entered into any covenant not to compete or any contract
or agreement limiting its ability to exploit fully any of the Transferred OSi
Intellectual Property or the OSi Licensed Intellectual Property.
(h) Except as set forth on SCHEDULE 3.13(H), there are no material Claims
or demands of any Third Party pertaining to the Transferred OSi Intellectual
Property or the OSi Licensed Intellectual Property (i) pending or, to Crompton's
Knowledge, threatened against Crompton or any OSi Subsidiary or (ii) to
Crompton's Knowledge, pending or threatened against any other Third Party.
Except as set forth on SCHEDULE 3.13(H), neither Crompton nor any OSi Subsidiary
is a party to any pending or, to Crompton's Knowledge, threatened proceedings,
which involve a claim of infringement, unauthorized use, or violation of any
Intellectual Property Right of any Third Party or challenge the ownership, use,
validity or enforceability of any of the Transferred OSi Intellectual Property
or the OSi Licensed Intellectual Property, or which challenge the rights of
Crompton or any OSi Subsidiary in respect of the Transferred OSi Intellectual
Property or the OSi Licensed Intellectual Property. Except as set forth on
SCHEDULE 3.13(H), to Crompton's Knowledge, no Third Party is a party to any
pending or threatened proceedings, which challenge the ownership, use, validity
or enforceability of any of the Transferred OSi Intellectual Property or the OSi
Licensed Intellectual Property. Neither Crompton nor any of its Subsidiaries
(including the OSi Subsidiaries) has received written (including by electronic
mail) notice of any such threatened claim, or a written offer of a license with
respect to any Intellectual Property Rights of any Third Party. To
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Crompton's Knowledge, all of the Transferred OSi Intellectual Property and the
OSi Licensed Intellectual Property owned by Crompton and its Subsidiaries
(including the OSi Subsidiaries) is in compliance in all material respects with
applicable legal requirements (including payment of maintenance fees and the
like).
(i) The Transferred OSi Intellectual Property and the OSi Licensed
Intellectual Property include all of the Intellectual Property Rights necessary
for or used to conduct the OSi Business (and to make, have made, use, lease,
import, offer to sell or sell the products of the OSi Business), as such
business has been and is currently being conducted. Notwithstanding the
foregoing, under no circumstances shall Crompton be required to grant to GE a
license, right or other permission to use the Crompton name, other than as set
forth in Section 5.12.
(j) To Crompton's Knowledge, no other Person is infringing, violating,
misusing or misappropriating any of the Transferred OSi Intellectual Property or
the OSi Licensed Intellectual Property, which in the case of infringement,
violation, misuse or misappropriation, either individually or in the aggregate,
would reasonably be expected to materially affect the conduct of the OSi
Business, and no such material claims have been made against any Person by
Crompton or any of its Subsidiaries (including the OSi Subsidiaries).
(k) There are no judgments, decrees or orders of any Governmental Body to
which Crompton or any of its Subsidiaries is a party or by which any of them is
bound which restrict, in any material respect, the rights to use any of the
Transferred OSi Intellectual Property or the OSi Licensed Intellectual Property.
(l) Except as disclosed on SCHEDULE 3.13(L), the consummation of the
transactions contemplated hereby will not result in the material loss or
material impairment of GE's or its Subsidiaries' (including the Transferred OSi
Subsidiary's) right to own or use any of the Transferred OSi Intellectual
Property or the OSi Licensed Intellectual Property after the Closing.
(m) No present or former OSi Business Employee has any right, title or
interest, directly or indirectly, in whole or in part, in any of the Transferred
OSi Intellectual Property or the OSi Licensed Intellectual Property, which
right, title or interest, either individually or in the aggregate, would
reasonably be expected to materially affect the conduct of the OSi Business. To
Crompton's Knowledge, no employee, consultant or independent contractor of
Crompton or the OSi Subsidiaries is, as a result of or in the course of such
employee's, consultant's or independent contractor's engagement by Crompton or
the OSi Subsidiaries, in material default or breach of any material term of any
employment agreement, non-disclosure agreement, assignment of invention
agreement or similar agreement relating to the protection, ownership, or
development, use or transfer of the Transferred OSi Intellectual Property or the
OSi Licensed Intellectual Property.
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(n) Except as disclosed on SCHEDULE 3.13(N), there are no oppositions or
similar proceedings challenging the Intellectual Property Rights of any Third
Party which relate to the OSi Business.
3.14 CROMPTON BROKERS
Other than Lehman Brothers and J.P. Morgan Securities Inc., the fees and
expenses of which will be paid by Crompton, no broker, investment banker,
financial advisor or other Person 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 or any Affiliate of Crompton.
3.15 CERTAIN TAX MATTERS
(a) (i) All material Tax returns, reports and forms required to be filed
under the Code or under applicable state, local or foreign Tax laws with respect
to the OSi Business, the Transferred OSi Assets and the Acquired OSi
Subsidiaries have been filed or will be filed in a timely manner (within any
applicable extension periods) and all such Tax returns that relate to the
Acquired OSi Subsidiaries are (and will be) true, correct and complete in all
material respects, (ii) all Taxes shown to be due on such returns, reports and
forms have been timely paid in full or will be timely paid in full by the due
date thereof, (iii) all required current estimated Tax payments sufficient to
avoid any understatement penalties have been made by or on behalf of each of the
Acquired OSi Subsidiaries, (iv) there are no Tax liens upon the assets of any
Acquired OSi Subsidiary or with respect to the Transferred OSi Assets (other
than Permitted OSi Encumbrances), (v) all deficiencies asserted or assessments
made as a result of any examination by any Governmental Body of the Tax returns
of any of the Acquired OSi Subsidiaries have been fully paid, and (vi) no Claims
are being asserted in writing with respect to any Taxes of any Acquired OSi
Subsidiary or with respect to the Transferred OSi Assets.
(b) Except as set forth on SCHEDULE 3.15(B), (i) no audit report has been
issued during the five (5) year period ending on the date of this Agreement
relating to Taxes due from or with respect to any of the Acquired OSi
Subsidiary, and (ii) all Tax returns filed in respect of income or franchise
Taxes of any of the Acquired OSi Subsidiaries have been examined by the relevant
taxing authority, or the applicable statute of limitations on assessment with
respect to such Tax returns has expired.
(c) No Claim has been made in writing by a Governmental Body in a
jurisdiction where any Acquired OSi Subsidiary does not file Tax returns to the
effect that the Acquired OSi Subsidiary is or may be subject to taxation by that
jurisdiction.
(d) None of the Acquired OSi Subsidiaries is subject to any private letter
ruling of the IRS or comparable ruling of any other Governmental Body.
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(e) Crompton, each Acquired OSi Subsidiary and each OSi Subsidiary selling
Transferred OSi Assets has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other Third Party directly
connected to the OSi Business.
(f) (i) None of the Acquired OSi Subsidiaries has filed a consent under
Section 341(f) of the Code concerning collapsible corporations, (ii) no property
of the Acquired OSi Subsidiaries and none of the Transferred OSi Assets is "tax
exempt use property" within the meaning of Section 168(h) of the Code, (iii)
none of the Acquired OSi Subsidiaries is a party to any lease, and none of the
assets of the Acquired OSi Subsidiaries or the Transferred OSi Assets is subject
to any lease, made pursuant to Section 168(F)(8) of the Internal Revenue Code of
1954, and (iv) except as set forth in SCHEDULE 3.15(F), none of the Assumed OSi
Liabilities is an obligation to make a payment that will not be deductible under
Section 280G of the Code.
(g) No Acquired OSi Subsidiary has (i) any application pending with any
Governmental Body requesting permission for any changes in accounting methods,
(ii) executed or entered into a closing agreement pursuant to Section 7121 of
the Code or any predecessor provision thereof or any similar provision of Law,
(iii) extended the time (A) within which to file any Tax return, which Tax
return has since not been filed, or (B) for the assessment or collection of
Taxes, which Taxes have not since been paid or (iv) granted to any Person any
power of attorney that is currently in force with respect to any Tax matter.
(h) None of the Acquired OSi Subsidiaries is or was a member of any
affiliated, consolidated, combined or unitary group of corporations that filed
or was required to file an affiliated, consolidated, combined or unitary Tax
return or has any liability for the Taxes of any other Person under any Law, by
agreement, contract or otherwise.
(i) None of the Acquired OSi Subsidiaries is a party to, bound by or
obligated under, any Tax allocation, indemnity, sharing or similar contract or
arrangement.
(j) None of the Acquired OSi 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 (A) in the two (2) years prior
to the date of this Agreement or (B) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the transactions
contemplated by this Agreement.
(k) There is no taxable income of any of the Acquired OSi Subsidiaries that
will be required under applicable Tax Law to be reported by GE or its Affiliates
(including the Acquired OSi Subsidiaries) for a taxable period beginning after
the
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Closing Date which taxable income was realized (and reflects economic income
arising) prior to the Closing Date.
(l) Neither Crompton nor any OSi Subsidiary selling a "United States real
property interest" (as defined in Section 897(c) of the Code) pursuant to this
Agreement is a "foreign person" within the meaning of Section 1445(f)(3) of the
Code.
(m) The OSi Business Joint Venture is properly characterized as an entity
taxable as a corporation for United States federal income Tax purposes and under
the Tax Laws of the country in which such entity is organized. The Transferred
OSi Subsidiary is properly characterized as an entity taxable as a corporation
under the Tax Laws of the country in which such entity is organized. The
Transferred OSi Subsidiary has timely and duly filed an election, a copy of
which was provided to GE, to be classified as disregarded as an entity separate
from its owner for United States federal income Tax purposes effective as of
December 25, 2002.
(n) None of the Acquired OSi Subsidiaries has elected to be treated as a
domestic corporation under Section 897(i) of the Code.
(o) No Acquired OSi Subsidiary is (or has ever been) a "foreign personal
holding company" within the meaning of Section 552 of the Code, a "foreign
investment company" within the meaning of Section 1246(b) of the Code, or a
"passive foreign investment company" within the meaning of Section 1297 of the
Code. No Acquired OSi Subsidiary which is not incorporated under the laws of a
state of the United States is engaged in a United States trade or business for
United States federal income tax purposes, or has any investment in United
States property within the meaning of Section 956 of the Code.
(p) Set forth on SCHEDULE 3.15(P) is a list, as of the date hereof, of all
jurisdictions in which, in the reasonable judgment of Crompton, the nature of
the OSi Business or Transferred OSi Assets requires the owner of the OSi Assets
or the OSi Business to file income or franchise Tax returns.
(q) Each Acquired OSi Subsidiary has complied in all material respects with
any relevant VAT Legislation; (ii) no Acquired OSi Subsidiary is a member of a
group of companies for the purposes of any relevant VAT Legislation; and (iii)
no Acquired OSi Subsidiary has made any exempt supplies in consequence of which
it is or will be unable to obtain credit for all input tax paid by it during any
of the previous 8 (eight) VAT quarters (including the VAT period during which
the Closing occurs).
3.16 TRANSACTIONS WITH AFFILIATES
SCHEDULE 3.16 lists all transactions, contracts and understandings between
or among Crompton or any Affiliate of Crompton, on behalf of the OSi Business,
or the OSi Business itself, on the one hand, and (a) Crompton or any Affiliate
of Crompton or (b) any officer, director or employee of Crompton (other than
employee compensation in the
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ordinary course of business consistent with past practices), on the other hand,
during the three (3)-year period prior to the date hereof.
3.17 CROMPTON INTERCOMPANY ARRANGEMENTS
Except as set forth in SCHEDULE 3.17, there are no Material OSi Contracts
pursuant to which any goods, services, materials or supplies are provided (a) by
the OSi Business (or any portion thereof), the OSi Subsidiaries or the
Transferred OSi Assets, on the one hand, to Crompton or any of its Affiliates
(other than the OSi Subsidiaries), on the other hand, or (b) by Crompton or any
of its Affiliates (other than the OSi Subsidiaries), on the one hand, to the OSi
Business (or any portion thereof), the OSi Subsidiaries or the Transferred OSi
Assets, on the other hand (each, a "CROMPTON INTERCOMPANY ARRANGEMENT").
3.18 RELATIONSHIPS WITH CUSTOMERS
Except as set forth in SCHEDULE 3.18, to Crompton's Knowledge, from
September 30, 2002 through the date hereof Crompton has not received any written
communication in which any customer of any portion of the OSi Business who
accounted for annual sales in excess of $1,000,000 during 2002 indicated an
intention to terminate or reduce in excess of $500,000 annually its purchases
from the OSi Business.
3.19 INVENTORY
All Inventory is valued on the Unaudited OSi Special Purpose Financial
Statements on a basis consistent with the OSi Accounting Principles, with
adequate provision for obsolescence.
3.20 INDEPENDENT ASSESSMENT
Crompton acknowledges that it has made its own assessment of the present
condition and the future prospects of the SC Business and is sufficiently
experienced to make an informed judgment with respect thereto. Crompton further
acknowledges that neither GE nor any Affiliate of GE has made any warranty,
express or implied, oral or written as to the future prospects of the SC
Business or its profitability for Crompton, or with respect to any forecasts,
projections or business plans prepared by or on behalf of GE and delivered to
Crompton prior to the date hereof in connection with the SC Business and the
negotiation and the execution of this Agreement.
3.21 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE
As included in the Unaudited OSi Special Purpose Financial Statements:
(a) the accounts payable of the OSi Business have arisen in the ordinary
course of the OSi Business consistent with past practices and, with respect to
the direct accounts payable, are bona fide liabilities solely of the OSi
Business and, with respect to
73
the allocated accounts payable, are bona fide liabilities attributable to the
OSi Business, in each case, as described in such Unaudited OSi Special Purpose
Financial Statements;
(b) the accounts receivable of the OSi Business are adequately reserved for
doubtful and uncollectible accounts in all material respects in accordance with
GAAP applied on a consistent basis, and the allowance for doubtful and
uncollectible accounts is based upon the most current information available as
of December 31, 2002 with respect to each account receivable of the OSi
Business; and
(c) the accounts receivable reflected thereon constitute all of the
accounts receivable of the OSi Business and are reflected on such Unaudited OSi
Special Purpose Financial Statements without giving effect to any monetization
or factoring of such accounts receivable.
3.22 NO OTHER CROMPTON REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Article 3,
none of Crompton, any Affiliate of Crompton or any other Person makes any
representations or warranties, whether express or implied, oral or written, and
Crompton hereby disclaims any other representations or warranties, whether
express or implied, whether made by Crompton or any Affiliate of Crompton or any
of their respective officers, directors, employees, agents or representatives,
with respect to the execution and delivery of this Agreement or any Collateral
Agreement, the transactions contemplated hereby or the OSi Business,
notwithstanding the delivery or disclosure to GE or its representatives of any
documentation or other information with respect to any one or more of the
foregoing. Notwithstanding anything to the contrary herein, no representation or
warranty contained in this Article 3 is intended to, or does, cover or otherwise
pertain to any assets that are not included in the Transferred OSi Assets or any
liabilities that are not included in the Assumed OSi Liabilities.
4. REPRESENTATIONS AND WARRANTIES OF GE
Except as set forth in Schedules attached hereto, GE represents and
warrants to Crompton that:
4.1 ORGANIZATION AND QUALIFICATION
GE is a corporation duly organized, validly existing and in good standing
under the Laws of the State of New York, and GE or the applicable SC Subsidiary
has all requisite corporate power and authority to carry on the SC Business as
currently conducted and to own, lease, use and operate the Transferred SC
Assets. GE or the applicable SC Subsidiary is duly qualified to do business and
is in good standing as a foreign corporation (in any jurisdiction that
recognizes such concept) in each jurisdiction where the ownership or operation
of the Transferred SC Assets or the operation or conduct of the SC Business
requires such qualification, except where the failure to be so
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qualified or in good standing, individually or in the aggregate, has not had and
would not reasonably be expected to have a GE Material Adverse Effect.
4.2 SUBSIDIARIES
SCHEDULE 4.2 sets forth a list of each GE Subsidiary and each other
Affiliate of GE that is engaged in the operation or conduct of the SC Business
or that has title to any asset reasonably expected to be a Transferred SC Asset
or an obligation reasonably expected to be an Assumed SC Liability, together
with its jurisdiction of organization (collectively, the "SC SUBSIDIARIES").
Except as set forth on SCHEDULE 4.2, each SC Subsidiary is duly organized and
validly existing under the Laws of its jurisdiction of organization and has all
requisite corporate or similar power and authority to own, lease and operate the
Transferred SC Assets owned, leased or operated by it and to carry on its
portion of the SC Business as presently conducted and is duly qualified to do
business and is in good standing as a foreign corporation or other entity (in
any jurisdiction that recognizes such concept) in each jurisdiction where the
ownership or operation of its properties and assets or the conduct of its
business requires such qualification, except where the failure to be so duly
organized, validly existing, qualified or in good standing individually or in
the aggregate has not had and would not reasonably be expected to have a GE
Material Adverse Effect. GE is the owner, beneficially and of record, of all the
SC Subsidiary shares, free and clear of any Encumbrance.
4.3 AUTHORIZATION; BINDING EFFECT
(a) (i) GE has all requisite corporate power and authority to execute and
deliver this Agreement and the Collateral Agreements to which it will be a party
and to effect the transactions contemplated hereby and thereby, and the
execution, delivery and performance of this Agreement and the Collateral
Agreements to which it will be a party, and the transactions contemplated hereby
and thereby, have been duly authorized by all requisite corporate or shareholder
action.
(ii) Each SC Subsidiary that has title to any Transferred SC Asset or
an Assumed SC Liability has all requisite corporate power and authority to
execute and deliver the Collateral Agreements to which it will be a party and to
effect the transactions contemplated thereby, and the execution, delivery and
performance of such agreements have been duly authorized by all requisite
corporate or shareholder action.
(b) This Agreement has been duly executed and delivered by GE and this
Agreement is, and the Collateral Agreements to which GE and each SC Subsidiary
that has title to any Transferred SC Asset or an Assumed SC Liability will be a
party, when duly executed and delivered by GE or such SC Subsidiary, will be,
valid and legally binding obligations of GE or such SC Subsidiary, enforceable
against GE or such SC Subsidiary, as applicable, in accordance with their
respective terms.
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4.4 NON-CONTRAVENTION; CONSENTS
(a) Except as set forth on SCHEDULE 4.4(A), neither the execution and
delivery of this Agreement or the Collateral Agreements, nor the performance by
GE and the SC Subsidiaries hereunder or thereunder (including consummation of
the transactions contemplated hereby and thereby), will violate, conflict with
or result in the material breach of or material 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 material obligation or to a loss of a
material benefit under, or give rise to any material obligation of GE or any SC
Subsidiary to make any payment under, or to the increased, additional,
accelerated guaranteed material rights or material entitlements of any Person
under, or result in the creation of any material Encumbrances upon any
Transferred SC Asset, and such performance will not be materially limited or
materially prohibited by, any provision of (i) the governing documents or bylaws
of GE or the applicable SC Subsidiary, (ii) any Material SC Contract or other
material instrument binding on GE, the applicable SC Subsidiary or any of the
properties or assets of GE or any SC Subsidiary (including the Transferred SC
Assets) or to which any of their respective properties or assets (including the
Transferred SC Assets) may be bound, or (iii) any applicable Law.
(b) Except for (i) consents and authorizations of any Governmental Body
pursuant to the HSR Act or with respect to the jurisdictions set forth on
SCHEDULE 8.1(B) and (ii) matters set forth on SCHEDULE 4.4(B), to GE's Knowledge
no material notice to, filing with, license of, authorization of, exemption by,
or consent of, any Person, Governmental Body or other Third Party is required to
be made or obtained in connection with the execution, delivery and performance
of this Agreement and the Collateral Agreements or the consummation of the
transactions contemplated on its part hereby and thereby.
4.5 TITLE TO PROPERTY; PRINCIPAL EQUIPMENT; SUFFICIENCY OF ASSETS
(a) Except as set forth on SCHEDULE 4.5(A), and except with respect to real
property, GE or an SC Subsidiary has and at the Closing will have good and valid
title to, or a valid and binding leasehold interest or license in, or other
rights to use, all Transferred SC Assets free and clear of any Encumbrance other
than Permitted SC Encumbrances.
(b) Each material item of Principal SC Equipment is in reasonable operating
condition and in a state of good maintenance and repair (ordinary wear and tear
in light of its age excepted) and is suitable for the purposes for which it is
currently being used, in each case sufficient to conduct in all material
respects the SC Business as currently conducted by GE.
(c) The Excluded SC Assets, the Transferred SC Assets, the SC Business
Employees and the rights to be acquired under this Agreement and the Collateral
Agreements (after giving effect to the receipt by Crompton and its Affiliates of
the services to be provided pursuant to the Transition Services Agreement)
constitute all of
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the assets, properties, personnel and rights necessary for, or used or held for
use by GE and the SC Subsidiaries primarily in, the operation or conduct of the
SC Business, and are sufficient in all material respects for the conduct of the
SC Business immediately following the Closing as currently conducted.
4.6 PERMITS
Except as set forth on SCHEDULE 4.6 and except with respect to
environmental, health and safety matters, GE and the SC Subsidiaries are in
possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and
orders necessary to own, lease, use and operate its properties and assets to
carry on the SC Business as currently conducted (the "SC PERMITS"). There is no
Action or Claim pending, or, to GE's Knowledge, threatened, regarding any of the
SC Permits and each such SC Permit is in full force and effect. Neither GE nor
any SC Subsidiary is in conflict with, or in default with, or in violation of,
any of the SC Permits.
4.7 REAL ESTATE
(a) OWNED REAL PROPERTY.
(i) Schedule 4.7(A) contains a complete and accurate list of the
Transferred Owned SC Properties.
(ii) Each of GE and the SC Subsidiaries holds good, marketable and
indefeasible fee simple title to the Transferred Owned SC Property that is
located in the United States, free and clear of all Encumbrances other than and
subject to Permitted Property Encumbrances.
(b) Neither GE nor any of its Affiliates is party to any lease or sublease
pertaining to real property that is used or held for use primarily in the
operation or conduct of the SC Business.
(c) All of the material buildings, fixtures and improvements included on or
in the Transferred SC Assets and owned or leased by GE or any SC Subsidiary are
in satisfactory condition and repair for the continued use in the ordinary
course of business consistent with past practices. No person or entity has any
option, right of first refusal or other contractual right or obligation to
acquire fee title to any Transferred Owned SC Property or any portion thereof.
(d) Except as set forth on SCHEDULE 4.7(D), (i) there does not exist any
actual or, to GE's Knowledge, threatened condemnation or eminent domain
proceedings that affect any Transferred Owned SC Property; and (ii) the current
use and occupancy of the Transferred Owned SC Property and the improvements
located thereon are not in violation of any recorded covenants, conditions,
restrictions, reservations, easements or agreements affecting such property
which, in the case of clause (i) and (ii) above,
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individually or in the aggregate, would reasonably be expected to materially
affect the (A) conduct of the SC Business or (B) continued use of the affected
Transferred Owned SC Property in the ordinary course of business consistent with
past practice.
(e) To GE's Knowledge, there are sufficient water, gas and other utilities
lines and contracts to enable the Transferred Owned SC Properties to continue to
be used and operated in the ordinary course of business, consistent with past
practices.
4.8 COMPLIANCE WITH LAWS; LITIGATION
(a) Except as set forth on SCHEDULE 4.8(A), and except with respect to
environmental, health and safety matters, with respect to the SC Business
conducted by it and the SC Subsidiaries, GE and each SC Subsidiary and their
respective properties is, and at all times since January 1, 2002 has been, in
compliance in all material respects with all applicable Laws and all decrees,
orders, judgments, permits and licenses of or from Governmental Bodies.
(b) Except as set forth on SCHEDULE 4.8(B), and except with respect to
environmental, health and safety matters, (i) as of the date hereof there is no
material action, suit, proceeding or governmental investigation pending or, to
GE's Knowledge, threatened by or against GE or any of the SC Subsidiaries
relating to the SC Business or affecting the Transferred SC Assets or that seeks
to impair, prohibit or restrain the ability of GE or any SC Subsidiary to enter
into this Agreement or any Collateral Agreement, as applicable, or to consummate
any of the transactions contemplated hereby or thereby and (ii) neither GE nor
any SC Subsidiary is subject to any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with a Governmental Body, and,
to GE's Knowledge, there are no orders, writs, judgments, injunctions, decrees,
stipulations, determinations or awards entered by or with a Governmental Body
threatened to be imposed on GE or any SC Subsidiary in respect of the SC
Business.
4.9 SC BUSINESS EMPLOYEES
(a) SCHEDULE 4.9(A) sets forth for each SC Business Employee the position
held by such SC Business Employee and the annual base salary of such SC Business
Employee as of December 31, 2002, and there have been no changes since such
date, other than in the ordinary course of business consistent with past
practices.
(b) SCHEDULE 4.9(B) lists each material GE Benefit Plan maintained or
contributed to, or required to be maintained or contributed to, by GE or any of
its Affiliates for the benefit of any SC Business Employee as of the date
hereof. With respect to each of the GE Benefit Plans identified on SCHEDULE
4.9(B), GE has made available to Crompton true and complete copies of the most
recent summary plan description, if any. Each GE Benefit Plan identified on
SCHEDULE 4.9(B) has been operated in material compliance with all applicable
Laws, including ERISA to the extent applicable.
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(c) Except as set forth in SCHEDULE 4.9(C), as required by applicable Law,
or as expressly contemplated by this Agreement, the consummation of the
transactions contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events such as a termination of
employment) constitute an event under any GE Benefit Plan, trust, or loan that,
with respect to any SC Business Employee, will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits, or obligation to fund
benefits.
(d) Except as set forth on SCHEDULE 4.9(D), none of the SC Business
Employees are covered by any union contract, collective bargaining agreement,
works council agreement, or other similar labor agreement. With respect to the
SC Business, there is not pending or existing, and to GE's Knowledge, there is
not threatened, (i) any strike, slowdown, picketing or work stoppage or (ii) any
application for certification of a collective bargaining agent.
(e) Except as set forth on SCHEDULE 4.9(E), with respect to the GE
Transferred Non-U.S. Retirement Plan:
(i) all material employer and employee contributions to each plan
required by Law or by the terms of such plan have been made, or, if applicable,
accrued in accordance with normal accounting practices;
(ii) the fair market value of the assets of each funded plan, the
liability of each insurer for any plan funded through insurance or the book
reserve established for any plan, together with any accrued contributions, is
sufficient to procure or provide for the accrued benefit obligations, as of the
Closing Date, with respect to all current or former participants in such plan
according to the actuarial assumptions and valuations most recently used to
determine employer contributions to such plan and no transaction contemplated by
this Agreement shall cause such assets or insurance obligations to be less than
such benefit obligations; and
(iii) each plan required to be registered has been registered and has
been maintained in good standing in all material respects with applicable
regulatory authorities.
(f) With respect to the SC Business Employees and except as set forth on
SCHEDULE 4.9(F), to GE's Knowledge, (i) there are no material complaints,
charges or claims against GE or any of its Affiliates pending with any public or
governmental authority, arbitrator or court based on, arising out of, in
connection with, or otherwise relating to the employment by GE or any of its
Affiliates of, the termination of employment by GE or any of its Affiliates of,
or the failure by GE or any of its Affiliates to employ, any individual; (ii)
except for immaterial non-compliance, GE is in compliance with all laws,
regulations and orders relating to the employment of labor, including all such
laws, regulations and orders relating to wages, hours, WARN, collective
bargaining, discrimination, civil rights, safety and health, workers'
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compensation and the collection and payment of withholding and/or social
security taxes and any similar tax; (iii) no SC Business Employee is a target or
subject of any governmental investigation relating to GE and its Affiliates,
including any current, ongoing governmental investigation by the Department of
Justice relating to antitrust violations; and (iv) there has been no "mass
layoff" or "plant closing" as defined by WARN within the six (6) months prior to
Closing.
4.10 SC CONTRACTS
SCHEDULE 4.10 contains a complete and accurate list of all Material SC
Contracts as of the date hereof. Except as set forth on SCHEDULE 4.10, (a)
neither GE nor any SC Subsidiary nor, to GE's Knowledge, any other party to any
Material SC Contract is in material default under any provision thereof, and no
condition or set of facts exists that, with notice or lapse of time, or both,
would constitute such a default, and (b) in all material respects, all Material
SC Contracts are valid and binding on GE or the applicable SC Subsidiary and on
any other party thereto, and each Material SC Contract is enforceable against GE
or the applicable SC Subsidiary and, to GE's Knowledge, the other parties
thereto in accordance with its terms, and is in full force and effect.
4.11 SC ENVIRONMENTAL, SAFETY AND HEALTH MATTERS
Except as set forth in SCHEDULE 4.11, with respect to the SC Business:
(a) GE and each SC Subsidiary has obtained all Governmental Permits
relating to environmental, health and safety matters necessary for the operation
or conduct of the SC Business at such SC Premises, and all such Governmental
Permits are in good standing and the SC Business at such SC Premises is in
compliance with all terms and conditions of such Governmental Permits and
Environmental Laws, in all material respects;
(b) none of the SC Premises included in the Transferred SC Assets is
subject to any on-going investigation by, order from or agreement with any
Person relating to (i) any Environmental Law or (ii) any remedial action arising
from the release or threatened release of a Hazardous Substance into the
environment;
(c) neither GE nor any SC Subsidiary is subject to any judicial or
administrative proceeding, order, judgment, decree or settlement alleging or
addressing a violation of, or liability under, any Environmental Law;
(d) GE or each applicable SC Subsidiary has filed all material notices
required to be filed under any Law indicating past or present treatment, storage
or disposal of a Hazardous Substance or reporting a spill or release of a
Hazardous Substance into the environment;
(e) neither GE nor any SC Subsidiary has received any written notice to the
effect that it is or may be liable to any Person as a result of the release or
threatened
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release of a Hazardous Substance, except for any such notices relating to
matters that, individually or in the aggregate, would not be material to the SC
Business;
(f) GE has delivered to Crompton true and complete copies in all material
respects of all asbestos and other environmental reports in GE's possession that
have been prepared within the last five (5) years and disclose the presence of
asbestos or other Hazardous Substances at any SC Premises included in the
Transferred SC Assets; and
(g) the SC Business has not manufactured or distributed or otherwise
incorporated into any product it manufactured or distributed any asbestos or
asbestos-containing materials.
4.12 SC FINANCIAL STATEMENTS; ABSENCE OF CHANGES
(a) SCHEDULE 4.12(A) contains the unaudited statements (including the
notes, schedules and exhibits thereto) at and for the 12-month periods ended
December 31, 2001 and December 31, 2002, comprised of: (1) the SC Combined
Statement of Net Assets; and (2) the related SC Combined Statement of Revenues
and Expenses (the "UNAUDITED SC SPECIAL PURPOSE FINANCIAL STATEMENTS"). The
Unaudited SC Special Purpose Financial Statements were prepared from the books
and records of GE and the SC Business and in accordance with the SC Accounting
Principles and present fairly in all material respects the net assets, revenues
and expenses of the SC Business as of December 31, 2002 and 2001, on a basis
consistent with the SC Accounting Principles at the dates or for the periods
indicated, in each case, except as otherwise set forth in such Unaudited SC
Special Purpose Financial Statements. The parties acknowledge and agree that the
Unaudited SC Special Purpose Financial Statements have been prepared in
accordance with the SC Accounting Principles consistent with historical
practices of the SC Business, which may not be the same as those used to prepare
the financial statements of GE and its consolidated subsidiaries.
(b) Except (i) as and to the extent disclosed or reserved against on the SC
Combined Statement of Net Assets, (ii) as incurred after the date of the SC
Combined Statement of Net Assets in the ordinary course of business, consistent
with past practices of the SC Business, PROVIDED that such liability was not
incurred in violation of Section 5.2 as if Section 5.2 had been effective as of
December 31, 2002, (iii) as shall be reflected in the Closing SC Statement or
(iv) as is not required to be recorded on a balance sheet in accordance with
GAAP, the Assumed SC Liabilities do not include any indebtedness, material
obligations or material liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due).
(c) Since September 30, 2002, GE and the SC Subsidiaries have conducted and
operated the SC Business in the ordinary course (except in connection with the
sale of the SC Business or as otherwise contemplated by this Agreement) and
there has not been any GE Material Adverse Change or any GE Material Adverse
Effect. Without limiting the foregoing, except as set forth on SCHEDULE 4.12(C),
since September 30, 2002
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through the date hereof, except as expressly contemplated by this Agreement and
the Collateral Agreements:
(i) GE and the SC Subsidiaries have not sold, leased, transferred or
assigned any of their respective assets of the SC Business (whether tangible or
intangible) having a value in excess of $100,000, other than inventory sold for
fair consideration in the ordinary course of business consistent with past
practices;
(ii) no Person (including GE and the SC Subsidiaries) other than a
customer has accelerated, terminated, modified, or canceled any contract (or
series of related contracts with the same party) relating to any portion of the
SC Business involving more than $250,000 per year individually or $1,500,000 per
year for a series of related contracts with the same party;
(iii) there has not been any material damage, destruction or loss,
whether or not covered by insurance, exceeding $50,000 individually or $250,000
in the aggregate, with respect to the Transferred SC Assets;
(iv) GE or the SC Subsidiaries have not committed to make any capital
expenditures or capital additions in respect of the SC Business which have not
yet been made in excess of $250,000 in the aggregate;
(v) GE and the SC Subsidiaries have not (A) entered into any
employment, deferred compensation, severance or similar agreement (or amended
any such agreement) in excess of $100,000 per year with respect to any SC
Business Employee, (B) agreed, other than in the ordinary course of business
consistent with past practice, to increase the compensation payable or to become
payable by it to any of its SC Business Employees or agents or representatives
employed in any portion of the SC Business or (C) increased (other than pursuant
to the terms of any plans, contracts or arrangements in effect on December 31,
2002) or agreed to increase the coverage or benefits available to any class or
group of SC Business Employees, generally, under any severance pay, termination
pay, vacation pay, company awards, salary continuation for disability, sick
leave, deferred compensation, bonus or other incentive compensation, insurance,
pension or other employee benefit plan, payment or arrangement made to, for or
with such employees, agents or representatives in connection with any portion of
the SC Business.
4.13 SC INTELLECTUAL PROPERTY
(a) (i) SCHEDULE 4.13(A)(I) sets forth a true and complete list, as of the
date hereof, of all internet domain names, patents, patent applications,
invention disclosures, registered trademarks, applications for trademark
registration, registered copyrights and applications for copyright registration
included in the Transferred SC Intellectual Property. SCHEDULE 4.13(A)(I) lists,
as of the date hereof, the jurisdictions in which each such Intellectual
Property Right has been issued, registered or recorded or in which any
application for such issuance, registration or recordation has been filed.
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(ii) GE or one of the SC Subsidiaries is the legal and beneficial
owner of all right, title and interest in and to such Transferred SC
Intellectual Property, free and clear of all Encumbrances (other than Permitted
SC Encumbrances).
(b) SCHEDULE 2.6(H) sets forth a true and complete list, as of the date
hereof, of all SC Licenses.
(c) The use, practice or other commercial exploitation of the Transferred
SC Intellectual Property and the SC Business, and the business practices and
methods of the SC Business, as presently conducted, do not infringe, constitute
an unauthorized use of, or violate any valid and enforceable patent, copyright,
trade secret or other Intellectual Property Right of any Third Party in
existence on the date hereof or on the Closing Date (including under any
non-disclosure agreements), or those of any present or former employees, or the
former employers of such Third Party, which, in the case of infringement,
unauthorized use or a violation, either individually or in the aggregate, would
reasonably be expected to materially affect the conduct of the SC Business.
(d) SCHEDULE 4.13(D) sets forth a true and complete list, as of the date
hereof, of (i) all material Software owned exclusively by GE and its
Subsidiaries (including the SC Subsidiaries), and (ii) all material Software
used by GE and its Subsidiaries (including the SC Subsidiaries) that is not
exclusively owned by GE or such Subsidiaries, in each case, that is included in
the Transferred SC Intellectual Property, excluding licenses of off-the-shelf
Software available on commercial terms.
(e) Except pursuant to the agreements listed in SCHEDULE 4.13(E), none of
GE, its Affiliates or the SC Subsidiaries is, as of the date hereof, required,
obligated, or under any liability whatsoever, to make any payments in an amount
exceeding $100,000 per annum by way of royalties, fees or otherwise to any Third
Party with respect to the use of any Intellectual Property Rights of such Third
Party in connection with the operation of the SC Business.
(f) Neither the execution nor delivery of this Agreement, nor the operation
of nor the carrying on of the SC Business, nor the conduct of the SC Business as
presently conducted, will materially conflict with or result in a material
breach of the terms, conditions or provisions of, or constitute a material
default under, any material contract, covenant, agreement or instrument with
respect to any of the Transferred SC Intellectual Property under which any of GE
or its Subsidiaries (including the SC Subsidiaries) are now obligated.
(g) Except as set forth in SCHEDULE 2.6(H), neither GE nor its Subsidiaries
(including the SC Subsidiaries) have granted to any Third Party any explicit
material right, license or permission, to use or to exercise any rights under
any of the Transferred SC Intellectual Property, nor has GE or its Subsidiaries
(including the SC Subsidiaries) entered into any covenant not to compete or any
contract or agreement limiting its ability to exploit fully any of the
Transferred SC Intellectual Property.
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(h) Except as set forth on SCHEDULE 4.13(H), there are no material Claims
or demands of any Third Party pertaining to the Transferred SC Intellectual
Property (i) pending or, to GE's Knowledge, threatened against GE or any SC
Subsidiary or (ii) to GE's Knowledge, pending or threatened against any other
Third Party. Except as set forth on SCHEDULE 4.13(H), neither GE nor any SC
Subsidiary is a party to any pending or, to GE's Knowledge, threatened
proceedings, which involve a claim of infringement, unauthorized use, or
violation of any Intellectual Property Right of any Third Party or challenge the
ownership, use, validity or enforceability of any of the Transferred SC
Intellectual Property, or which challenge the rights of GE or any SC Subsidiary
in respect of the Transferred SC Intellectual Property. Except as set forth on
SCHEDULE 4.13(H), to GE's Knowledge, no Third Party is a party to any pending or
threatened proceedings, which challenge the ownership, use, validity or
enforceability of any of the Transferred SC Intellectual Property. Neither GE
nor any of its Subsidiaries (including the SC Subsidiaries) has received written
(including by electronic mail) notice of any such threatened claim, or a written
offer of a license with respect to any Intellectual Property Rights of any Third
Party. To GE's Knowledge, all of the Transferred SC Intellectual Property owned
by GE and its Subsidiaries (including the SC Subsidiaries) is in compliance in
all material respects with applicable legal requirements (including payment of
maintenance fees and the like).
(i) Except as set forth on SCHEDULE 4.13(I), the Transferred SC
Intellectual Property includes all of the Intellectual Property Rights necessary
for or used to conduct the SC Business (and to make, have made, use, lease,
import, offer to sell or sell the products of the SC Business), as such business
has been and is currently being conducted. Notwithstanding the foregoing, under
no circumstances shall GE be required to grant to Crompton a license, right or
other permission to use the GE name, other than as set forth in Section 5.12.
(j) To GE's Knowledge, no other Person is infringing, violating, misusing
or misappropriating any of the Transferred SC Intellectual Property, which in
the case of infringement, violation, misuse or misappropriation, either
individually or in the aggregate, would reasonably be expected to materially
affect the conduct of the SC Business, and no such material claims have been
made against any Person by GE or any of its Subsidiaries (including the SC
Subsidiaries).
(k) There are no judgments, decrees or orders of any Governmental Body to
which GE or any of its Subsidiaries (including the SC Subsidiaries) is a party
or by which any of them is bound which restrict, in any material respect, the
rights to use any of the Transferred SC Intellectual Property.
(l) Except as disclosed on SCHEDULE 4.13(L), the consummation of the
transactions contemplated hereby will not result in the material loss or
material impairment of Crompton's or its Subsidiaries' right to own or use any
of the Transferred SC Intellectual Property after the Closing.
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(m) No present or former SC Business Employee has any right, title or
interest, directly or indirectly, in whole or in part, in any of the Transferred
SC Intellectual Property, which right, title or interest, either individually or
in the aggregate, would reasonably be expected to materially affect the conduct
of the SC Business. To GE's Knowledge, no employee, consultant or independent
contractor of GE or the SC Subsidiaries is, as a result of or in the course of
such employee's, consultant's or independent contractor's engagement by GE or
the SC Subsidiaries, in material default or breach of any material term of any
employment agreement, non-disclosure agreement, assignment of invention
agreement or similar agreement relating to the protection, ownership or
development, use or transfer of the Transferred SC Intellectual Property.
(n) Except as disclosed on SCHEDULE 4.13(N), there are no oppositions or
similar proceedings challenging the Intellectual Property Rights of any Third
Party which relate to the SC Business.
4.14 GE BROKERS
No broker, investment banker, financial advisor or other Person 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 GE or any Affiliate of GE.
4.15 CERTAIN TAX MATTERS
(a) (i) All material Tax returns, reports and forms required to be filed
under the Code or under applicable state, local or foreign Tax laws with respect
to the SC Business and the Transferred SC Assets have been filed or will be
filed in a timely manner (within any applicable extension periods), (ii) all
Taxes shown to be due on such returns, reports and forms have been timely paid
in full or will be timely paid in full by the due date thereof, (iii) there are
no Tax liens upon the Transferred SC Assets (other than Permitted SC
Encumbrances) and (iv) no Claims are being asserted in writing with respect to
Taxes with respect to the Transferred SC Assets.
(b) GE and each SC Subsidiary selling Transferred SC Assets has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other Third Party directly connected to the SC Business.
(c) (i) None of the Transferred SC Assets is "tax exempt use property"
within the meaning of Section 168(h) of the Code, (ii) none of the Transferred
SC Assets is subject to any lease, made pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, and (iii) none of the Assumed SC Liabilities is
an obligation to make a payment that will not be deductible under Section 280G
of the Code.
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(d) Neither GE nor any SC Subsidiary selling a "United States real property
interest" (as defined in Section 897(c) of the Code) pursuant to this Agreement
is a "foreign person" within the meaning of Section 1445(f)(3) of the Code.
(e) Set forth on SCHEDULE 4.15(E) is a list, as of the date hereof, of all
jurisdictions in which, in the reasonable judgment of GE, the nature of the SC
Business or Transferred SC Assets requires the owner of the SC Assets or the SC
Business to file income or franchise Tax returns.
4.16 INDEPENDENT ASSESSMENT
GE acknowledges that it has made its own assessment of the present
condition and the future prospects of the OSi Business and is sufficiently
experienced to make an informed judgment with respect thereto. GE further
acknowledges that neither Crompton nor any Affiliate of Crompton has made any
warranty, express or implied, oral or written as to the future prospects of the
OSi Business or its profitability for GE, or with respect to any forecasts,
projections or business plans prepared by or on behalf of Crompton and delivered
to GE prior to the date hereof in connection with the OSi Business and the
negotiation and the execution of this Agreement.
4.17 GE INTERCOMPANY ARRANGEMENTS
Except as set forth in SCHEDULE 4.17, there are no Material SC Contracts
pursuant to which any goods, services, materials or supplies are provided (a) by
the SC Business (or any portion thereof), the SC Subsidiaries or the Transferred
SC Assets, on the one hand, to GE or any of its Affiliates (other than the SC
Subsidiaries), on the other hand, or (b) by GE or any of its Affiliates (other
than the SC Subsidiaries), on the one hand, to the SC Business (or any portion
thereof), the SC Subsidiaries or the Transferred SC Assets, on the other hand
(each, a "GE INTERCOMPANY ARRANGEMENT").
4.18 TRANSACTIONS WITH AFFILIATES
SCHEDULE 4.18 lists all transactions, contracts and understandings between
or among GE or any Affiliate of GE, on behalf of the SC Business, or the SC
Business itself, on the one hand, and (a) GE or any Affiliate of GE or (b) any
officer, director or employee of GE (other than employee compensation in the
ordinary course of business consistent with past practices), on the other hand,
during the three (3)-year period prior to the date hereof.
4.19 INVENTORY
All Inventory is valued on the Unaudited SC Special Purpose Financial
Statements on a basis consistent with the SC Accounting Principles, with
adequate provision for obsolescence.
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4.20 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE
As included in the Unaudited SC Special Purpose Financial Statements:
(a) the accounts payable of the SC Business have arisen in the ordinary
course of the SC Business consistent with past practices and are bona fide
liabilities solely of the SC Business;
(b) the accounts receivable of the SC Business are adequately reserved for
doubtful and uncollectible accounts in all material respects in accordance with
GAAP applied on a consistent basis and the allowance for doubtful and
uncollectible accounts is based upon the most current information available as
of December 31, 2002 with respect to each account receivable of the SC Business;
and
(c) the accounts receivable reflected thereon constitute all of the
accounts receivable of the SC Business that have not been monetized or factored.
4.21 BLENDEX AGREEMENTS; GE PLASTICS AGREEMENT; GE BETZ AGREEMENT
(a) Attached as EXHIBIT 4.21 are (a) the Supply Agreement, to be entered
into as of the Closing Date, by and between GE Specialty Chemicals, Inc.
("GESC") and General Electric Company ((acting through its GE Plastics business
unit ("GEP")), for the sale of certain products supplied by GE's Engineered
Styrenic Resin product company under GE's BLENDEX registered trademark (the "ESR
BLENDEX AGREEMENT") and (b) the Price Agreement, to be entered into as of the
date hereof, between GE Polymerland, Inc. and GE Specialty Chemicals (together
with the ESR Blendex Agreement, the "BLENDEX AGREEMENTS"). At and after the
Closing Date (and giving effect to the assignment of the Blendex Agreements to
Crompton), the Blendex Agreements will be in full force and effect, valid and
binding on the parties thereto and enforceable against each party in accordance
with its terms. No condition or set of facts exists or, to GE's Knowledge, will
exist at and after the Closing that, with notice or lapse of time, or both, is
reasonably likely to result in a default under any provision of the Blendex
Agreements. The Blendex Agreements are fully assignable to Crompton.
(b) At and after the Closing Date (and giving effect to the assignment of
the GE Plastics Agreement and the GE Betz Agreement, to Crompton), the GE
Plastics Agreement and the GE Betz Agreement will be in full force and effect,
valid and binding on the parties thereto and enforceable against each party in
accordance with their terms. No condition or set of facts exists or, to GE's
Knowledge, will exist at and after the Closing that, with notice or lapse of
time, or both, is reasonably likely to result in a default under any provision
of the GE Plastics Agreement and the GE Betz Agreement. The GE Plastics
Agreement and the GE Betz Agreement are fully assignable to Crompton.
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4.22 RELATIONSHIPS WITH CUSTOMERS
Except as set forth in SCHEDULE 4.22, to GE's Knowledge, from September
30, 2002 through the date hereof GE has not received any written communication
in which any customer of any portion of the SC Business who accounted for annual
sales in excess of $500,000 during 2002 indicated an intention to terminate or
reduce in excess of $250,000 annually its purchases from the SC Business.
4.23 BASELINE CM
The Baseline CM was prepared from the books and records of GE Silicones
and in accordance with the Earn-Out Accounting Principles, and fairly presents
in all material respects the Contribution Margin of GE Silicones for the 2002
fiscal year, except for the adjustments set forth on SCHEDULE 4.23.
4.24 NO OTHER GE REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Article 4,
none of GE, any Affiliate of GE or any other Person makes any representations or
warranties, whether express or implied, oral or written, and GE hereby disclaims
any other representations or warranties, whether express or implied, whether
made by GE or any Affiliate of GE or any of their respective officers,
directors, employees, agents or representatives, with respect to the execution
and delivery of this Agreement or any Collateral Agreement, the transactions
contemplated hereby or the SC Business, notwithstanding the delivery or
disclosure to Crompton or its representatives of any documentation or other
information with respect to any one or more of the foregoing. Notwithstanding
anything to the contrary herein, no representation or warranty contained in this
Article 4 is intended to, or does, cover or otherwise pertain to any assets that
are not included in the Transferred SC Assets or any liabilities that are not
included in the Assumed SC Liabilities.
5. CERTAIN COVENANTS
5.1 ACCESS AND INFORMATION
(a) (i) Crompton shall, and shall cause its Affiliates to, give to GE and
to its officers, employees, accountants, counsel (subject to the restrictions of
attorney-client privilege) and other representatives reasonable access, during
Crompton's or the applicable Affiliate's normal business hours throughout the
period prior to the Closing, to all of Crompton's or the applicable Affiliate's
properties (real or personal), books, contracts, commitments, reports of
examination and records (excluding confidential portions of personnel and
medical records) primarily (or if not primarily, to the extent) relating to the
OSi Business or the Transferred OSi Assets (but excluding the Excluded OSi
Assets and Excluded Crompton Liabilities and subject to any limitations under
applicable Law or that are reasonably required to preserve any applicable
attorney-client privilege or Third-Party confidentiality obligation). Crompton
shall, and shall cause its
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Affiliates to, assist GE in making such investigation and shall use its
commercially reasonable efforts to cause its counsel, accountants, engineers,
consultants and other non-employee representatives to be reasonably available
to, and cooperate fully with, GE for such purposes. No investigation by GE or
its representatives or advisers prior to or after the date of this Agreement
(nor any information obtained by GE pursuant to this Section 5.1) shall
diminish, obviate or cure any breach of any representation, warranty, covenant
or agreement contained in this Agreement or any Collateral Agreement. Without
limiting the generality of the foregoing, Crompton agrees that from and after
the date of this Agreement and until the Closing Date, it will keep GE
reasonably informed contemporaneously of any significant issues or developments
relating to human resources at the various OSi Business plants and facilities
(collectively, the "OSI FACILITIES"), and will permit GE (A) to conduct,
utilizing the services of any legal or consulting groups, a reasonable
"management audit" of the human resources environment at the OSi Facilities
(subject to the protection of attorney-client privilege) and (B) to reasonably
conduct introduction and orientation programs for OSi Business Employees at the
OSi Facilities after reasonable consultation with Crompton as to the substantive
content of such programs. Any activities that GE undertakes pursuant to clauses
(A) and (B) of the preceding sentence shall be at GE's expense. Crompton will
reasonably cooperate with any activities GE undertakes with respect to the OSi
Facilities pursuant to this Section 5.1(a)(i), including by providing GE with
reasonable access to OSi Business Employees and any other employees at the OSi
Facilities during working time and on the premises of the OSi Facilities.
(ii) GE shall, and shall cause its Affiliates to, give to Crompton
and to its officers, employees, accountants, counsel (subject to the
restrictions of attorney-client privilege) and other representatives reasonable
access, during GE's or the applicable Affiliate's normal business hours
throughout the period prior to the Closing, to all of GE's or the applicable
Affiliate's properties (real or personal), books, contracts, commitments,
reports of examination and records (excluding confidential portions of personnel
and medical records) primarily (or if not primarily, to the extent) relating to
the SC Business or the Transferred SC Assets (but excluding the Excluded SC
Assets and Excluded GE Liabilities and subject to any limitations under
applicable Law or that are reasonably required to preserve any applicable
attorney-client privilege or Third-Party confidentiality obligation). GE shall,
and shall cause its Affiliates to, assist Crompton in making such investigation
and shall use its commercially reasonable efforts to cause its counsel,
accountants, engineers, consultants and other non-employee representatives to be
reasonably available to, and cooperate fully with, Crompton for such purposes.
No investigation by Crompton or its representatives or advisers prior to or
after the date of this Agreement (nor any information obtained by Crompton
pursuant to this Section 5.1) shall diminish, obviate or cure any breach of any
representation, warranty, covenant or agreement contained in this Agreement or
any Collateral Agreement. Without limiting the generality of the foregoing, GE
agrees that from and after the date of this Agreement and until the Closing
Date, it will keep Crompton reasonably informed contemporaneously of any
significant issues or developments relating to human resources at the various SC
Business plants and facilities (collectively, the "SC FACILITIES"), and
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will permit Crompton (A) to conduct, utilizing the services of any legal or
consulting groups, a reasonable "management audit" of the human resources
environment at the SC Facilities (subject to the protection of attorney-client
privilege) and (B) to reasonably conduct introduction and orientation programs
for SC Business Employees at the SC Facilities after reasonable consultation
with GE as to the substantive content of such programs. Any activities that
Crompton undertakes pursuant to clauses (A) and (B) of the preceding sentence
shall be at Crompton's expense. GE will reasonably cooperate with any activities
Crompton undertakes with respect to the SC Facilities pursuant to this Section
5.1(a)(ii), including by providing Crompton with reasonable access to SC
Business Employees and any other employees at the SC Facilities during working
time and on the premises of the SC Facilities.
(b) After the Closing Date, Crompton and GE shall, and shall cause their
respective Affiliates to, provide to each other and to their respective
officers, employees, counsel and other representatives, upon reasonable request
(subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege or Third-Party confidentiality obligation),
reasonable access for inspection and copying of all OSi Business Records or SC
Business Records, OSi Governmental Permits or SC Governmental Permits, OSi
Licenses or SC Licenses, OSi Contracts or SC Contracts and any other information
existing as of the Closing Date and primarily (or, if not primarily, to the
extent) relating to the OSi Business or SC Business or the Transferred OSi
Assets or Transferred SC Assets, and shall make their respective personnel
reasonably available for interviews, depositions and testimony in any legal
matter concerning transactions contemplated by this Agreement, the operations or
activities primarily (or, if not primarily, to the extent) relating to the OSi
Business or SC Business or the Transferred OSi Assets or Transferred SC Assets
and as otherwise may be necessary or desirable to enable the party requesting
such assistance to: (i) comply with any reporting, filing or other requirements
imposed by any Governmental Body; (ii) assert or defend any Claims or
allegations in any litigation or arbitration or in any administrative or legal
proceeding, other than Claims or allegations that one party to this Agreement
has asserted against the other; or (iii) subject to clause (ii) above, perform
its obligations under this Agreement. The party requesting such information or
assistance shall reimburse the other party for all reasonable and necessary
out-of-pocket costs and expenses incurred by such party in providing such
information and in rendering such assistance. The access to files, books and
records contemplated by this Section 5.1(b) shall be during normal business
hours and upon reasonable prior notice and shall be subject to such reasonable
limitations as the party having custody or control thereof may impose to
preserve the confidentiality of information contained therein.
(c) PRE-CLOSING ENVIRONMENTAL DUE DILIGENCE
(i) PHASE II ENVIRONMENTAL SITE ASSESSMENTS. GE and Crompton shall have
the right to conduct Phase II Environmental Site Assessments ("ESAS") at the OSi
Premises and the SC Premises, respectively, and shall use commercially
reasonable efforts to complete and exchange such Phase II ESAs prior to the
Closing. Moreover, either party may elect to share some or all of the Phase II
ESA results with an
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Environmental Agency regardless of which party caused the Phase II ESA to be
prepared, PROVIDED that (A) such an election is made and communicated in writing
to the other party within 30 days following the delivery of the Phase II ESA to
the other party; (B) the other party is permitted the option of presenting Phase
II ESA results to the Environmental Agency; and (C) the transaction contemplated
by this Agreement closes. It is further agreed that the other party may be
present at any meeting at which the disclosure is made and be copied on any
written communications between the other party and the Environmental Agency
regarding the disclosure.
(ii) COMPLIANCE AUDITS. GE and Crompton shall have the right to
conduct environmental compliance audits at the OSi Premises and the SC Premises,
respectively, prior to Closing and shall provide the other party with a list of
items of non-compliance that require correction in order to address
non-compliance. Each party shall use commercially reasonable efforts to correct
items of non-compliance at its premises on or before the Closing and provide
documentation evidencing such corrections. The parties agree that any actual or
alleged violations of Law can be corrected by obtaining written confirmation of
compliance from a Government Body having the authority to issue such a
confirmation.
5.2 CONDUCT OF BUSINESS
(a) OSI BUSINESS. From and after the date of this Agreement and until the
Closing Date, except as set forth on SCHEDULE 5.2(A), as otherwise expressly
contemplated by this Agreement or as GE shall otherwise consent to in writing
(such consent not to be unreasonably withheld), Crompton agrees that it and the
OSi Subsidiaries:
(i) except as required by Law, will carry on the OSi Business in the
ordinary course consistent with past practices and shall use commercially
reasonable efforts to keep intact and preserve the OSi Business's operations,
organization (including management and the OSi Business Employees), physical
facilities, working conditions and the relationships of the OSi Business with
its customers, suppliers, licensors, licensees, distributors and others with
whom the OSi Business has any material dealings or relationships;
(ii) will not, (x) other than as may be required by Law or a
Governmental Body, sell, transfer, lease, license, dispose of or subject (or
permit to be subjected) to any Encumbrance (other than a Permitted Property
Encumbrance), any Transferred OSi Property, Assumed OSi Lease or the Tarrytown
Lease or (y) other than as may be required by Law or a Governmental Body, sell,
transfer, lease, license, dispose of or subject (or permit to be subjected) to
any Encumbrance (other than a Permitted OSi Encumbrance), any other Transferred
OSi Asset (personal, tangible or intangible), including of an OSi Subsidiary but
excluding any Excluded OSi Asset, except for (A) sales, transfers, leases,
licenses, dispositions or Encumbrances in the ordinary course that do not
individually exceed $10,000 and (B) sales of OSi Inventory in the ordinary
course;
(iii) will (x) conduct the OSi Business, including the use and
operation of the properties of Crompton (in respect of the OSi Business) and
each OSi Subsidiary, in compliance in all material respects with applicable Laws
and applicable decrees, orders, judgments, permits and licenses of or from
Governmental Bodies and (y) maintain all OSi Permits in full force and effect;
(iv) will provide GE prompt notice of any material damage, destruction
or loss, whether or not covered by insurance, with respect to the Transferred
OSi Assets;
(v) will not acquire any asset that will be a Transferred OSi Asset
except in the ordinary course of business consistent with past practices or,
with respect to the OSi Business, merge or consolidate with, purchase
substantially all or a material portion of the assets of, or otherwise acquire
any business or any proprietorship, firm, association, limited liability
company, joint venture corporation or other business organization or division
thereof;
(vi) will not (w) other than in the ordinary course of business
consistent with past practices (which shall not include modifications with
respect to the monetary terms or the duration of any Assumed OSi Lease or the
Tarrytown Lease), terminate, modify or amend, release, enter into, extend, waive
any material right under, or discharge any other party thereunder of any of
their obligation under any Assumed OSi Lease or the Tarrytown Lease; (x) other
than in the ordinary course of business consistent with past practices,
terminate, modify or amend, release, enter into, extend, waive any material
right under, assign or otherwise change any rights under, or discharge any other
party thereunder of any of their obligations under, any other Material OSi
Contract; or (y) enter into any contract, agreement or understanding that
restrains, restricts or limits the ability of the OSi Business to compete with
or conduct any business or line of business in any geographic area, other than
exclusive distribution, agency or supply arrangements;
(vii) will not (w) voluntarily incur or assume any liabilities,
obligations or indebtedness in respect of the OSi Business, other than in the
ordinary course of business consistent with past practices or that will
constitute Excluded Crompton Liabilities or (x) guarantee (directly or
indirectly) any liability, incur or assume any indebtedness in respect of the
OSi Business; (y) enter into any settlement or release with respect to any
material Action or Claim against Crompton or its Affiliates with respect to the
OSi Business, unless such settlement or release contemplates only the payment of
money; or (z) commit to any capital expenditures except as contemplated by the
OSi Business capital budget for fiscal year 2003 (a copy of which is attached as
SCHEDULE 5.2(A)(VII)) or as may be reasonably required to fulfill Crompton's
obligations under this Agreement;
(viii) will, if the Closing Date does not occur more than 30 days
prior to the scheduled expiration of the Agreement between OSi Specialties, Inc.
Sistersville Plant and Local 698-C of the International Chemical Workers Union
Council of the United Food and Commercial Workers (the "OSI COLLECTIVE
BARGAINING AGREEMENT") on July 25, 2003, take commercially reasonable efforts,
in reasonable consultation with GE,
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to obtain one or more extensions of the OSi Collective Bargaining Agreement,
such that the OSi Collective Bargaining Agreement remains in force through the
30th day following the Closing Date;
(ix) will provide proper notification as described in Section 1.02 of
the OSi Collective Bargaining Agreement not less than 60 days but not more than
90 days prior to July 25, 2003;
(x) will not (A) materially increase the base pay or benefits payable
to any OSi Business Employee (including any such increase pursuant to any bonus,
pension, profit sharing or other plan or commitment), except (I) as required by
Law or by any OSi Contract or Crompton Benefit Plan, (II) for increases in base
pay in the ordinary course of business consistent with past practice, and (III)
for increases in the ordinary course of business consistent with past practice
that also apply to employees of Crompton and its Affiliates other than OSi
Business Employees and that apply on similar terms across-the-board to similarly
situated employees of Crompton and its Affiliates, (B) enter into or amend any
employment, consulting, severance, change in control, compensation or similar
agreement for the benefit or welfare of any OSi Business Employee, or (C) except
as required by Law, enter into any new, or amend any existing, collective
bargaining agreement or similar agreement with respect to any OSi Business
Employee;
(xi) will not introduce any material change with respect to the
operation of the OSi Business (including any material change in the types,
nature, composition or quality of products or services) or, other than in the
ordinary course of business consistent with past practices, make any material
change in product specifications or terms of distributions of such products;
(xii) with respect to any of the Acquired OSi Subsidiaries, will not
make or rescind any election relating to Taxes, settle or compromise any Claim,
Action, suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, except as may be required by applicable Law, or
make any change to any of its methods of accounting or methods of reporting
income or deductions for Taxes from those employed in the preparation of its
most recent Tax returns, in each case if doing so could reasonably be expected
to adversely affect GE or any of its Affiliates, or, in a Post-Closing
Tax-Period, any of the Acquired OSi Subsidaries;
(xiii) will pay all maintenance and similar fees and take all other
appropriate actions as necessary to prevent the abandonment, loss or impairment
of all Transferred OSi Intellectual Property set forth on SCHEDULE 3.13(A)(I)(A)
and the OSi Licensed Intellectual Property set forth on SCHEDULE 3.13(A)(I)(B);
(xiv) will maintain the accounts receivable and the accounts payable
of the OSi Business on payment and credit terms consistent with the practices of
the OSi Business as of December 31, 2002; and
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(xv) will not authorize or enter into any transaction, agreement or
commitment for any of the foregoing, other than with respect to clauses (i),
(iii), (iv), (viii), (ix), (xiii) and (xiv) above.
(b) SC BUSINESS. From and after the date of this Agreement and until the
Closing Date, except as set forth on SCHEDULE 5.2(B), as otherwise expressly
contemplated by this Agreement or as Crompton shall otherwise consent to in
writing (such consent not to be unreasonably withheld), GE agrees that it and
the SC Subsidiaries:
(i) except as required by Law, will carry on the SC Business in the
ordinary course consistent with past practices and shall use commercially
reasonable efforts to keep intact and preserve the SC Business's operations,
organization (including management and the SC Business Employees), physical
facilities, working conditions and the relationships of the SC Business with its
customers, suppliers, licensors, licensees, distributors and others with whom
the SC Business has any material dealings or relationships;
(ii) will not, (x) other than as may be required by Law or a
Governmental Body, sell, transfer, lease, license, dispose of or subject (or
permit to be subjected) to any Encumbrance (other than a Permitted Property
Encumbrance), any Transferred SC Property or (y) other than as may be required
by Law or a Governmental Body, sell, transfer, lease, license, dispose of or
subject (or permit to be subjected) to any Encumbrance (other than a Permitted
SC Encumbrance), any other Transferred SC Asset (personal, tangible or
intangible), including of an SC Subsidiary but excluding any Excluded SC Asset,
except for (A) sales, transfers, leases, licenses, dispositions or Encumbrances
in the ordinary course that do not individually exceed $2,500 and (B) sales of
SC Inventory in the ordinary course;
(iii) will (x) conduct the SC Business, including the use and
operation of the properties of GE (in respect of the SC Business) and each SC
Subsidiary, in compliance in all material respects with applicable Laws and
applicable decrees, orders, judgments, permits and licenses of or from
Governmental Bodies and (y) maintain all SC Permits in full force and effect;
(iv) will provide Crompton prompt notice of any material damage,
destruction or loss, whether or not covered by insurance, with respect to the
Transferred SC Assets;
(v) will not acquire any asset that will be a Transferred SC Asset
except in the ordinary course of business consistent with past practices or,
with respect to the SC Business, merge or consolidate with, purchase
substantially all or a material portion of the assets of, or otherwise acquire
any business or any proprietorship, firm, association, limited liability
company, joint venture corporation or other business organization or division
thereof;
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(vi) will not (x) other than in the ordinary course of business
consistent with past practices, terminate, modify or amend, release, enter into,
extend, waive any material right under, assign or otherwise change any rights
under, or discharge any other party thereunder of any of their obligations
under, any other Material SC Contract; or (y) enter into any contract, agreement
or understanding that restrains, restricts or limits the ability of the SC
Business to compete with or conduct any business or line of business in any
geographic area, other than exclusive distribution, agency or supply
arrangements;
(vii) will not (w) voluntarily incur or assume any liabilities,
obligations or indebtedness in respect of the SC Business, other than in the
ordinary course of business consistent with past practices or that will
constitute Excluded GE Liabilities or (x) guarantee (directly or indirectly) any
liability, incur or assume any indebtedness in respect of the SC Business; (y)
enter into any settlement or release with respect to any material Action or
Claim against GE or its Affiliates with respect to the SC Business, unless such
settlement or release contemplates only the payment of money; or (z) commit to
any capital expenditures except as contemplated by the SC Business capital
budget for fiscal year 2003 (a copy of which is attached as SCHEDULE
5.2(B)(VII)) or as may be reasonably required to fulfill GE's obligations under
this Agreement;
(viii) will not (A) without Crompton's consent, voluntarily recognize
any labor union which would represent SC Business Employees or (B) without first
consulting Crompton, respond to any representation petition filed with the
National Labor Relations Board with respect to a labor union which would
represent SC Business Employees;
(ix) will not (A) materially increase the base pay or benefits payable
to any SC Business Employee (including any such increase pursuant to any bonus,
pension, profit sharing or other plan or commitment), except (I) as required by
Law or by any SC Contract or GE Benefit Plan, (II) for increases in base pay in
the ordinary course of business consistent with past practice and (III) for
increases in the ordinary course of business consistent with past practice that
also apply to employees of GE and its Affiliates other than SC Business
Employees and that apply on similar terms across-the-board to similarly situated
employees of GE and its Affiliates, (B) enter into or amend any employment,
consulting, severance, change in control, compensation or similar agreement for
the benefit or welfare of any SC Business Employee, or (C) except as required by
Law, enter into any new, or amend any existing, collective bargaining agreement
or similar agreement with respect to any SC Business Employee;
(x) will not introduce any material change with respect to the
operation of the SC Business (including any material change in the types,
nature, composition or quality of products or services) or, other than in the
ordinary course of business consistent with past practices, make any material
change in product specifications or terms of distributions of such products;
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(xi) will pay all maintenance and similar fees and take all other
appropriate actions as necessary to prevent the abandonment, loss or impairment
of all Transferred SC Intellectual Property set forth on SCHEDULE 4.13(A)(I);
and
(xii) will not authorize or enter into any transaction, agreement or
commitment for any of the foregoing, other than with respect to clauses (i),
(iii), (iv) and (xi) above.
5.3 ENVIRONMENTAL MATTERS
(a) PERMITS.
(i) GE agrees to comply in all material respects with the OSi
Governmental Permits relating to environmental, health and safety matters which
Crompton has agreed to maintain pursuant to Section 2.13(e)(ii).
(ii) Crompton agrees to comply in all material respects with the SC
Governmental Permits relating to environmental, health and safety matters which
GE has agreed to maintain pursuant to Section 2.13(f)(ii).
(b) DOCUMENTS RELATING TO ASBESTOS OR OTHER HAZARDOUS SUBSTANCES.
(i) Crompton will, within thirty (30) days after the date hereof,
deliver or make available to GE true and complete copies in all material
respects of all asbestos and other environmental reports in Crompton's
possession that have been prepared within the last ten (10) years and disclose
the presence of asbestos or other Hazardous Substances at any OSi Premises
included in the Transferred OSi Assets.
(ii) GE will, within thirty (30) days after the date hereof, deliver
or make available to Crompton true and complete copies in all material respects
of all asbestos and other environmental reports in GE's possession that have
been prepared within the last ten (10) years and disclose the presence of
asbestos or other Hazardous Substances at any SC Premises included in the
Transferred SC Assets.
5.4 TAX COVENANTS
(a) FILING OF TAX RETURNS.
(i) Crompton shall prepare and timely file, or cause to be timely
filed, all Tax returns relating to any Acquired OSi Subsidiary due on or before
the Closing Date (taking into account any applicable extension periods) and,
where appropriate, shall cause the Acquired OSi Subsidiaries to be included in
any income Tax returns for a consolidated, combined, affiliated, group or
unitary income Tax return for all periods ending on or before or which include
the Closing Date. Crompton shall timely pay all Taxes due with respect to all
Tax returns described in this Section 5.4(a)(i).
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(ii) With respect to each Tax return relating to any Acquired OSi
Subsidiary covering a taxable period ending on or before the Closing Date that
is required to be filed after the Closing Date (taking into account applicable
extension periods) for, by or with respect to any of the Acquired OSi
Subsidiaries (other than the Tax returns described in Section 5.4(a)(i)), GE
shall prepare such Tax returns and deliver copies to Crompton for review and
approval (such approval shall not be unreasonably withheld) at least twenty (20)
days prior to the due date. GE shall cause the Acquired OSi Subsidiaries to
timely file and pay the Taxes shown due on such returns. Notwithstanding the
foregoing, Crompton shall be responsible for all Taxes due with respect to all
Tax returns described in this Section 5.4(a)(ii) and shall pay the amount shown
due on such Tax returns to GE in accordance with Section 5.4(a)(vi).
(iii) With respect to each Straddle Period Return, GE shall cause each
Straddle Period Return to be prepared and timely filed. GE shall deliver copies
of such Tax returns to Crompton for review and approval (such approval shall not
be unreasonably withheld) at least twenty (20) days prior to the due date
(accompanied, where appropriate, by an allocation between the Pre-Closing Tax
Period and the Post-Closing Tax Period of the Taxes shown to be due on such Tax
return). GE shall cause the Acquired OSi Subsidiaries to timely file and pay the
Taxes shown due on such returns. Notwithstanding the foregoing, Crompton shall
be responsible for the portion of the Taxes shown due on such Tax returns that
are attributable to the Pre-Closing Tax Period (as determined under Section
5.4(a)(v)) and shall pay such amounts to GE in accordance with Section
5.4(a)(vi) and GE shall be responsible for any remaining Taxes shown due on such
return.
(iv) All Tax returns to be prepared pursuant to this Section 5.4 shall
be prepared in a manner consistent with practices followed in prior years except
for changes required by Law. Neither GE nor any of its Affiliates shall, or
shall cause the Acquired OSi Subsidiaries to, amend, refile or otherwise modify
any Tax return or election of an Acquired OSi Subsidiary with respect to any
Pre-Closing Tax Period without the prior written consent of Crompton.
(v) To the extent permitted by applicable Law or administrative
practice of any Governmental Body, the taxable year of each Acquired OSi
Subsidiary shall close as of the close of business on the Closing Date. Neither
the parties hereto nor the Acquired OSi Subsidiaries shall take any position
inconsistent with the preceding sentence on any Tax return. If applicable Law
does not permit any Acquired OSi Subsidiary to close its taxable year as of the
close of business on the Closing Date, or where Taxes are assessed with respect
to a taxable period which includes the Closing Date (but does not end on that
day), then Taxes, if any, attributable to the taxable period of the applicable
Acquired OSi Subsidiary beginning on or before and ending after the Closing Date
shall be allocated (i) to Crompton to the extent such Taxes are Excluded OSi
Taxes, and (ii) to GE to the extent such Taxes are not Excluded OSi Taxes.
(vi) Notwithstanding anything to the contrary herein, a party who is
responsible for all or a portion of the Taxes pursuant to Section 2.16 or
Section 5.4(a)
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(the "PAYING PARTY") that another party is responsible for filing the Tax return
or applicable form with respect to such Taxes (the "FILING PARTY") shall pay the
amount of such Taxes for which the Paying Party is responsible to the Filing
Party within five (5) days after the filing of the underlying Tax return. If a
dispute arises (and is not resolved within five (5) days after the filing of the
Tax return) between the Filing Party and the Paying Party as to the Tax return
or the amount that the Paying Party owes to the Filing Party, the Paying Party
shall pay to the Filing Party the amount that the Paying Party believes is owing
to the Filing Party, and the parties shall resolve their dispute through the
Independent Arbitrator described in Section 5.4(c) hereof. The Independent
Arbitrator's determination shall be final and binding on both parties and its
expenses shall be borne equally by both parties. Within five (5) days following
resolution of the dispute, the appropriate party shall pay to the other party
any amount determined to be due upon final resolution of the dispute.
(vii) Crompton and GE agree to furnish or cause to be furnished to
each other, and each at their own expense, as promptly as practicable, such
information (including access to books and records) and assistance, including
making employees available on a mutually convenient basis to provide additional
information and explanations of any material provided, relating to the Acquired
OSi Subsidiaries as is reasonably necessary for the filing of any Tax returns,
for the preparation for any audit, and for the prosecution or defense of any
claim, suit or proceeding relating to any adjustment or proposed adjustment with
respect to Taxes. GE shall retain in its possession or cause the Acquired OSi
Subsidiaries to retain in their possession, and shall provide Crompton
reasonable access to (including the right to make copies of), such supporting
books and records and any other materials that Crompton may specify with respect
to matters relating to Taxes for any Pre-Closing Tax Period until the relevant
statute of limitations has expired. After such time, GE may dispose of such
material; PROVIDED, that prior to such disposition GE shall give Crompton a
reasonable opportunity to take possession of such materials.
(b) WITHHOLDING AND REPORTING WITH RESPECT TO WAGES AND OTHER COMPENSATION.
(i) Crompton and GE acknowledge and agree that (A) Crompton will be responsible
for and will perform all Tax withholding, payment and reporting duties with
respect to any wages and other compensation paid by Crompton or any OSi
Subsidiary in connection with the operation or conduct of the OSi Business prior
to or on the Closing Date and (B) GE will be responsible for and will perform
all Tax withholding, payment and reporting duties with respect to any wages and
other compensation paid by GE to any OSi Continuing Employee in connection with
the operation or conduct of the OSi Business after the Closing Date.
(ii) Crompton and GE acknowledge and agree that (A) GE will be
responsible for and will perform all Tax withholding, payment and reporting
duties with respect to any wages and other compensation paid by GE or any SC
Subsidiary in connection with the operation or conduct of the SC Business prior
to or on the Closing Date and (B) Crompton will be responsible for and will
perform all Tax withholding, payment and reporting duties with respect to any
wages and other compensation paid by
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Crompton to any SC Continuing Employee in connection with the operation or
conduct of the SC Business after the Closing Date.
(iii) Pursuant to Section 5 of Revenue Procedure 96-60, 1996-2 C.B.
399, PROVIDED that Crompton provides GE with all necessary payroll records and
that GE provides Crompton with all necessary payroll records for the calendar
year that includes the Closing Date, GE shall furnish a Form W-2 to each OSi
Continuing Employee and Crompton shall provide a Form W-2 to each SC Continuing
Employee, disclosing all wages and other compensation paid for such calendar
year, and Taxes withheld therefrom.
(c) ALLOCATION OF CONSIDERATION. Crompton and GE recognize their mutual
obligations pursuant to Section 1060 of the Code and any comparable state, local
and foreign Tax laws to timely file IRS Forms 8594 and any comparable state,
local or foreign Tax forms (collectively referred to as the "ASSET ACQUISITION
STATEMENTS") with respect to the sale of the OSi Business and the SC Business
with their respective federal income Tax returns to the extent that the
transactions contemplated hereunder are not part of a like-kind exchange as set
forth in Section 2.12 of this Agreement. Accordingly, Crompton and GE shall, no
later than 120 days after the date of this Agreement, attempt in good faith to
agree to the allocation of the total consideration (including the Earn-Out
Amount) for the OSi Business and the SC Business among the Transferred OSi
Assets and the Transferred SC Assets (other than the Transferred OSi Subsidiary
Shares and the assets that were exchanged in a like-kind exchange pursuant to
Section 1031 of the Code or in connection therewith) consistent with the
provisions of Section 1060 of the Code and the Treasury Regulations thereunder
and any comparable state, local and foreign Tax laws. Such allocation, which
shall be consistent with the terms of this Agreement, including the Schedules
thereto, shall be in the form set forth on SCHEDULE 5.4 and all Asset
Acquisition Statements, including any amended or supplemental Asset Acquisition
Statements required to take into account any Earn-Out Payments, shall be filed
consistent with SCHEDULE 5.4, as hereafter agreed. If within 120 days after the
date of this Agreement SCHEDULE 5.4 has not been agreed by the parties hereto,
and the parties have not otherwise agreed upon an allocation with respect to the
Asset Acquisition Statements, any disagreement with respect thereto shall be
resolved by a mutually agreed-upon nationally recognized valuation firm or
arbitrator with no material relationship with either party (the "INDEPENDENT
ARBITRATOR"). The resolution of the Independent Arbitrator shall be binding on
all parties without any further adjustment and Crompton and GE shall file the
Asset Acquisition Statements in the form reflecting the resolution by the
Independent Arbitrator. The costs, expenses and fees of the Independent
Arbitrator shall be borne equally by Crompton and GE. Except as otherwise
required pursuant to a "determination" under Section 1313(a) of the Code (or any
comparable provision of state, local or non-U.S. Law), neither Crompton nor GE
shall take, or shall permit its Affiliates to take, a Tax position which is
inconsistent with the allocation reflected in the Asset Acquisition Statements.
(d) TAX CLEARANCE CERTIFICATES. (i) Crompton (or the applicable Crompton
Affiliate) shall use reasonable efforts to obtain all available Tax clearance
certificates by
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notifying any taxing authority of the transactions contemplated by this
Agreement in the form and in the manner required by applicable Tax law and
regulations if the failure to obtain such available Tax clearance certificates
could subject GE, any GE Affiliate or any OSi Business Employee to any Taxes of
Crompton or its Affiliates.
(ii) GE (or the applicable GE Affiliate) shall use reasonable efforts
to obtain all available Tax clearance certificates by notifying any taxing
authority of the transactions contemplated by this Agreement in the form and in
the manner required by applicable Tax law and regulations if the failure to
obtain such available Tax clearance certificates could subject Crompton, any
Crompton Affiliate or any SC Business Employee to any Taxes of GE or its
Affiliates.
(e) REFUNDS. Any Tax refund, credit or similar benefit (including any
interest paid or credited with respect thereto and net of any Taxes payable with
respect thereto) reflected on a Tax return filed by any Acquired OSi Subsidiary
for a Pre-Closing Tax Period shall be allocated to Crompton, and if received by
GE or any of its Affiliates, shall be paid over promptly to Crompton. GE shall,
if Crompton so requests and at Crompton's expense, cause the relevant Acquired
OSi Subsidiary to file for and use reasonable efforts to obtain or expedite the
receipt of any refund to which Crompton is entitled; PROVIDED that any such
filing would not reasonably be expected to have an adverse effect on GE or any
of its Affiliates (including the Acquired OSi Subsidiaries). GE shall permit
Crompton to participate in (at Crompton's expense) the prosecution of any such
refund claim.
(f) CERTAIN CLOSING DATE TRANSACTION. GE shall not, and shall cause its
Affiliates not to, take any action or engage in any transaction that would
result in an actual or deemed disposition of any asset of the OSi Business Joint
Venture on the Closing Date after the Closing, other than in the ordinary course
of business of the OSi Business Joint Venture.
5.5 EMPLOYMENT OF EMPLOYEES OF THE OSI AND SC BUSINESSES.
(a) CONTINUED EMPLOYMENT. The parties hereto agree to the following
procedures designed to ensure that, except as specifically provided in this
Section 5.5(a), there shall be continuity of employment with respect to the OSi
Business Employees and the SC Business Employees (the OSi Business Employees and
the SC Business Employees shall collectively be referred to as the "EMPLOYEES"):
(i) Except as provided in Section 5.5(a)(iv), GE shall offer
employment, commencing on the Closing Date, to the OSi Business Employees,
including those OSi Business Employees on vacation, leave of absence, short-term
disability leave or long-term disability leave (collectively, "LEAVE") on the
Closing Date, on terms consistent with the provisions of Section 5.5(a)(iii) and
with the provisions of Section 5.5(b) or Section 5.8(a), as applicable;
PROVIDED, HOWEVER, that in the event that the parties enter into the Employee
Lease Agreement, (x) the offers made to OSi Business Employees whose employment
is governed by the OSi Collective Bargaining
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Agreement shall offer employment commencing as of the expiration of the term of
such Employee Lease Agreement, and (y) upon such expiration, offers shall be
made as well to any employees hired after the Closing Date whose employment is
governed by the OSi Collective Bargaining Agreement (the employees covered by
(x) and (y), the "OSI BARGAINING EMPLOYEES"); and, PROVIDED, FURTHER, that the
provisions of this Section 5.5(a)(i) shall not apply to the OSi Business
Employees listed on Exhibit A of the OSi Manufacturing and Services Agreement or
to any employees hired after the Closing Date with respect to the OSi Business
facilities in Korea, Mexico, and Thailand that are governed by such agreement
(collectively, such listed employees and employees hired after the Closing Date,
the "OSI MANUFACTURING AGREEMENT EMPLOYEES").
(ii) Except as provided in Section 5.5(a)(iv), Crompton shall offer
employment, commencing on the Closing Date, to the SC Business Employees,
including those SC Business Employees on Leave on the Closing Date, on terms
consistent with the provisions of Section 5.5(a)(iii) and with the provisions of
Section 5.5(b) or Section 5.8(a), as applicable; provided, however, that the
provisions of this Section 5.5(a)(ii) shall not apply to the SC Business
Employees listed on Exhibit A of the SC Manufacturing and Services Agreement or
to any employees hired after the Closing Date with respect to the SC Business
facility in the Netherlands that is governed by such agreement (collectively,
such listed employees and employees hired after the Closing Date, the "SC
MANUFACTURING AGREEMENT EMPLOYEES"). The OSi Manufacturing Agreement Employees
and the SC Manufacturing Agreement Employees shall collectively be referred to
as the "MANUFACTURING AGREEMENT EMPLOYEES."
(iii) Except as provided in Section 5.5(a)(iv), GE and Crompton agree
to use commercially reasonable efforts so that the terms and conditions of all
offers of employment made pursuant to this Section 5.5(a) shall satisfy all
requirements of applicable Law and shall be sufficient to prevent (to the extent
possible under applicable Law) giving rise to a right, on the part of any
Employee, to receive any Severance Benefit arising out of or as a consequence of
the consummation of any transactions contemplated by this Agreement. Except as
provided in Section 5.5(a)(iv), GE and Crompton also agree that offers of
employment made pursuant to this Section 5.5 shall be for "comparable
positions." For purposes of this Section 5.5, a "comparable position" shall mean
a position paying at least the same base salary as such Employee was receiving
immediately prior to such Employee's Transfer Date and at a principal site of
employment that is not more than 35 miles (50 miles in the case of the Employees
listed on SCHEDULE 5.5(A)(III)) further in distance from such Employee's
residence immediately prior to such Employee's Transfer Date than is such
Employee's principal place of employment immediately prior to such Employee's
Transfer Date.
(iv) Notwithstanding the foregoing, GE shall not be obligated to offer
employment to the OSi Business Employees identified as "EXCLUDED OSI BUSINESS
EMPLOYEES" on SCHEDULE 5.5(A)(IV)(A), and Crompton shall not be obligated to
offer employment to the SC Business Employees identified as "EXCLUDED SC
BUSINESS EMPLOYEES" on SCHEDULE 5.5(A)(IV)(B). GE and Crompton may amend the
lists of Excluded OSi Business Employees and Excluded SC Business Employees,
respectively,
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in each case with the consent of the other party, which consent shall not be
unreasonably withheld. Crompton shall be responsible for, and shall reimburse GE
for, any Severance Benefits due to any Excluded SC Business Employee as a result
of the termination of his or her employment with GE and its Affiliates, provided
that such termination occurs not later than 90 days after the Closing Date. GE
shall be responsible for, and shall reimburse Crompton for, any Severance
Benefits due to any Excluded OSi Business Employee as a result of the
termination of his or her employment with Crompton and its Affiliates, provided
that such termination occurs not later than 90 days after the Closing Date.
(v) Employees (including for purposes of this Section 5.5(a)(v) OSi
Bargaining Employees and Manufacturing Agreement Employees hired after the
Closing Date) who are offered employment by either GE or Crompton pursuant to
Sections 5.5(a)(i), (ii) and (iii) (or, in the case of Manufacturing Agreement
Employees, who are offered employment pursuant to the procedures set forth, in
the applicable Manufacturing and Services Agreement) and who commence such
employment, or transfer automatically pursuant to any applicable Law shall
hereafter be referred to as either "OSi Continuing Employees" or "SC Continuing
Employees" (the OSi Continuing Employees and the SC Continuing Employees shall
collectively be referred to as the "CONTINUING EMPLOYEES"); PROVIDED, HOWEVER,
that each Employee who is on disability leave or other leave of absence on the
Closing Date (or, in the case of OSi Bargaining Employees and Manufacturing
Agreement Employees, on the date that would have been such Employee's Transfer
Date were such Employee not on such leave of absence) (each such Employee, an
"ON-LEAVE EMPLOYEE") shall become a Continuing Employee only if and when he or
she returns to work with GE or Crompton, as applicable, and only if such return
occurs within either (A) 18 months from the date that such leave or leave of
absence commenced, in the case of a leave in connection with a work-related
illness or condition, or 12 months from the date that such leave or leave of
absence commenced, in the case of any other type of leave or (B) if longer, the
period during which such Employee has a statutory right to return to work (the
date of such return, with respect to the applicable On-Leave Employee, the
"RETURN-FROM-LEAVE DATE"). SCHEDULE 3.9(A) identifies each OSi Business Employee
who is on Leave as of the date hereof, and SCHEDULE 4.9(A) identifies each SC
Business Employee on Leave as of the date hereof. Crompton and GE, respectively,
shall update such schedules to identify the employees who are on Leave as of the
Closing Date.
(vi) The "TRANSFER DATE" for each Continuing Employee other than an
On-Leave Employee or a Manufacturing Agreement Employee shall be the Closing
Date, the Transfer Date for each On-Leave Employee shall be the applicable
Return-From-Leave Date, and the Transfer Date for each Manufacturing Agreement
Employee (who is not an On-Leave Employee) who becomes a Continuing Employee
shall be the date of expiration of the Schedule of the Manufacturing and
Services Agreement relating to the Facility (as defined in the applicable
Manufacturing and Services Agreement) which relates to such Manufacturing
Agreement Employee; PROVIDED, HOWEVER, that in the event that the parties enter
into the Employee Lease Agreement, the Transfer Date for each OSi
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Bargaining Employee shall be the date of expiration of the term of such Employee
Lease Agreement.
(vii) Notwithstanding any other provision of this Agreement, (A) in
the event that any OSi Business Employee is determined prior to the Closing Date
to be a target or subject of any investigation with respect to Crompton and its
Affiliates by the Department of Justice relating to antitrust violations, at
GE's request, Crompton shall remove such OSi Business Employee from the list of
OSi Business Employees (and, if such OSi Business Employee is an Excluded OSi
Business Employee, from the list of Excluded OSi Business Employees), and (B) in
the event that any SC Business Employee is determined prior to the Closing Date
to be a target or subject of any investigation with respect to GE and its
Affiliates by the Department of Justice relating to antitrust violations, at
Crompton's request, GE shall remove such SC Business Employee from the list of
SC Business Employees (and, if such SC Business Employee is an Excluded SC
Business Employee, from the list of Excluded SC Business Employees).
(b) POST-CLOSING BENEFITS. GE or Crompton, as applicable, shall provide
each Continuing Employee, until the first anniversary of the Closing Date (or,
if earlier, until the termination of such Continuing Employee's employment), a
base salary that is not less than the base salary provided to such Continuing
Employee by Crompton or GE, as applicable, immediately prior to the Closing
Date. Except as otherwise provided or required under foreign Law or an
applicable collective bargaining agreement: (i) GE shall maintain or contribute
to (or cause its Subsidiaries to maintain or contribute to) with respect to the
OSi Continuing Employees, for a period of one year after the Closing Date,
without interruption, employee compensation, benefit plans, policies, programs
and arrangements (the "GE POST-CLOSING PLANS") that are comparable in aggregate
value to those provided to the OSi Continuing Employees as of the date hereof;
and (ii) Crompton shall maintain or contribute to (or cause its Subsidiaries to
maintain or contribute to) with respect to the SC Continuing Employees, for a
period of one year after the Closing Date, without interruption, employee
compensation, benefit plans, policies, programs and arrangements (the "CROMPTON
POST-CLOSING PLANS") that are comparable in aggregate value to those provided to
the SC Continuing Employees as of the date hereof; PROVIDED, HOWEVER, that the
determination of whether the employee compensation, benefit plans, policies,
programs and arrangements offered to OSi Continuing Employees or to SC
Continuing Employees are comparable in aggregate value to those provided prior
to the Closing Date, respectively, to OSi Continuing Employees or SC Continuing
Employees shall not take into account Severance Benefits. The parties agree that
both the GE Post-Closing Plans and the Crompton Post-Closing Plans shall include
participation by each Continuing Employee employed in the United States in a
qualified defined benefit pension plan and in a retiree medical benefit plan,
but that in no event shall any particular plan design or level of benefits with
respect to such plans be required. The parties further agree that the
determination of whether the GE Post-Closing Plans or the Crompton Post-Closing
Plans meet the requirements of this Section 5.5(b) shall be made by evaluating
such plans with respect to the OSi Continuing Employees or the SC Continuing
Employees, as applicable, as a group, rather than on an individual-by-individual
basis.
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(c) SERVICE CREDIT. Continuing Employees shall be given credit under GE's
and Crompton's employee benefit plans for all service with either GE or Crompton
(or predecessor employers to the extent GE or Crompton, as applicable, provide
past service credit) for purposes of eligibility and vesting and calculation of
vacation, sick days and severance pay and except to the extent that such credit
would result in a duplication of benefits for such credited period of service.
Without limiting the foregoing, for all purposes under the employee benefit
plans of either GE or Crompton providing benefits primarily to Continuing
Employees employed outside the United States of America after the Closing Date,
each such Continuing Employee shall be credited with his or her years of service
with GE or Crompton (or any predecessor employers prior to the Closing Date) to
the extent and in the manner required under applicable Law.
(d) SEVERANCE.
(i) The parties hereto agree to allocate liability for any Severance
Benefits due to Employees as follows, except as provided in Section 5.5(a)(iv):
(A) GE shall be responsible for and shall pay and provide any
Severance Benefits due to any SC Business Employee as a result of
the termination of his or her employment before the Closing Date,
and Crompton shall be responsible for and shall pay and provide
any Severance Benefits due to any OSi Business Employee as a
result of the termination of his or her employment before the
Closing Date.
(B) GE shall be responsible for and shall pay and provide (or
reimburse, as applicable) all Severance Benefits due to OSi
Business Employees as a result of (I) the termination of their
employment with Crompton and its Affiliates on or after the
Closing Date (including as a result of the transactions
contemplated by this Agreement) if such termination and/or
entitlement to Severance Benefits is due to GE's failure to
comply with Section 5.5(a)(iii) or to the failure of such terms
and conditions to prevent the right to Severance Benefits from
arising, and/or (II) the termination of their employment with GE
and its Affiliates on or after the Closing Date; PROVIDED,
HOWEVER, that GE shall not be responsible for any Severance
Benefits provided under any Crompton Benefit Plan to an OSi
Business Employee employed in the United States who received an
offer from GE complying with Section 5.5(a)(iii).
(C) Crompton shall be responsible for and shall pay and provide (or
reimburse, as applicable) all Severance Benefits due to SC
Business Employees as a result of (I) the termination of their
employment with GE and its Affiliates on and after the Closing
Date (including as a result of the transactions contemplated by
this
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Agreement) if such termination and/or entitlement to Severance
Benefits is due to Crompton's failure to comply with Section
5.5(a)(iii) or to the failure of such terms and conditions to
prevent the right to Severance Benefits from arising, and/or (II)
the termination of their employment with Crompton and its
Affiliates on or after the Closing Date; PROVIDED, HOWEVER, that
Crompton shall not be responsible for any Severance Benefits
provided under any GE Benefit Plan to an SC Business Employee
employed in the United States who received an offer from Crompton
complying with Section 5.5(a)(iii).
(ii) For a period of one year following the Closing Date, GE shall, or
shall cause its Subsidiaries to, provide to each OSi Continuing Employee who is
terminated under circumstances entitling such OSi Continuing Employee to
benefits under the terms of GE's severance plans and practices generally
applicable to similarly situated GE employees severance benefits in accordance
with the terms of such severance plans and practices, and Crompton shall, or
shall cause its Subsidiaries to, provide to each SC Continuing Employee who is
terminated under circumstances entitling such SC Continuing Employee to benefits
under the terms of Crompton's severance plans and practices generally applicable
to similarly situated Crompton employees severance benefits in accordance with
the terms of such severance plans and practices. Notwithstanding the foregoing,
this Section 5.5(d)(ii) shall not apply in the case of Severance Benefits which
are required under applicable Law or the provisions of an applicable collective
bargaining agreement.
(e) BASE SALARY AND PAYROLL. GE shall retain liability for payment of, and
for any Claims relating to, base salary, wages and overtime pay for each SC
Continuing Employee accruing prior to or on such SC Continuing Employee's
Transfer Date and shall assume responsibility for payments of base salary, wages
and overtime pay to each OSi Continuing Employee accruing after such OSi
Continuing Employee's Transfer Date, and Crompton shall retain liability for
payment of, and for any Claims relating to, base salary, wages and overtime pay
for each OSi Continuing Employee accruing prior to or on such OSi Continuing
Employee's Transfer Date and shall assume responsibility for payments of base
salary, wages and overtime pay to each SC Continuing Employee accruing after the
such SC Continuing Employee's Transfer Date.
(f) EMPLOYMENT AGREEMENTS. As of the Closing Date, GE shall assume all
liabilities and obligations under each of the employment agreements listed on
SCHEDULE 5.5(F), and GE shall assume and be solely responsible for all
liabilities arising out of or resulting from such assumption. GE shall use
commercially reasonable efforts to obtain any consents that may be required to
such assumption, but a failure of such consent shall not relieve GE of the
obligations and liabilities assumed under the preceding sentence.
(g) ALLOCATION OF LIABILITIES GENERALLY. Except as specifically provided
elsewhere in Sections 5.5 through 5.8: (i) (A) neither GE nor any of its
Affiliates shall
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adopt, become a sponsoring employer of, or have any obligations under or with
respect to the Crompton Benefit Plans, (B) Crompton and its Affiliates shall be
solely responsible for any and all liabilities which have arisen or may arise
under or in connection with any Crompton Benefit Plan, (C) neither Crompton nor
any of its Affiliates shall adopt, become a sponsoring employer of, or have any
obligations under or with respect to the GE Benefit Plans, and (D) GE and its
Affiliates shall be solely responsible for any and all liabilities which have
arisen or may arise under or in connection with any GE Benefit Plan; (ii) GE and
its Affiliates shall be solely responsible for any and all liabilities relating
to or arising out of the employment of SC Business Employees who do not become
SC Continuing Employees, whether such liabilities arise before, on or after the
Closing Date, and Crompton and its Affiliates shall be solely responsible for
any and all liabilities relating to or arising out of the employment of OSi
Business Employees who do not become OSi Continuing Employees, whether such
liabilities arise before, on or after the Closing Date; and (iii) GE and its
Affiliates shall be solely responsible for any and all liabilities relating to
or arising out of the employment of any SC Business Employee before his or her
Transfer Date, and Crompton and its Affiliates shall be solely responsible for
any and all liabilities relating to or arising out of the employment of any OSi
Business Employee before his or her Transfer Date.
(h) COOPERATION. GE and Crompton shall cooperate with each other in
carrying out the terms of Sections 5.5 through 5.8 herein, and each party shall
exchange such information with the other party, as may reasonably be required by
the other party, with respect thereto.
5.6 RETIREMENT PLANS
(a) WITCO CORPORATION RETIREMENT PLAN. Prior to the Closing Date, or as
soon as reasonably practicable thereafter, Crompton shall cause the Witco
Corporation Retirement Plan to be amended to provide that each OSi Continuing
Employee who participates in such plan on the Closing Date shall be fully vested
in his or her entire accrued benefit in such plan as of the Closing Date. Such
benefits shall be payable to each such OSi Continuing Employee, or, in the case
of an OSi Continuing Employee's death, to such OSi Continuing Employee's
beneficiaries, in accordance with the terms of such plan and the requirements of
applicable Law.
(b) RETIREMENT PROGRAM FOR EMPLOYEES OF OSI SPECIALTIES, INC. Prior to the
Closing Date, Crompton shall amend the Retirement Program for Employees of OSi
Specialties, Inc. (the "OSI RETIREMENT PLAN") to provide that each OSi
Continuing Employee who participates in such plan on the Closing Date shall be
fully vested in his or her entire accrued benefit in such plan as of the Closing
Date. Notwithstanding any other provision of this Agreement, in the event that
the Closing Date occurs prior to the expiration of the OSi Collective Bargaining
Agreement (including any extension thereto obtained by Crompton pursuant to
Section 5.2(a)(viii)), GE and Crompton shall enter into the Employee Lease
Agreement on the Closing Date.
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(c) CROMPTON DEFINED CONTRIBUTION PLANS. Prior to the Closing Date, or as
soon as reasonably practicable thereafter, Crompton shall contribute to the
Crompton Corporation Employee Savings Plan (the "CROMPTON 401(K) PLAN") and the
Crompton Corporation Employee Stock Ownership Plan (the "CROMPTON ESOP") an
amount equal to the salary deferral and other contributions (if any) of each OSi
Continuing Employee who participates in the Crompton 401(k) Plan and Crompton
ESOP plus related matching contributions through the Closing Date, and Crompton
shall cause the Crompton 401(k) Plan and the Crompton ESOP to be amended to
provide that each such OSi Continuing Employee shall be fully vested in his or
her accounts in the Crompton 401(k) Plan and Crompton ESOP.
(d) NON-U.S. RETIREMENT PLANS. The treatment of pension and similar
benefits of Employees employed outside the United States of America shall be set
forth on SCHEDULE 5.6(D).
(e) GE PENSION PLAN. Prior to the Closing Date, or as soon as reasonably
practicable thereafter, GE shall cause the GE Pension Plan to be amended to
provide that each SC Continuing Employee who participates in such plan on the
Closing Date shall be fully vested in his or her entire accrued benefit in such
plan as of the Closing Date. Such benefits shall be payable to each such SC
Continuing Employee, or, in the case of an SC Continuing Employee's death, to
the SC Continuing Employee's beneficiaries, in accordance with the terms of the
GE Pension Plan and the requirements of applicable Law.
(f) GE DEFINED CONTRIBUTION PLAN. Prior to the Closing Date, or as soon as
reasonably practicable thereafter, GE shall contribute to the GE Savings and
Security Program (the "GE 401(K) PLAN") an amount equal to the salary deferral
and other contributions (if any) of each SC Continuing Employee who participates
in the GE 401(k) Plan plus related matching contributions through the Closing
Date, and GE shall cause the GE 401(k) Plan to be amended to provide that each
such SC Continuing Employee shall be fully vested in his or her account balance
determined after taking into account the contributions described in this
paragraph.
(g) 401(k) ASSETS. Effective as of the Closing Date, GE shall have in
effect a qualified defined contribution plan (the "NEW GE 401(K) PLAN") that
includes a qualified cash or deferred arrangement within the meaning of Section
401(k) of the Code designed to provide benefits as of the Closing Date to OSi
Continuing Employees participating in the Crompton 401(k) Plan as of the Closing
Date, and Crompton shall have in effect a qualified defined contribution plan
(the "NEW CROMPTON 401(K) PLAN") that includes a qualified cash or deferred
arrangement within the meaning of Section 401(k) of the Code designed to provide
benefits as of the Closing Date to SC Continuing Employees participating in the
GE 401(k) Plan as of the Closing Date. Effective as of the applicable Transfer
Date, (i) each OSi Continuing Employee who was a participant in the Crompton
401(k) Plan shall be deemed terminated from employment solely for purposes of
such Plan in accordance with Code Section 401(k) and the regulations thereunder,
and to the extent permitted, shall be entitled to a distribution of his or her
respective account
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balance and shall have all statutory rights with respect to such distribution
including an individual direct rollover distribution to the New GE 401(k) Plan
in accordance with Section 401(a)(31) of the Code, and (ii) each SC Continuing
Employee who was a participant in the GE 401(k) Plan shall be deemed terminated
from employment solely for purposes of such Plan in accordance with Code Section
401(k) and the regulations thereunder, and to the extent permitted, shall be
entitled to a distribution of his or her respective account balance and shall
have all statutory rights with respect to such distribution including an
individual direct rollover distribution to the New Crompton 401(k) Plan in
accordance with Section 401(a)(31) of the Code. Both the New GE 401(k) Plan and
the New Crompton 401(k) Plan shall provide for the receipt of the rollovers
contemplated by the preceding sentence. The New Crompton 401(k) Plan shall
provide for the receipt in kind (and subject to the same terms to which the
applicable loan was subject under the GE 401(k) Plan prior to the applicable
Transfer Date) of any participant loans held by an SC Continuing Employee
pursuant to the GE 401(k) Plan; PROVIDED, HOWEVER, that an SC Continuing
Employee may transfer such a loan only if such Continuing Employee elects as
well to roll over his or her entire account balance. Each OSi Continuing
Employee shall be permitted to continue to repay participant loans to the
Crompton 401(k) Plan after such OSi Continuing Employee's Transfer Date;
PROVIDED, HOWEVER, that if any OSi Continuing Employee elects a distribution or
rollover of all or a portion of such OSi Continuing Employee's Crompton 401(k)
account balance, such OSi Continuing Employee shall be required immediately to
repay all participant loans outstanding under the Crompton 401(k) Plan. GE and
Crompton shall provide each other copies of the most recent Internal Revenue
Service favorable determination letter with respect to the GE 401(k) Plan and
the Crompton 401(k) Plan, as applicable, and a certification from an appropriate
corporate officer that such respective plans are intended to qualify under
Section 401 of the Code and are so qualified and the trusts maintained pursuant
thereto are exempt from federal income taxation under Section 501 of the Code,
and nothing has occurred with respect to the operation of such plans which is
reasonably likely to cause the loss of such qualification or exemption or the
imposition of any liability, penalty or tax under ERISA or the Code. The
transactions contemplated by this Section 5.6(g) shall depend upon compliance
with the preceding sentence.
5.7 WELFARE BENEFITS
(a) ALLOCATION OF LIABILITY. Without limiting the generality of Section
5.5(g):
(i) GE and its Affiliates shall be solely responsible for (A) Claims
for Welfare Benefits and for workers' compensation, in each case that are
incurred by or with respect to any SC Business Employee before his or her
Transfer Date; (B) Claims relating to COBRA Coverage attributable to "qualifying
events" with respect to any SC Business Employee and his or her beneficiaries
and dependents that occur on or before such SC Business Employee's Transfer
Date; (C) Claims for Welfare Benefits and for workers' compensation, in each
case that are incurred by or with respect to any SC Business Employee who does
not become an SC Continuing Employee, whether incurred before, on or after the
Closing Date; (D) Claims relating to COBRA Coverage attributable to "qualifying
events" with respect to any SC Business Employee who does
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not become an SC Continuing Employee and his or her beneficiaries and
dependents, whether occurring before, on or after the Closing Date; (E) Claims
for Welfare Benefits and for workers compensation, in each case that are
incurred by or with respect to any OSi Continuing Employee on or after his or
her Transfer Date; and (F) Claims relating to COBRA Coverage attributable to
"qualifying events" with respect to any OSi Continuing Employee and his or her
beneficiaries and dependents that occur after such OSi Continuing Employee's
Transfer Date;
(ii) Crompton and its Affiliates shall be solely responsible for
(A) Claims for Welfare Benefits and for workers' compensation, in each case that
are incurred by or with respect to any OSi Business Employee before his or her
Transfer Date; (B) Claims relating to COBRA Coverage attributable to "qualifying
events" with respect to any OSi Business Employee and his or her beneficiaries
and dependents that occur on or before such OSi Business Employee's Transfer
Date; (C) Claims for Welfare Benefits and for workers' compensation, in each
case that are incurred by or with respect to any OSi Business Employee who does
not become an OSi Continuing Employee, whether incurred before, on or after the
Closing Date; (D) Claims relating to COBRA Coverage attributable to "qualifying
events" with respect to any OSi Business Employee who does not become an OSi
Continuing Employee and his or her beneficiaries and dependents, whether
occurring before, on or after the Closing Date; (E) Claims for Welfare Benefits
and for workers compensation, in each case that are incurred by or with respect
to any SC Continuing Employee on or after his or her Transfer Date, and (F)
Claims relating to COBRA Coverage attributable to "qualifying events" with
respect to any SC Continuing Employee and his or her beneficiaries and
dependents that occur after such SC Continuing Employee's Transfer Date;
(iii) Notwithstanding anything else contained in this Section 5.7(a),
in the event that the parties enter into the Employee Lease Agreement, the
allocation of liabilities with respect to Claims for Welfare Benefits incurred
by OSi Bargaining Employees during the term of such Employee Lease Agreement
shall be governed by such Employee Lease Agreement; and
(iv) For purposes of this Section 5.7(a), a Claim is deemed incurred
when the services that are the subject of the Claim are performed; PROVIDED,
HOWEVER, that in the case of life insurance, a Claim is deemed incurred when the
death occurs, that in the case of disability benefits, a Claim is deemed
incurred when the illness or condition that gives rise to the disability first
occurs, and that, in the case of a hospital stay, all Claims for medical
services rendered and medical supplies provided during such stay are deemed
incurred when the Employee or beneficiary first enters the hospital; PROVIDED,
FURTHER, HOWEVER, that a Claim for disability shall be deemed incurred on the
date such Claim is made if such Claim is made after (A) the 18-month anniversary
of the Closing Date, in the case of a Claim in connection with a work-related
illness or condition, or (B) the first anniversary of the Closing Date, in the
case of a Claim in connection with any other illness or condition.
(b) FLEXIBLE SPENDING PLANS.
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(i) GE and Crompton shall take all actions necessary or appropriate so
that, effective as of the Closing Date, (A) the account balances (whether
positive or negative) (the "SC COVERED EMPLOYEES TRANSFERRED ACCOUNT BALANCES")
under GE Flexible Spending Accounts (the "GE FLEX PLAN") of the SC Business
Employees who are participants in the GE Flex Plan (the "SC COVERED EMPLOYEES")
shall be transferred to one or more comparable plans of Crompton (collectively,
the "CROMPTON FLEX PLANS FOR SC COVERED EMPLOYEES"); (B) the elections,
contribution levels and coverage levels of the SC Covered Employees shall apply
under the Crompton Flex Plans for SC Covered Employees in the same manner as
under the GE Flex Plan; and (C) the SC Covered Employees shall be reimbursed
from the Crompton Flex Plans for SC Covered Employees for Claims incurred at any
time during the plan year of the GE Flex Plan in which the Closing Date occurs
submitted to the Crompton Flex Plans for SC Covered Employees from and after the
Closing Date on the same basis and the same terms and conditions as under the GE
Flex Plan.
(ii) GE and Crompton shall take all actions necessary or appropriate
so that, effective as of the Closing Date, (A) the account balances (whether
positive or negative) (the "OSI COVERED EMPLOYEES TRANSFERRED ACCOUNT BALANCES")
under the Crompton Corporation Flexible Benefits Program (the "CROMPTON FLEX
PLAN") of the OSi Business Employees who are participants in the Crompton Flex
Plan (the "OSI COVERED EMPLOYEES") shall be transferred to one or more
comparable plans of GE (collectively, the "GE FLEX PLANS FOR OSI COVERED
EMPLOYEES"); (B) the elections, contribution levels and coverage levels of the
OSi Covered Employees shall apply under the GE Flex Plans for OSi Covered
Employees in the same manner as under the Crompton Flex Plan; and (C) the OSi
Covered Employees shall be reimbursed from the GE Flex Plans for OSi Covered
Employees for Claims incurred at any time during the plan year of the Crompton
Flex Plan in which the Closing Date occurs submitted to the GE Flex Plans for
OSi Covered Employees from and after the Closing Date on the same basis and the
same terms and conditions as under the Crompton Flex Plan.
(iii) As soon as practicable after the Closing Date, and in any event
within 10 business days after both the amount of the OSi Covered Employees
Transferred Account Balances and the amount of the SC Covered Employees
Transferred Account Balances have been determined, (A) if the SC Covered
Employees Transferred Account Balances exceeds the OSi Covered Employees
Transferred Account Balance, GE shall pay Crompton the amount of the excess or
(B) if the OSi Covered Employees Transferred Account Balances exceeds the SC
Covered Employees Transferred Account Balance, Crompton shall pay GE the amount
of the excess.
(iv) Notwithstanding anything else contained in this Section 5.7(b),
in the event that the parties enter into the Employee Lease Agreement, (A) the
transfers and payments set forth above in Sections 5.7(b)(i-iii) shall occur in
accordance with the provisions of such sections, but for purposes of such
transfers and payments, all references in Sections 5.7(b)(i-iii) to the OSi
Business Employees shall be deemed to refer to all OSi Business Employees other
than the OSi Bargaining Employees, (B) effective as of expiration of the term of
such Employee Lease Agreement, (1) the account
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balances (whether positive or negative) (the "OSI BARGAINING EMPLOYEE
TRANSFERRED ACCOUNT BALANCES") under the Crompton Flex Plan of the OSi
Bargaining Employees who are participants in the Crompton Flex Plan (the "OSI
BARGAINING COVERED EMPLOYEES") shall be transferred to one or more of the GE
Flex Plans for OSi Covered Employees; (2) the elections, contribution levels and
coverage levels of the OSi Bargaining Covered Employees shall apply under the GE
Flex Plans for OSi Covered Employees in the same manner as under the Crompton
Flex Plan; and (3) the OSi Bargaining Covered Employees shall be reimbursed from
the GE Flex Plans for OSi Covered Employees for claims incurred at any time
during the plan year of the Crompton Flex Plan in which the expiration of such
Employee Lease Agreement occurs submitted to the GE Flex Plans for OSi Covered
Employees from and after the date of expiration of such Employee Lease Agreement
on the same basis and the same terms and conditions as under the Crompton Flex
Plan, and (C) as soon as practicable after the date of expiration of such
Employee Lease Agreement, and in any event within 10 business days after the
amount of the OSi Bargaining Employee Transferred Account Balances is
determined, Crompton shall pay GE the net aggregate amount of the OSi Bargaining
Employee Transferred Account Balances, if such amount is positive, and GE shall
pay Crompton the net aggregate amount of the OSi Bargaining Employee Transferred
Account Balances, if such amount is negative.
(c) VACATION AND SICK LEAVE.
(i) GE and Crompton shall allow each OSi Continuing Employee and SC
Continuing Employee, respectively, to use the vacation and sick leave that such
Continuing Employee has accrued but not used as of the applicable Transfer Date
(including, for the avoidance of doubt, any such leave attributable to years
prior to the year during which the applicable Transfer Date occurs), except as
otherwise required by applicable Law; PROVIDED, HOWEVER, that (A) in the case of
an OSi Continuing Employee whose annual vacation entitlement under the
applicable Crompton vacation policy in effect immediately prior to the
applicable Transfer Date is greater than under the applicable GE vacation policy
on and after the applicable Transfer Date, such OSi Continuing Employee shall
retain the greater vacation entitlement until such Employee would be entitled to
the same or greater vacation entitlement under the applicable GE vacation policy
and (B) in the case of a SC Continuing Employee whose annual vacation
entitlement under the applicable GE vacation policy in effect immediately prior
to the applicable Transfer Date is greater than under the applicable Crompton
vacation policy on and after the applicable Transfer Date, such SC Continuing
Employee shall retain the greater vacation entitlement until such Employee would
be entitled to the same or greater vacation entitlement under the applicable
Crompton vacation policy.
(ii) As soon as practicable following the delivery of the Closing OSi
Statement and the Closing SC Statement, (A) Crompton shall transfer to GE an
amount equal to (x) the accrued liability as of the Closing Date with respect to
the accrued but not used vacation and sick leave of the OSi Business Employees
(other than Excluded OSi Employees) minus (y) the accrued liability as of the
Closing Date with respect to the accrued but not used vacation and sick of the
SC Business Employees (other than
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Excluded SC Employees), if such number is positive, or (B) GE shall transfer to
Crompton an amount equal to (x) the accrued liability as of the Closing Date
with respect to the accrued but not used vacation and sick leave of the SC
Business Employees (other than Excluded SC Employees) minus (y) the accrued
liability as of the Closing Date with respect to the accrued but not used
vacation and sick leave of the OSi Business Employees (other than Excluded OSi
Employees), if such number is positive.
(d) RELOCATION BENEFITS. With regard to the cost-of-living-adjustment
payments described on SCHEDULE 5.7(D) that are being provided by Crompton to
certain OSi Business Employees pursuant to the Crompton Corporation Relocation
Policy, Crompton shall make payments which come due prior to the Closing Date,
and GE shall make payments which would have come due on or after the Closing
Date had the applicable OSi Business Employee remained employed by Crompton and
its Affiliates. With regard to all other expenses incurred by the OSi Business
Employees listed on SCHEDULE 5.7(D) that are eligible for reimbursement pursuant
to the Crompton Corporation Relocation Policy, Crompton shall make such
reimbursements regardless of when submitted for payment and GE shall have no
liability with respect to such expenses.
5.8 LABOR MATTERS
(a) COLLECTIVE BARGAINING AGREEMENTS.
(i) As of the Closing Date (or, in the event that the parties enter
into the Employee Lease Agreement, upon expiration of the term of such Employee
Lease Agreement), GE shall assume all liabilities and obligations (including the
obligation to provide retiree medical benefits to eligible individuals) with
respect to OSi Continuing Employees under the OSi Collective Bargaining
Agreement, and GE shall assume and be solely responsible for all liabilities
arising out of or resulting from such assumption. The foregoing shall not be
construed to require GE to assume the OSi Retirement Plan or any Claims
described in Section 2.5(g) that arise out of the operation of the OSi Business
prior to the Closing Date. For the avoidance of doubt, the parties agree and
acknowledge that Claims arising out of GE's assumption pursuant to this Section
5.8(a)(i) of the obligation to provide retiree medical benefits (to eligible
individuals) with respect to OSi Continuing Employees under the OSi Collective
Bargaining Agreement are not Claims arising out of the operation of the OSi
Business prior to the Closing Date.
(ii) As of the Closing Date, GE shall assume all liabilities and
obligations under the works council agreements relating to OSi Continuing
Employees that are listed on SCHEDULE 5.8(A)(II)(A), and Crompton shall assume
all liabilities and obligations under the works council agreements relating to
SC Continuing Employees that are listed on SCHEDULE 5.8(A)(II)(B). The foregoing
shall not be construed to require GE to assume any Claims described in Section
2.5(g) that arise out of the operation of the OSi Business prior to the Closing
Date, nor shall it be construed to require Crompton to assume any Claims
described in Section 2.9(g) that arise out of the operation of the SC Business
prior to the Closing Date.
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(iii) Nothing herein shall obligate Crompton to assume any collective
bargaining or similar agreement with SC Business Employees, including any such
agreement that may be entered into after the date hereof with a labor union
representing SC Business Employees employed at Morgantown, West Virginia, and GE
shall not take any action that could result in a requirement that Crompton
assume any such agreement.
(iv) Each of GE and Crompton shall use commercially reasonable efforts
to obtain any consents that may be required to facilitate the assumption of
liabilities and obligations contemplated by this Section 5.8(a), but any failure
to obtain any such consents shall not relieve GE or Crompton of any obligations
and liabilities assumed under this Section 5.8(a).
(b) WARN. GE and Crompton shall not, at any time between the date hereof
and the Closing Date or at any time prior to 60 days after the Closing Date,
effectuate a "plant closing" or "mass layoff," as those terms are defined in
WARN, affecting in whole or in part any site of employment, facility, operating
unit or employee of the OSi Business or SC Business, without complying with the
notice requirements and other provisions of WARN.
5.9 COLLATERAL AGREEMENTS; LEASED EQUIPMENT
(a) On or prior to the Closing Date, (i) GE shall execute and deliver to
Crompton, and Crompton or the applicable OSi Subsidiary shall execute and
deliver to GE the Collateral Agreements (other than the GE Plastics Agreement
and the GE Betz Agreement), subject to Sections 2.13(c) and 2.13(d) hereof, and
(ii) GE shall execute, deliver and assign to Crompton, and Crompton shall accept
the assignment of, the GE Plastics Agreement and the GE Betz Agreement.
(b) (i) Prior to the Closing Date, Crompton shall (A) provide GE with the
costs and other terms applicable to the Leased OSi Equipment and GE shall decide
(subject to the terms of applicable agreements) whether such Leased OSi
Equipment will (x) transfer to GE as of the Closing Date by GE assuming the
leases for such equipment, in which case such lease agreement shall be deemed an
OSi Contract hereunder, or (y) be acquired by GE as of the Closing Date by GE
paying for the costs of purchasing such equipment to the applicable Third Party
pursuant to the leases (the "TRANSFERRED LEASED OSI EQUIPMENT") and (B) take
such actions as necessary to fulfill GE's decision, including giving any
applicable notices to lessors sufficiently prior to Closing so as not to delay
Closing from the date it otherwise would have occurred.
(ii) Prior to the Closing Date, GE shall (A) provide Crompton with the
costs and other terms applicable to the Leased SC Equipment and Crompton shall
decide (subject to the terms of applicable agreements) whether such Leased SC
Equipment will (x) transfer to Crompton as of the Closing Date by Crompton
assuming the leases for such equipment, in which case such lease agreement shall
be deemed an SC Contract hereunder, or (y) be acquired by Crompton as of the
Closing Date by Crompton paying for the costs of purchasing such equipment to
the applicable Third Party pursuant to the
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leases (the "TRANSFERRED LEASED SC EQUIPMENT") and (B) take such actions as
necessary to fulfill Crompton's decision, including giving any applicable
notices to lessors sufficiently prior to Closing so as not to delay Closing from
the date it otherwise would have occurred.
5.10 COMMERCIALLY REASONABLE EFFORTS
(a) Consistent with the terms of Section 2.13 and the remainder of this
Section 5.10, each party will use its commercially reasonable efforts to take or
cause to be taken all actions and to do or cause to be done all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated hereby, and to cooperate with the
other in connection with the foregoing, including using commercially reasonable
efforts (i) to obtain all necessary waivers, consents and approvals from other
parties to material agreements, leases and other contracts with third parties,
(ii) to obtain all consents, approvals and authorizations that are required to
be obtained under any federal, state, local or foreign law or regulation, (iii)
to lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby and (iv) to affect all necessary registrations and filings and
submissions of information requested by any Government Authority.
(b) Each of Crompton and GE shall (i) make or cause to be made all filings
required of each of them or any of their respective Subsidiaries or Affiliates
under the HSR Act or other Antitrust Laws with respect to the transactions
contemplated hereby as promptly as practicable, (ii) comply at the earliest
practicable date with any request under the HSR Act or other Antitrust Laws for
additional information, documents or other materials received by each of them or
any of their respective Subsidiaries from the FTC, the Antitrust Division or any
other Governmental Body with respect to such filings or such transactions, and
(iii) cooperate with each other in connection with any such filing (including,
to the extent permitted by applicable Law, providing copies of all such
documents to the non-filing party prior to filing and considering all reasonable
additions, deletions or changes suggested in connection therewith) and in
connection with resolving any investigation or other inquiry of any of the FTC,
the Antitrust Division or other Governmental Bodies under any Antitrust Laws
with respect to any such filing or any such transaction. Each such party shall
use commercially reasonable efforts to furnish to each other all information
required for any application or other filing to be made pursuant to any
applicable Law in connection with the transactions contemplated by this
Agreement. Each such party shall promptly inform the other party hereto of any
material oral communication with, and provide copies of any and all written
communications with, any Governmental Body regarding any such filings or any
such transaction. No party hereto shall independently participate in any formal
meeting with any Governmental Body with respect to any such filings,
investigations or other inquiries without giving the other party hereto prior
notice of the meeting and, to the extent permitted by such Governmental Body,
the opportunity to attend and/or participate. Subject to applicable Law, the
parties hereto will consult and cooperate with one another in connection with
any analyses, appearances, presentations, memoranda, briefs,
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arguments, opinions and proposals made or submitted by or on behalf of any party
hereto relating to proceedings under the HSR Act or other Antitrust Laws.
Crompton and GE may, as each deems advisable and necessary, reasonably designate
any competitively sensitive material provided to the other under this Section
5.10 as "outside counsel only," PROVIDED, HOWEVER, that materials concerning the
valuation of the OSi Business or the SC Business may be redacted. Such materials
and the information contained therein shall be given only to the outside legal
counsel of the recipient and will not be disclosed by such outside counsel to
employees, officers or directors of the recipient, unless express written
permission is obtained in advance from the source of the materials (Crompton or
GE, as the case may be).
(c) Each of Crompton and GE shall use commercially reasonable efforts to
resolve such objections, if any, as may be asserted by any Governmental Body
with respect to the transactions contemplated by this Agreement under the
Antitrust Laws. In connection therewith, each of Crompton and GE shall use their
commercially reasonable efforts to avoid or eliminate impediments under any
antitrust, competition, or trade regulation law that may be asserted by the FTC,
the Antitrust Division, any State Attorney General or any other Governmental
Body with respect to the transactions contemplated by this Agreement to enable
the consummation of the transactions contemplated by this Agreement to occur as
soon as reasonably possible. Furthermore, if any Action is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as a violation of any Antitrust Law, each of Crompton and GE shall
cooperate and use commercially reasonable efforts to contest and resist any such
Action and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order whether temporary, preliminary or permanent, that is
in effect and that prohibits, prevents or restricts consummation of the
transactions contemplated by this Agreement, including by pursuing all available
avenues of administrative and judicial appeal, unless, by mutual agreement,
Crompton and GE decide that litigation is not in their respective best
interests. Each of Crompton and GE shall use commercially reasonable efforts to
take such action as may be required to cause the expiration of the notice
periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement. For
purposes of this Section 5.10, commercially reasonable efforts of GE shall not
include proposing, negotiating, committing to and effecting by consent decree,
hold separate order, or otherwise, the sale or divestiture, licensing or
disposition of any Transferred OSi Assets or any portion of the OSi Business,
and neither GE nor any of its Affiliates shall have any obligation to dispose
of, hold separate or otherwise restrict their respective enjoyment of any of
their respective assets, properties or business (including, after the Closing
Date, any of the Transferred OSi Assets), and commercially reasonable efforts of
Crompton shall not include proposing, negotiating, committing to and effecting
by consent decree, hold separate order, or otherwise, the sale or divestiture,
licensing or disposition of any Transferred SC Assets or any portion of the SC
Business, and neither Crompton nor any of its Affiliates shall have any
obligation to dispose of, hold separate or otherwise restrict their respective
enjoyment of any of their respective assets, properties or business (including,
after the Closing Date, any of the Transferred SC Assets).
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5.11 CONTACTS WITH SUPPLIERS, EMPLOYEES AND CUSTOMERS
(a) Prior to the Closing Date, without the prior written consent of
Crompton, which consent shall not be unreasonably withheld, GE shall not contact
any suppliers to, or customers of, the OSi Business in connection with or
pertaining to any subject matter of this Agreement. The parties agree that for
integration planning purposes, they will discuss and agree to a procedure for GE
to contact and communicate with the OSi Business Employees prior to Closing.
(b) Prior to the Closing Date, without the prior written consent of GE,
which consent shall not be unreasonably withheld, Crompton shall not contact any
suppliers to, or customers of, the SC Business in connection with or pertaining
to any subject matter of this Agreement. The parties agree that for integration
planning purposes, they will discuss and agree to a procedure for Crompton to
contact and communicate with the SC Business Employees prior to Closing.
(c) Nothing in this Section 5.11 shall restrict Crompton (other than with
respect to the SC Business) or GE (other than with respect to the OSi Business)
from contacting customers or suppliers to seek to engage in commercial
transactions in the ordinary course of business.
5.12 USE OF TRADE OR SERVICE MARKS
(a) GE and Crompton agree as follows:
(i) (A) Crompton shall not use or permit its distributors or agents to
use or authorize its customers to use the name "GE" or "General Electric" or any
other corporate, trade or service marks or names, identifying symbols, logos,
emblems, signs or insignia related thereto or containing or comprising the
foregoing, including any marks, names, symbols, logos, emblems, signs or
insignia confusingly similar thereto, unless such marks, names, symbols, logos,
emblems, signs or insignia are specifically included on SCHEDULE 4.13(A)(I)
(collectively, the "EXCLUDED GE MARKS"). Notwithstanding the foregoing, Crompton
shall not use any such marks, names, symbols, logos, emblems, signs or insignia
specifically included on SCHEDULE 4.13(A)(I) in any manner that (I) emphasizes
or highlights the use of "GE" or "General Electric" in such marks, names,
symbols, logos, emblems, signs or insignia or (II) is likely to cause confusion
with respect to the source or origin of the products in connection with which
such marks, names, symbols, logos, emblems, signs or insignia are used.
(B) GE shall not use or permit its distributors or agents to
use or authorize its customers to use the names "Witco," "Crompton" or any other
corporate, trade or service marks or names, identifying symbols, logos, emblems,
signs or insignia related thereto or containing or comprising the foregoing,
including any marks, names, symbols, logos, emblems, signs or insignia
confusingly similar thereto, unless such marks, names, symbols, logos, emblems,
signs or insignia are specifically included on SCHEDULE 3.13(A)(I)(A) or
SCHEDULE 3.13(A)(I)(B) (collectively, the "EXCLUDED CROMPTON
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MARKS" and together with the Excluded GE Marks, the "EXCLUDED MARKS").
Notwithstanding the foregoing, GE shall not use any such marks, names, symbols,
logos, emblems, signs or insignia specifically included on SCHEDULE
3.13(A)(I)(A) or SCHEDULE 3.13(A)(I)(B) in any manner that (I) emphasizes or
highlights the use of "Witco" or "Crompton" in such marks, names, symbols,
logos, emblems, signs or insignia or (II) is likely to cause confusion with
respect to the source or origin of the products in connection with which such
marks, names, symbols, logos, emblems, signs or insignia are used.
(ii) Notwithstanding Section 5.12(a)(i), for a period of up to twelve
(12) months from the Closing Date, GE and Crompton shall be entitled to use all
inventories of packaging, labels and sales literature existing as of the Closing
Date bearing or reflecting any Excluded Marks which had been used by the OSi
Business or SC Business, respectively, prior to the Closing Date but which are
not Transferred OSi Assets or Transferred SC Assets, respectively, PROVIDED
that:
(A) such use is strictly the same as existed prior to the Closing
Date;
(B) the services and goods rendered and all goods produced,
distributed or sold under the Excluded Marks are of at least
equal quality standards as were maintained by the transferor of
the Excluded Marks prior to the Closing Date;
(C) the party permitting the use of the Excluded Marks pursuant to
this Section 5.12(a)(ii), through a mutually agreed-upon
accounting firm or professional inspectors of goods, shall have
the right to inspect the operations of the party permitted to use
the Excluded Marks and evaluate products to ensure compliance
with this Section 5.12(a);
(D) the party permitted to use the Excluded Marks pursuant to this
Section 5.12(a)(ii) discontinues such use as soon as practicable
after the Closing Date and in any event no later than twelve (12)
months from the Closing Date; and
(E) the product packaging shall bear a new code identification which
indicates that the products were shipped and/or manufactured by
Crompton or GE, as applicable.
(iii) Each party acknowledges that the Excluded Marks relating to the
OSi Business or the SC Business are the sole property of the party transferring
such business and are not being transferred with such business, and the party
permitted to use the Excluded Marks will (A) do nothing inconsistent with such
ownership, (B) not attack the other party's Excluded Marks in any way or use,
register or seek to register any trademark or trade name which is the same as or
similar to an Excluded Mark of the other party, or (C) identify and use the
other party's Excluded Marks in accordance with any
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applicable Laws or applicable international, national, state and local
standards as may be appropriate to protect the validity and strength of the
other party's Excluded Marks or as may be reasonably requested by such party.
(b) In no event shall GE or any Affiliate of GE advertise or hold itself
out as Crompton or an Affiliate of Crompton after the Closing Date. In no event
shall Crompton or any Affiliate of Crompton advertise or hold itself out as GE
or an Affiliate of GE after the Closing Date.
5.13 NON-SOLICITATION OF EMPLOYEES
(a) None of Crompton or any of its Affiliates will at any time during the
period from the date hereof through the second anniversary of the Closing Date,
directly or indirectly, solicit the employment of any OSi Continuing Employee
(or of any other OSi Business Employee who received an offer from GE complying
with Section 5.5(a)(iii)) without GE's prior written consent. The term "solicit
the employment" shall not be deemed to include generalized searches for
employees through media advertisements that are not focused on individuals
employed by GE or any of its Affiliates or any successor or located specifically
only where Transferred OSi Assets are located. This restriction shall not apply
to any OSi Business Employee whose employment with GE or its successor is
terminated by GE or its successor after the Closing, subject to any restrictions
placed on such OSi Business Employee in connection with such OSi Business
Employee's separation from GE or its Affiliates.
(b) None of GE or any of its Affiliates will at any time during the period
from the date hereof through the second anniversary of the Closing Date,
directly or indirectly, solicit the employment of any SC Continuing Employee (or
of any other SC Business Employee who received an offer from Crompton complying
with Section 5.5(a)(iii)) without Crompton's prior written consent. The term
"solicit the employment" shall not be deemed to include generalized searches for
employees through media advertisements that are not focused on individuals
employed by Crompton or any of its Affiliates or any successor or located
specifically only where Transferred SC Assets are located. This restriction
shall not apply to any SC Business Employee whose employment with Crompton or
its successor is terminated by Crompton or its successor after the Closing,
subject to any restrictions placed on such SC Business Employee in connection
with such SC Business Employee's separation from Crompton or its Affiliates.
5.14 NON-COMPETITION
(a) (i) (A) Crompton agrees, until the earlier of (x) the five-year
anniversary of the Closing Date or (y) such shorter period as required by
applicable Law and articulated by a court of competent authority (the
"NON-COMPETITION PERIOD"), that Crompton will not, and shall cause each of its
controlled Affiliates not to, directly or indirectly, own, operate, perform,
control, engage in, manage or have an ownership interest in a business or Person
that develops, manufactures, sells or distributes products or performs services
that are manufactured, sold or distributed by the OSi Business (as
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such business is conducted as of the Closing Date (including products and
services that are in development by the OSi Business as of the Closing Date))
(collectively, "CROMPTON RESTRICTED ACTIVITIES"), except as specifically set
forth on SCHEDULE 5.14(A)(I).
(B) Notwithstanding the foregoing, Crompton or its controlled
affiliates may:
(1) purchase or otherwise acquire by merger, purchase of assets,
stock, controlling interest or otherwise any Person or business
(a "CROMPTON ACQUIRED COMPANY") or engage in any similar merger
and acquisition activity with any Person, so long as
(aa) Crompton divests (or enters into an agreement to divest)
itself within one year of such acquisition any portion of
such business that would cause non-compliance with this
Section 5.14(a)(i), or
(bb) such Person is a De Minimis Business, PROVIDED that, with
respect to any De Minimis Business, no subject Person shall
be allowed any access to any competitively sensitive
proprietary and confidential information that pertains to
the OSi Business or any portion thereof, and PROVIDED,
FURTHER, that any investment in or acquisition of a De
Minimis Business shall not relieve Crompton and its
controlled Affiliates from an obligation to comply with the
non-compete obligations set forth in Section 5.14(a)(i)(A)
(I.E., Crompton may not combine the operations of the De
Minimis Business with those of Crompton and its controlled
Affiliates, engage in cross-selling efforts or conduct
preferential purchases or sales to or from Crompton and its
controlled Affiliates of products manufactured, sold,
distributed or developed by the De Minimis Business or
otherwise, if and to the extent such activities would
violate the restrictions set forth in Section
5.14(a)(i)(A));
(2) acquire, own or manage exclusively for the account of third
parties through a mutual fund, employee benefit plan, trust
account, or similar investment pool or vehicle, any class of
securities of any Person regardless of whether such entity
engages in Crompton Restricted Activities, PROVIDED that none of
Crompton or any of its controlled Affiliates controls the
management of such Person; or
(3) own or manage, to the extent permitted by Section 5.14(a)(i)(A),
the Excluded OSi Assets.
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(C) For the avoidance of doubt, upon the consummation of any
transaction that results in a change of control of Crompton, the restrictions
set forth in this Section 5.14(a)(i) shall apply only to Crompton and its
controlled Affiliates but not to any other Affiliate of Crompton, including a
Person obtaining control of Crompton in such change of control transaction (such
Person and such non-controlled Affiliates of Crompton, collectively the
"CROMPTON ACQUIRING ENTITY"); PROVIDED, HOWEVER, that to the extent the Crompton
Acquiring Entity is engaged in Crompton Restricted Activities, the Crompton
Acquiring Entity shall not be allowed any access to any competitively sensitive
proprietary and confidential information that pertains to the OSi Business or
any portion thereof.
(D) Notwithstanding the foregoing, nothing in this Agreement shall
preclude, prohibit or restrict Crompton or any of its Affiliates from engaging
in any manner in any Financial Services Business. Notwithstanding anything to
the contrary in this paragraph, Crompton Restricted Activities will not include
the provision by Crompton or an Affiliate of Crompton of business process
outsourcing services, information technology services or other similar services
that Crompton or such Affiliate also provides in the ordinary course of business
to businesses or Persons that are not controlled by Crompton.
(ii) (A) GE agrees, until the end of the Non-Competition Period, that
GE will not, and shall cause each of its controlled Affiliates not to, directly
or indirectly, own, operate, perform, control, engage in, manage or have an
ownership interest in a business or Person that develops, manufactures, sells or
distributes products or performs services that are manufactured, sold or
distributed by the SC Business (as such business is conducted as of the Closing
Date (including products and services that are in development by the SC Business
as of the Closing Date)) (collectively, "GE RESTRICTED ACTIVITIES"), except as
specifically set forth on SCHEDULE 5.14(A)(II).
(B) Notwithstanding the foregoing, GE or its controlled affiliates
may:
(1) purchase or otherwise acquire by merger, purchase of assets,
stock, controlling interest or otherwise any Person or business
(a "GE ACQUIRED COMPANY") or engage in any similar merger and
acquisition activity with any Person, so long as
(aa) GE divests (or enters into an agreement to divest) itself
within one year of such acquisition any portion of such
business that would cause non-compliance with this Section
5.14(a)(ii), or
(bb) such Person is a De Minimis Business, PROVIDED that, with
respect to any De Minimis Business, no subject Person shall
be allowed any access to any competitively sensitive
proprietary and confidential information that pertains to
the SC Business or any portion thereof, and PROVIDED,
FURTHER,
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that any investment in or acquisition of a De Minimis
Business shall not relieve GE and its controlled Affiliates
from an obligation to comply with the non-compete
obligations set forth in Section 5.14(a)(ii)(A) (I.E., GE
may not combine the operations of the De Minimis Business
with those of GE and its controlled Affiliates, engage in
cross-selling efforts or conduct preferential purchases or
sales to or from GE and its controlled Affiliates of
products manufactured, sold, distributed or developed by the
De Minimis Business or otherwise, if and to the extent such
activities would violate the restrictions set forth in
Section 5.14(a)(ii)(A));
(2) acquire, own or manage exclusively for the account of third
parties through a mutual fund, employee benefit plan, trust
account, or similar investment pool or vehicle, any class of
securities of any Person regardless of whether such entity
engages in GE Restricted Activities, PROVIDED that none of GE or
any of its controlled Affiliates controls the management of such
Person; or
(3) own or manage, to the extent permitted by Section 5.14(a)(ii)(A),
the Excluded SC Assets.
(C) For the avoidance of doubt, upon the consummation of any
transaction that results in a change of control of GE, the restrictions set
forth in this Section 5.14(a)(ii) shall apply only to GE and its controlled
Affiliates but not to any other Affiliate of GE, including a Person obtaining
control of GE in such change of control transaction (such Person and such
non-controlled Affiliates of GE, collectively the "GE ACQUIRING ENTITY");
PROVIDED, HOWEVER, that to the extent the GE Acquiring Entity is engaged in GE
Restricted Activities, the GE Acquiring Entity shall not be allowed any access
to any competitively sensitive proprietary and confidential information that
pertains to the SC Business or any portion thereof.
(D) Notwithstanding the foregoing, nothing in this Agreement shall
preclude, prohibit or restrict GE or any of its Affiliates from engaging in any
manner in any Financial Services Business. Notwithstanding anything to the
contrary in this paragraph, GE Restricted Activities will not include the
provision by GE or an Affiliate of GE of business process outsourcing services,
information technology services or other similar services that GE or such
Affiliate also provides in the ordinary course of business to businesses or
Persons that are not controlled by GE.
(b) (i) Crompton acknowledges that the restrictions set forth in Section
5.14(a)(i) constitute a material inducement to GE's entering into and performing
this Agreement. Crompton further acknowledges, stipulates and agrees that a
breach of said obligation could result in irreparable harm and continuing damage
to GE for which there may be no adequate remedy at law and further agrees that,
in the event of any breach of
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such obligation, GE may be entitled to injunctive relief and to such other
relief as is proper under the circumstances.
(ii) GE acknowledges that the restrictions set forth in Section
5.14(a)(ii) constitute a material inducement to Crompton's entering into and
performing this Agreement. GE further acknowledges, stipulates and agrees that a
breach of said obligation could result in irreparable harm and continuing damage
to Crompton for which there may be no adequate remedy at law and further agrees
that, in the event of any breach of such obligation, Crompton may be entitled to
injunctive relief and to such other relief as is proper under the circumstances.
(c) CERTAIN DEFINITIONS.
(i) "CAPITAL MARKETS ACTIVITY" shall include any activity undertaken in
connection with efforts by any Person to raise for or on behalf of any Person
capital from any public or private source.
(ii) "DEFAULT RECOVERY ACTIVITIES" shall include the (a) exercise of
any rights or remedies in connection with any Financing, Insurance, Leasing or
Other Financial Services Activity (whether such rights or remedies arise under
any agreement relating to such Financing, Insurance, Leasing or Other Financial
Services Activity, under applicable Law or otherwise) or in connection with the
purchase or sale of goods and services including any foreclosure, realization or
repossession of any collateral or other security for any Financing (including
the equity in any entity or business), Insurance, or Other Financial Services
Activities or any property subject to any Leasing or (b) the consummation of any
consensual or non-consensual restructuring of any Financing that permits or
contemplates the management or disposition of any collateral or security.
(iii) "DE MINIMIS BUSINESS" means:
(A) with respect to GE:
(I) any equity investment by GE or any of its Subsidiaries in
any Person in which (x) GE and such Subsidiaries
collectively do not have the right to designate a majority,
or such higher amount constituting a controlling number, of
the members of the board of directors (or similar governing
body) of such entity, (y) GE and its Subsidiaries
collectively hold not more than more than 20% of the
outstanding voting securities or similar equity interests,
or (z) GE and its Subsidiaries collectively hold not more
than 5% of any class of equity securities of a Person whose
securities are publicly traded under a recognized securities
exchange, PROVIDED, in the case of (x), (y) or (z), that
neither GE nor any of its Subsidiaries controls the
management of such Person, or
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(II) any business activity that would otherwise violate Section
5.14(a)(ii) that is carried on by a GE Acquired Company but
only if, at the time of such acquisition the revenues
derived from that portion of the GE Acquired Company that
engages in GE Restricted Activities constitute less than 15%
of the annual gross revenues of the GE Acquired Company; and
(B) with respect to Crompton:
(I) any equity investment by Crompton or any of its Subsidiaries
in any Person in which (x) Crompton and such Subsidiaries
collectively do not have the right to designate a majority,
or such higher amount constituting a controlling number, of
the members of the board of directors (or similar governing
body) of such entity, (y) Crompton and its Subsidiaries
collectively hold not more than more than 20% of the
outstanding voting securities or similar equity interests,
or (z) Crompton and its Subsidiaries collectively hold not
more than 5% of any class of securities of a Person whose
securities are publicly traded under a recognized securities
exchange, PROVIDED, in the case of (x), (y) or (z), that
neither Crompton nor any of its Subsidiaries controls the
management of such Person, or
(II) any business activity that would otherwise violate Section
5.14(a)(i) that is carried on by a Crompton Acquired Company
but only if, at the time of such acquisition the revenues
derived from that portion of the Crompton Acquired Company
that engages in Crompton Restricted Activities constitute
less than 15% of the annual gross revenues of the Crompton
Acquired Company.
(iv) "FINANCIAL SERVICES BUSINESS" means any activities undertaken in
connection with or in furtherance of (a) any Capital Markets Activity, (b)
Financing, (c) Leasing, (d) Default Recovery Activities, (e) Other Financial
Services Activities, (f) any Securities Activity, or (g) the sale of Insurance,
the conduct of any Insurance brokerage activities or services or the provision
of Insurance advisory services, businesses processes or software.
(v) "FINANCING" means the making, entering into, purchase of, or
participation in (including, without limitation, syndication or servicing
activities) (a) secured or unsecured loans, conditional sales agreements, debt
instruments or transactions of a similar nature, (b) non-voting preferred equity
investments, and (c) investments as a limited partner in a partnership or as a
member of a limited liability company in which another Person who is not an
Affiliate is a management member.
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(vi) "INSURANCE" means any product or service determined to constitute
insurance, assurance or reinsurance by the laws or regulations in effect in any
jurisdiction in which the restriction set forth in Section 5.14(a)(i) or Section
5.14(a)(ii), as applicable, applies.
(vii) "LEASING" means the rental leasing, or financing under or
syndication of operating leases, finance leases or hire purchase or rental
agreements, of property, whether real, personal, tangible or intangible.
(viii) "OTHER FINANCIAL SERVICES ACTIVITIES" means the offering, sale,
distribution or provision, directly or through any distribution system or
channel, of any financial products, financial services, asset management
services, including investments on behalf of or for the benefit of third party
and client accounts, credit card products or services, vendor financing and
trade payables services, back office billing, processing, collection and
administrative services, or products or services related or ancillary to any of
the foregoing.
(ix) "SECURITIES ACTIVITY" means any activity, function or service
(without regard to where such activity function or service actually occurs)
which, if undertaken or performed (a) in the United States would be subject to
the United States federal securities laws or the securities laws of any state of
the United States or (b) outside of the United States within any other
jurisdiction in which the restrictions set forth in Section 5.14(a)(i) or
Section 5.14(a)(ii), as applicable, apply, would be subject to any law or
regulation in any such jurisdiction governing, regulating or pertaining to the
sale, distribution or underwriting of securities or the provision of investment
management, financial advisory or similar services.
5.15 CERTAIN BUSINESS ARRANGEMENTS
(a) POLYMERADDITIVES.COM.
(i) GE agrees that, because GE's interest in PolymerAdditives.com is an
Excluded SC Asset, Crompton may, as of the Closing Date, sell the products of
the SC Business that are sold by GE currently through PolymerAdditives.com (the
"POLYMER ADDITIVES PRODUCTS") other than through PolymerAdditives.com. In order
to facilitate the transition to sales by Crompton of the Polymer Additives
Products, GE agrees to use commercially reasonable efforts to enable Crompton to
continue selling the Polymer Additives Products through PolymerAdditives.com for
up to three months following the Closing Date, including using such efforts to
obtain any necessary consents (PROVIDED that such cooperation shall not require
GE to make any payment or concession to obtain any such consent, other than time
and reasonable out-of-pocket expenses). The foregoing arrangement shall be for
Crompton's benefit, and Crompton agrees to (A) pay a commission to
PolymerAdditives.com on the sales of Polymer Additives Products sold through
PolymerAdditives.com at the same level that the SC Business currently pays to
PolymerAdditives.com upon the sale of such Polymer Additives Products,
consistent with past practice, and (B) reimburse GE for ordinary course
operating expenses incurred by
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GE in operating PolymerAdditives.com under such arrangement in an amount not to
exceed $50,000 per month. In the event that GE is unable to make the foregoing
arrangements available to Crompton, GE agrees to use commercially reasonable
efforts to provide a comparable alternative arrangement to assist Crompton in
transitioning the sale of Polymer Additives Products through other channels.
(ii) GE agrees to indemnify and hold harmless Crompton from and
against any and all Losses (including reasonable attorneys' fees) incurred by
Crompton arising out of, resulting from, based upon, in connection with or
relating to any liabilities of PolymerAdditives.com (other than as specifically
set forth in Section 5.15(a)(i) above) or any Claim by or against, or any
liabilities to or of, the joint venture partners in PolymerAdditives.com.
(b) CERTAIN OSI AND SC BUSINESS ARRANGEMENTS.
(i) Crompton agrees that it will use commercially reasonable efforts to
assist GE in obtaining satisfactory terms with respect to the contractual
arrangements of the OSi Business that are set forth on SCHEDULE 5.15(B)(I),
PROVIDED that such cooperation shall not require Crompton to make any payment or
concession to obtain any necessary consents, other than time and reasonable
out-of-pocket expenses.
(ii) GE agrees that it will use commercially reasonable efforts to
assist Crompton in obtaining satisfactory terms with respect to the contractual
arrangements of the SC Business that are set forth on SCHEDULE 5.15(B)(II),
PROVIDED that such cooperation shall not require GE to make any payment or
concession to obtain any necessary consents, other than time and reasonable
out-of-pocket expenses.
(c) CERTAIN REAL PROPERTY ARRANGEMENTS. Attached as EXHIBIT 5.15(C) is a
term sheet reflecting the agreement of the parties with respect to the
subdivision and development of certain assets and real property in Rio Claro,
Brazil. Crompton and GE agree that they will use commercially reasonable efforts
to effect the transactions set forth in clause (iii) of EXHIBIT 5.15(C),
PROVIDED that such commercially reasonable efforts shall not require Crompton to
make any payment or concession to obtain any necessary approvals or consents,
other than time and reasonable out-of-pocket expenses, and in all respects shall
take into account local law and practice.
(d) CERTAIN ASSETS IN NANJING. Attached as EXHIBIT 5.15(D) is a term sheet
reflecting the agreement of the parties with respect to the acquisition,
transfer and development of certain assets and real property in Nanjing, China.
Crompton and GE agree that they will use commercially reasonable efforts to
effect the transactions set forth in clause 2(a) of EXHIBIT 5.15(D). All costs
and expenses related to the consummation of the transactions set forth in clause
2(a) of EXHIBIT 5.15(D) shall be borne by Crompton, other than Transfer Taxes,
which shall be allocated in accordance with Section 2.16.
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(e) OSI INDONESIA FACILITY. Crompton agrees that it will, on or prior to
the Closing Date, relocate to, and install and make operational at, real
property included in the Transferred OSi Assets the equipment and personal
property used in the OSi Business and located at the following address: Crompton
Specialties Pte Ltd., Indonesia Rep. Office, Cilandak Commercial Estate
Building, #406-EG, Jl. Cilandak kKO, Jakarta, 125660, Indonesia.
5.16 NOTIFICATION BY THE PARTIES
Between the date of this Agreement and the Closing, (i) Crompton and GE
shall inform each other promptly and on a date that is no more than five
Business Days prior to the Closing, of any pending or threatened litigation or
Action which is reasonably anticipated to (a) render inaccurate in any material
respect any representation or warranty made by Crompton, GE or a GE Affiliate
(as the case may be) or (b) prevent any condition to Closing from being
satisfied and (ii) promptly upon obtaining knowledge thereof, Crompton and GE
shall inform the other of any pending or threatened litigation or Action which
could reasonably be anticipated to prohibit or restrain or materially and
adversely affect the consummation of the transactions contemplated hereby or the
performance by such party of its obligations hereunder. Any such notification
shall not be deemed to have cured any breach of any representation, warranty,
covenant or agreement made in this Agreement for any purposes of this Agreement.
5.17 INTERCOMPANY AGREEMENTS
(a) At or prior to the Closing, Crompton shall, and shall cause each of its
Affiliates to take whatever steps may be necessary to terminate each Crompton
Intercompany Arrangement (including the agreements set forth in SCHEDULE
5.17(A), but excluding any such arrangements contemplated by the Collateral
Agreements), and to release and discharge all intercompany obligations owed by
Crompton or its Affiliates, in each case, in respect of the Transferred OSi
Assets. All such releases and discharges shall be accurately reflected on the
Closing OSi Statement.
(b) At or prior to the Closing, GE shall, and shall cause each of its
Affiliates to take whatever steps may be necessary to terminate each GE
Intercompany Arrangement (including the agreements set forth in SCHEDULE
5.17(B), but excluding any such arrangements contemplated by the Collateral
Agreements), and to release and discharge all intercompany obligations owed by
GE or its Affiliates, in each case, in respect of the Transferred SC Assets,
PROVIDED that nothing shall be done to release or discharge ordinary course
intercompany accounts receivable of the SC Business. All such releases and
discharges shall be accurately reflected on the Closing SC Statement.
5.18 BACKING LETTERS; LETTERS OF CREDIT; GUARANTEES
On or prior to the Closing, (a) Crompton shall use its commercially
reasonable efforts to replace, and obtain an unconditional release of, GE or its
Affiliates with respect to each declaration of backing letter, guarantee or
letter of credit made or issued by or on
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behalf of GE or an Affiliate of GE in respect of the Transferred SC Assets,
including as set forth on SCHEDULE 5.18(A) and (b) GE shall use its commercially
reasonable efforts to replace, and obtain an unconditional release of, Crompton
or its Affiliates with respect to each declaration of backing letter, guarantee
or letter of credit made or issued by or on behalf of Crompton or an Affiliate
of Crompton in respect of the Transferred OSi Assets, including as set forth on
SCHEDULE 5.18(B). In the event Crompton or GE is not able to replace, and obtain
an unconditional release of, the other party with respect to such declaration of
backing letter, guarantee or letter of credit, Crompton or GE, as applicable,
shall indemnify and hold harmless the other party from and against any Losses
incurred by such party or its Affiliates arising out of, resulting from, based
upon, in connection with or relating to such party's continued obligations with
respect to each such declaration of backing letter, guarantee or letter of
credit.
5.19 SC CUSTOMER REMITTANCES
GE agrees that, following the Closing Date, it will forward promptly to
Crompton any correspondence or messages and any monies, checks or other
consideration received by GE or by any of its Affiliates relating to receivables
of the SC Business included in the Transferred SC Assets for periods subsequent
to the Closing Date. Payments remitted shall be applied (regardless of which
party is the actual recipient) on a specific identification basis where such
payment identifies an invoice number, and, where it does not, inquiry will be
made of the payor and the payment shall be applied as directed by the payor.
5.20 DELIVERY OF AUDITED FINANCIAL STATEMENTS
(a) (i) As soon as practicable, Crompton shall deliver to GE audited
statements (together, including the notes, schedules and exhibits thereto) at
and for the 12-month periods ended December 31, 2001 and December 31, 2002,
comprised of: (1) the OSi Combined Statement of Net Assets; and (2) the related
OSi Combined Statement of Revenues and Expenses (the "AUDITED OSI SPECIAL
PURPOSE FINANCIAL STATEMENTS"), accompanied by a report of KPMG to the effect
that the Audited OSi Special Purpose Financial Statements have been audited in
accordance with generally accepted auditing standards and are presented in
accordance with the OSi Accounting Principles. The Audited OSi Special Purpose
Financial Statements shall be prepared from the books and records of Crompton
and the OSi Business and in accordance with the OSi Accounting Principles and
present fairly in all material respects the net assets, revenues and expenses of
the OSi Business as of December 31, 2002 and December 31, 2001, on a basis
consistent with the OSi Accounting Principles at the dates or for the periods
indicated, in each case, except as otherwise expressly set forth in such Audited
OSi Special Purpose Financial Statements. The parties acknowledge and agree that
the Audited OSi Special Purpose Financial Statements shall have been prepared in
accordance with the OSi Accounting Principles consistent with historical
practices of the OSi Business, which may not be the same as those used to
prepare the financial statements of Crompton and its consolidated subsidiaries.
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(ii) The parties agree that after delivery of the Audited OSi Special
Purpose Financial Statements as contemplated hereby, the Audited OSi Special
Purpose Financial Statements shall replace the Unaudited OSi Special Purpose
Financial Statements for all purposes herein, including indemnification
obligations relating to representations and warranties thereto. Notwithstanding
the preceding sentence, the representations and warranties contained in Sections
3.12, 3.19 and 3.21 shall also continue to be made (and the indemnification
obligations related to such representations and warranties shall continue to
apply) with respect to the Unaudited OSi Special Purpose Financial Statements,
but only to the extent such representations and warranties relate to the Base
OSi Net Assets.
(b) (i) As soon as practicable, GE shall deliver to Crompton audited
statements (together, including the notes, schedules and exhibits thereto) at
and for the 12-month periods ended December 31, 2001 and December 31, 2002,
comprised of: (1) the SC Combined Statement of Net Assets; and (2) the related
SC Combined Statement of Revenues and Expenses (the "AUDITED SC SPECIAL PURPOSE
FINANCIAL STATEMENTS"), accompanied by a report of KPMG to the effect that the
Audited SC Special Purpose Financial Statements have been audited in accordance
with generally accepted auditing standards and are presented in accordance with
the SC Accounting Principles. The Audited SC Special Purpose Financial
Statements shall be prepared from the books and records of GE and the SC
Business and in accordance with the SC Accounting Principles and present fairly
in all material respects the net assets, revenues and expenses of the SC
Business as of December 31, 2002 and December 31, 2001, on a basis consistent
with the SC Accounting Principles at the dates or for the periods indicated, in
each case, except as otherwise expressly set forth in such Audited SC Special
Purpose Financial Statements. The parties acknowledge and agree that the Audited
SC Special Purpose Financial Statements shall have been prepared in accordance
with the SC Accounting Principles consistent with historical practices of the SC
Business, which may not be the same as those used to prepare the financial
statements of GE and its consolidated subsidiaries.
(ii) The parties agree that after delivery of the Audited SC Special
Purpose Financial Statements as contemplated hereby, the Audited SC Special
Purpose Financial Statements shall replace the Unaudited SC Special Purpose
Financial Statements for all purposes herein, including indemnification
obligations relating to representations and warranties thereto. Notwithstanding
the preceding sentence, the representations and warranties contained in Sections
4.12, 4.19 and 4.20 shall also continue to be made (and the indemnification
obligations related to such representations and warranties shall continue to
apply) with respect to the Unaudited SC Special Purpose Financial Statements,
but only to the extent such representations and warranties relate to the Base SC
Net Assets.
5.21 INSURANCE
(a) To the extent that there is any loss or casualty on Transferred OSi
Assets between December 31, 2002 and the Closing Date and there exist any
insurance policies owned by Crompton or any of its Affiliates that may cover
such loss or casualty,
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Crompton shall file a claim for the amount of such loss or casualty under such
policies. Any proceeds received by Crompton or its Affiliates in respect of such
claim shall be for the account of GE (or its designated Affiliate), PROVIDED
that the proceeds paid to GE shall be reduced by the amount by which the amount
of Base OSi Net Assets were reduced as a result of such loss or casualty.
(b) To the extent that there is any loss or casualty on Transferred SC
Assets between December 31, 2002 and the Closing Date and there exist any
insurance policies owned by GE or any of its Affiliates that may cover such loss
or casualty, GE shall file a claim for the amount of such loss or casualty under
such policies. Any proceeds received by GE or its Affiliates in respect of such
claim shall be for the account of Crompton (or its designated Affiliate),
PROVIDED that the proceeds paid to Crompton shall be reduced by the amount by
which the amount of Base SC Net Assets were reduced as a result of such loss or
casualty.
5.22 BLENDEX AGREEMENTS
(a) At the Closing, GESC will assign the Blendex Agreements, and all its
rights and obligations thereunder, to Crompton, and such assignment shall be
valid and binding with respect to GEP.
(b) (i) Crompton acknowledges that the ESR Blendex Agreement contemplates
adjusted transfer prices (the "ADJUSTED TRANSFER PRICES") for certain products
to be supplied to the SC Business by GEP under such Agreement that, had such
Adjusted Transfer Prices been in effect for such products during the SC
Business's fiscal year 2002 ("YEAR 2002"), the SC Business would have incurred
additional aggregate cost in Year 2002 of $5,000,000. As promptly as practicable
after the date hereof, KPMG will perform agreed upon procedures (as agreed to by
both parties, the "AGREED UPON PROCEDURES") in connection with the calculations
to determine whether the Additional Aggregate Cost in Year 2002 (as defined in
SCHEDULE 5.22(B)(I)) to the SC Business for such products based upon actual
volumes sold by GESC to customers in Year 2002, as extrapolated by KPMG from the
Unaudited SC Special Purpose Financial Statements, equals $5,000,000. If such
calculations or the Agreed Upon Procedures related to such calculations indicate
that the additional aggregate cost is greater or lesser than $5,000,000 by more
than $100,000, then GEP shall adjust the Adjusted Transfer Prices set forth in
the ESR Blendex Agreement to reduce or increase the 2002 Additional Aggregate
Cost to $5,000,000 (the "ADJUSTED PRICES").
(ii) In addition, KPMG will perform the Agreed Upon Procedures in
connection with the calculations to determine the aggregate impact of the
Adjusted Prices on the SC Business's fiscal year 2003 ("YEAR 2003") using the
GESC 2003 operating plan as reported to GE senior management in GE Specialty
Materials's "Op-Plan" review. If the Aggregate Additional Cost for Year 2003 (as
defined in SCHEDULE 5.22(B)(II)) as a result of the Adjusted Prices is greater
than $5,250,000, the Adjusted Prices shall be reduced so that the 2003 Aggregate
Additional Cost is no more than $5,250,000.
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(iii) KPMG will also perform the Agreed Upon Procedures in
connection with the "Formulation Ratio by Weight" percentages shown in Exhibit E
of the ESR Blendex Agreement and attest to the accuracy of such percentages
(+/-one (1) part by weight for each raw material based on a total product
formulation of 100 parts by weight). If such percentages are inaccurate by more
than one (1) part by weight as described in the preceding sentence, they shall
be adjusted so that they are accurate.
(c) GE will promptly provide, at GE's sole cost and expense, access to any
and all employees, agents, books, files and records of GESC, GEP or any other
Affiliate of GE as may be requested by KPMG or Crompton in order to have KPMG
perform the Agreed Upon Procedures. Each of Crompton and GE shall have access to
KPMG's audit personnel and workpapers as each may reasonably require in order to
evaluate KPMG's reports. If, after KPMG has notified GE and Crompton of its
results, GE and Crompton have any dispute as to the calculations or KPMG's
results, such dispute shall be resolved as set forth in (d) and (e) below.
(d) PROCEDURES FOR DISPUTE RESOLUTION. If the parties have any dispute with
regard to the results of KPMG, the dispute shall be resolved in the following
manner:
(i) during the 30 days after receipt of KPMG's report, each party
shall in good faith attempt to resolve any disputes with respect to KPMG's
report;
(ii) if such dispute(s) cannot be resolved within 30 days, the party
contesting KPMG's report (if contested, the "DISPUTED DETERMINATION") shall
notify the other party in writing on the last day of such time period, which
notice shall specify in reasonable detail the nature of the dispute including,
(i) the disputed term or calculation, (ii) the basis for the dispute with
respect to each term or such calculation, and (iii) the adjustments sought with
respect to each such term or calculation and each such dispute;
(iii) if, at the end of the 30-day period specified in subsection (i)
above, the parties shall have failed to reach a written accord with respect to
the Disputed Determination, the disputed issues shall be arbitrated by the
Referee, in accordance with the arbitration procedures set forth on EXHIBIT
2.10(C)(III) hereto. The Referee shall act as an expert to determine, based
solely on the presentations by the parties, and not by independent review, only
those items or calculations in dispute. The parties acknowledge that in
submitting disputed items to the Referee, neither party shall be entitled to
present items not disputed in the notice of dispute delivered in accordance with
Section 2.10(c)(ii). The determination of the Referee with respect to those
items in dispute, which shall be made within 30 days of its selection, shall be
set forth in a written statement delivered to Crompton and GE, together with the
determinations of the parties with respect to those items accepted by the
parties (not otherwise affected by this Section 5.22(d)(iv)) or otherwise
resolved between Crompton and GE, and shall become the "FINAL DETERMINATION."
The decision of the Referee in accordance with the provisions hereof shall be
final and binding, and there shall be no right of appeal therefrom except in the
event of any fraud or material misrepresentation to the Referee. Each party
shall bear
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the costs, fees and expenses of its own accountants and the costs, fees and
expenses of or related to the Referee shall be borne equally, one-half by
Crompton and one-half by GE.
(e) GE shall provide the Referee access to employees, agents, books, files
and records of GESC or GEP, in each case, to the extent necessary to resolve the
Disputed Determination, and each of Crompton and GE shall provide the Referee
access to KPMG's auditors and workpapers as each may reasonably require in order
to evaluate KPMG's report. Crompton and GE shall use their respective
commercially reasonable efforts to cause Crompton's accountants and GE's
accountants to cooperate with each other in connection with all of their
activities undertaken in connection with this Section 5.22.
5.23 INVENTORY COUNT
(a) Promptly following the Closing Date, if GE so desires, Crompton and GE
shall cooperate to take a count of the OSi Inventories (other than OSi
Inventories located at the sites of customers of the OSi Business) as of the
Closing Date (the "OSI CLOSING INVENTORY COUNT"). If GE so elects, GE and GE's
accountants may participate in the OSi Closing Inventory Count. Such OSi Closing
Inventory Count shall be taken in accordance with the historical
inventory-taking procedures of the OSi Business, which have been disclosed in
writing to GE prior to the date hereof. Crompton and GE hereby agree that the
OSi Closing Inventory Count shall be used in determining the Closing OSi Net
Assets pursuant to Section 2.10. Disputes with respect to the OSi Closing
Inventory Count may only be settled either by GE and Crompton or by referral to
the Referee pursuant to Section 2.10. GE shall coordinate with Crompton with
respect to the timing of the OSi Closing Inventory Count.
(b) Promptly following the Closing Date, if Crompton so desires, GE and
Crompton shall cooperate to take a count of the SC Inventories (other than SC
Inventories located at the sites of customers of the SC Business) as of the
Closing Date (the "SC CLOSING INVENTORY COUNT"). If Crompton so elects, Crompton
and Crompton's accountants may participate in the SC Closing Inventory Count.
Such SC Closing Inventory Count shall be taken in accordance with the historical
inventory-taking procedures of the SC Business, which have been disclosed in
writing to Crompton prior to the date hereof. GE and Crompton hereby agree that
the SC Closing Inventory Count shall be used in determining the Closing SC Net
Assets pursuant to Section 2.10. Disputes with respect to the SC Closing
Inventory Count may only be settled either by Crompton and GE or by referral to
the Referee pursuant to Section 2.10. Crompton shall coordinate with GE with
respect to the timing of the SC Closing Inventory Count.
5.24 CERTAIN INTELLECTUAL PROPERTY MATTERS
(a) RECORDATIONS AND REGISTRATIONS OF ASSIGNMENTS AND LICENSES.
(i) Crompton and GE acknowledge and agree that after the Closing Date,
GE shall have sole responsibility for and shall bear the cost of recording
and/or
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registering the assignments or licenses of Transferred OSi Intellectual Property
to GE in the applicable national and/or regional offices where such recordations
and registrations of Intellectual Property Rights are made.
(ii) Crompton and GE acknowledge and agree that after the Closing Date,
Crompton shall have sole responsibility for and shall bear the cost of recording
and/or registering the assignments or licenses of Transferred SC Intellectual
Property to Crompton in the applicable national and/or regional offices where
such recordations and registrations of Intellectual Property Rights are made.
(iii) Crompton and GE acknowledge and agree that Crompton shall have
sole responsibility for and shall bear the cost of obtaining and duly recording
and/or registering all assignments and any other documents necessary to effect
the transfer to Crompton of those certain Intellectual Property Rights, which
GE, acting in good faith and with the assistance of Crompton, shall, prior to
the Closing Date, specifically identify as material to the conduct of the OSi
Business, for which record title is not, as of the date hereof, in Crompton's
name. Crompton shall use commercially reasonable efforts to complete such
recordations and/or registrations prior to the Closing Date or as soon as
reasonably practicable thereafter.
(iv) Crompton and GE acknowledge and agree that GE shall have sole
responsibility for and shall bear the cost of obtaining and duly recording
and/or registering all assignments and any other documents necessary to effect
the transfer to GE of those certain Intellectual Property Rights, which
Crompton, acting in good faith and with the assistance of GE, shall, prior to
the Closing Date, specifically identify as material to the conduct of the SC
Business, for which record title is not, as of the date hereof, in the name of
GE or an SC Subsidiary. GE shall use commercially reasonable efforts to complete
such recordations and/or registrations prior to the Closing Date or as soon as
reasonably practicable thereafter.
(b) POST-CLOSING MAINTENANCE FEES.
(i) Crompton and GE agree that prior to the Closing Date, Crompton
shall take the following actions with respect to the Transferred OSi
Intellectual Property set forth on SCHEDULE 3.13(A)(I)(A) and the OSi Licensed
Intellectual Property set forth on SCHEDULE 3.13(A)(I)(B): (A) pay all
maintenance fees which are due during the period from the Closing Date until the
date which is 90 days after the Closing Date; (B) make all foreign filings for
which the twelve (12) month foreign filing deadline shall occur during such
90-day period, consistent with past practices and (C) file all PCT national
stage applications for which the applicable deadline shall occur during such
90-day period, consistent with past practices; PROVIDED, that all payments made
with respect to items (A), (B) and (C) herein shall be reflected on the Closing
OSi Statement as prepaid expenses as of the Closing Date for purposes of the
adjustment to the Purchase Price based on the net assets of the OSi Business as
set forth in Section 2.10.
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(ii) Crompton and GE agree that prior to the Closing Date, GE shall
take the following actions with respect to the Transferred SC Intellectual
Property set forth on SCHEDULE 4.13(A)(I): (A) pay all maintenance fees which
are due during the period from the Closing Date until the date which is 90 days
after the Closing Date; (B) make all foreign filings for which the twelve (12)
month foreign filing deadline shall occur during such 90-day period, consistent
with past practices and (C) file all PCT national stage applications for which
the applicable deadline shall occur during such 90-day period, consistent with
past practices; PROVIDED, that all payments made with respect to items (A), (B)
and (C) herein shall be reflected on the Closing SC Statement as prepaid
expenses as of the Closing Date for purposes of the adjustment to the Purchase
Price based on the net assets of the SC Business as set forth in Section 2.10.
5.25 PROVISION OF CERTAIN INFORMATION
(a) ASSUMED OSI LEASES. After the date hereof, Crompton shall use its
commercially reasonable efforts to provide or make available to GE (to the
extent not previously provided or made available) as promptly as practicable
copies of all Assumed OSi Leases, together with any correspondence relating
thereto that is contained in the OSi Business Records.
(b) PERMITS. After the date hereof, GE shall provide or make available to
Crompton (to the extent not previously provided or made available) as promptly
as practicable a list and true and complete copies of all of the SC Permits,
together with any information regarding the SC Permits as Crompton may
reasonably request.
(c) SC BUSINESS CAPITAL COMMITMENTS. After the date hereof, GE shall use
its commercially reasonable efforts to provide or make available to Crompton (to
the extent not previously provided or made available) as promptly as practicable
information with respect to all commitments of GE or the SC Subsidiaries to make
any capital expenditures or capital additions in respect of the SC Business
which have not yet been made in excess of $100,000 individually or in the
aggregate.
5.26 ACCOUNTS PAYABLE AND ACCOUNTS RECEIVABLE
(a) OSI BUSINESS. Crompton agrees that as to be reflected on the Closing
OSi Statement:
(i) the accounts payable included in the Transferred OSi Liabilities
shall have arisen in the ordinary course of the OSi Business consistent with
past practices and shall be bona fide liabilities solely of the OSi Business;
(ii) the accounts receivable included in the Transferred OSi Assets
shall be adequately reserved for doubtful and uncollectible accounts in all
material respects in accordance with GAAP applied on a consistent basis, and the
allowance for doubtful and uncollectible accounts shall be based upon the most
current information
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available as of the Closing Date with respect to each account receivable
included in the Transferred OSi Assets;
(iii) the accounts payable and accounts receivable included in the
Transferred OSi Liabilities and the Transferred OSi Assets shall be on payment
and credit terms consistent with the practices of the OSi Business as of
December 31, 2002; and
(iv) none of the accounts receivable of the OSi Business included in
the Transferred OSi Assets shall be monetized or factored, and all
determinations as to the monetization or factoring of accounts receivable of the
OSi Business (with respect to the credit quality and terms of accounts
receivable to be monetized or factored) shall, since December 31, 2002, be
consistent with the past practices of the OSi Business as of such date.
(b) SC BUSINESS. GE agrees that as to be reflected on the Closing SC
Statement:
(i) the accounts payable included in the Transferred SC Liabilities
shall have arisen in the ordinary course of the SC Business consistent with past
practices and shall be bona fide liabilities solely of the SC Business;
(ii) the accounts receivable included in the Transferred SC Assets
shall be adequately reserved for doubtful and uncollectible accounts in all
material respects in accordance with GAAP applied on a consistent basis and the
allowance for doubtful and uncollectible accounts shall be based upon the most
current information available as of the Closing Date with respect to each
account receivable included in the Transferred SC Assets;
(iii) the accounts payable and accounts receivable included in the
Transferred SC Liabilities and Transferred SC Assets shall be on payment and
credit terms consistent with the practices of the SC Business as of December 31,
2002; and
(iv) none of the accounts receivable of the SC Business included in the
Transferred SC Assets shall be monetized or factored, and all determinations as
to the monetization or factoring of accounts receivable of the SC Business (with
respect to the credit quality and terms of accounts receivable to be monetized
or factored) shall, since December 31, 2002, be consistent with the past
practices of the SC Business as of such date.
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5A. REMEDIATION OF OSI ENVIRONMENTAL CONDITIONS
5A.1 CROMPTON'S OBLIGATIONS REGARDING REMEDIATION OF OSI ENVIRONMENTAL
CONDITIONS
Subject to each of the conditions and limitations set forth in the
remaining sections of this Article 5A, Crompton shall have monetary and legal
responsibility for Remediation Costs of (a) OSi Pre-Closing Contamination and
any Claims related thereto, if and to the extent that an Environmental Agency or
a court determines, in writing, within twenty (20) years following the Closing,
that Remedial Action is required in order to comply with Law, or if and to the
extent that during such period a Third Party Claim is made under Environmental
Laws; (b) those liabilities referred to in Sections 2.5(c) and (d) hereof; (c)
OSi Pre-Closing Contamination if and to the extent an Environmental Agency or
court determines in writing that Remediation is required as a result of an
Environmental Re-opener; and (d) Crompton's allocated share of the closure costs
of Landfill #2 at the Sistersville plant as calculated in accordance with
Section 5A.8 herein.
5A.2 LIMITATIONS ON CROMPTON'S OBLIGATIONS
Notwithstanding any other provision of this Agreement, Crompton shall not
have any liability or legal responsibility for, and GE shall have sole monetary
and legal responsibility for, the following matters:
(a) Remediation Costs or Claims relating to any of the OSi Premises
Post-Closing Contamination including GE's allocated share of Landfill #2 closure
costs calculated in accordance with Section 5A.8 herein;
(b) Remediation Costs associated with Remedial Action that has not been
required in writing within twenty (20) years after the Closing by an
Environmental Agency or a court, or which has not been required to settle or
discharge a Third Party Claim which was asserted within twenty (20) years after
the Closing Date, PROVIDED that such time restriction shall not apply to (i) OSi
Pre-Closing Contamination Remediation Costs if and to the extent an
Environmental Agency or court determines in writing that Remediation is required
as a result of an Environmental Re-opener; or (ii) Crompton's allocated share of
closure costs of Landfill #2 at the Sistersville plant as calculated in
accordance with Section 5A.8 herein;
(c) Remediation Costs associated with any Environmental Claim for which GE
has failed to provide Crompton notice in accordance with Section 5A.4 hereof;
(d) GE Discretionary Remediation;
(e) Remediation Costs incurred as a consequence of (i) a change in Laws,
after the Closing Date, or (ii) a change in the use from industrial to
non-industrial of any of the OSi Premises by GE after the Closing Date;
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(f) Remediation Costs incurred by GE in conducting Remedial Action at any
of the OSi Premises, or any portion thereof, for which a No Further Action
Determination has been obtained except to the extent that (i) an Environmental
Agency or court determines in writing that Remediation is required as a result
of an Environmental Re-opener related to OSi Pre-Closing Contamination or (ii)
there are OSi Post-Remediation Care Requirements;
(g) except as otherwise provided in 9.3(e)(i), costs, expenses or Claims
relating to or associated with (i) testing, cleaning, emptying, repairing or
taking any other action with respect to any fixed assets or fixtures located at
any of the OSi Premises and which are, or may be, contributing to soil or
groundwater conditions requiring Remediation hereunder, (ii) compliance with
Laws relating to the ongoing operations of any of the OSi Premises (excluding
Crompton's allocated share of the Sistersville Landfill #2 closure costs) or
(iii) costs and expenses associated with obtaining and/or maintaining any
financial assurance mechanisms required by Law relating to the post-Closing
operation of any of the OSi Premises;
(h) Remediation Costs necessitated by GE's refusal to assist Crompton in
obtaining reasonable institutional controls, including deed restrictions on the
future use of any of the OSi Premises necessary for Crompton to obtain a No
Further Action Determination, PROVIDED, HOWEVER, that such institutional
controls do not have an adverse effect on GE's ability to operate the OSi
Business or use the Transferred OSi Assets after the Closing as such OSi
Business was operated or Transferred OSi Assets were used prior thereto, and
PROVIDED, FURTHER, that such institutional controls do not have a material
adverse effect on the value or salability of any of the OSi Premises as a site
intended for similar industrial use;
(i) Remediation Costs resulting from GE's actions in contravention of the
provisions of Section 5A.3 or 5A.11 hereof;
(j) All Remediation Costs caused by GE's operation of any of the OSi
Premises after the Closing Date, including Remediation Costs at Third-Party
Sites caused by GE's sending its waste to such Sites after the Closing Date;
(k) All Remediation Costs incurred by GE to settle or discharge a
Third-Party Claim, which settlement or discharge was not approved by Crompton,
PROVIDED, HOWEVER, that Crompton's approval was not unreasonably withheld; and
(l) All costs of camera surveys of the Sistersville plant waste water
treatment system.
5A.3 SOLICITATION OF REMEDIAL ACTION
GE shall take no affirmative action to solicit from any Third Party,
including any Environmental Agency, any proceeding, order, directive or other
mandate to conduct Remedial Action at any of the OSi Premises that Crompton is
responsible for performing
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pursuant to the terms and conditions hereof, unless GE believes in good faith,
and so informs Crompton no less than thirty (30) days in advance in writing,
that GE has a lawful obligation to take such action. In furtherance, and not in
limitation, of the foregoing, GE will not knowingly initiate or undertake any
activity primarily for the purpose of finding conditions requiring Remedial
Action, or accelerating the timing or increasing the cost of any Remedial
Action, unless GE is compelled to take such action by Environmental Law or in
response to a written request from an Environmental Agency. The foregoing shall
not restrict GE from (a) reporting to any Governmental Body, including an
Environmental Agency, any OSi Environmental Condition which GE has a legal
obligation to report under applicable Environmental Laws; (b) conducting
environmental compliance audits to identify violations of Environmental Law at
any of the OSi Premises so long as such compliance audits do not include soil or
groundwater investigations at any of the OSi Premises not compelled by any
Environmental Law or a written request from an Environmental Agency; (c)
investigating subsurface conditions in connection with expansion, modification
or maintenance of buildings, reactors, tanks, improvements, fixtures or
equipment located at any of the OSi Premises; or (d) activities associated with
the Phase II ESAs as provided in Section 5.1.
5A.4 NOTICE
Crompton's obligation to pay Remediation Costs under Section 5A.1 hereof is
expressly conditioned upon GE providing timely written notice to Crompton of (a)
an Environmental Claim; or (b) the fact that Environmental Laws compel Remedial
Action for which Crompton may be responsible pursuant to this Agreement. Notice
shall be considered timely if it is delivered to Crompton within twenty (20)
years after the Closing and within thirty (30) days of GE's receipt of an
Environmental Claim, or GE's determination pursuant to subsection 5A.4(b) herein
that such Remedial Action is required or applicable. Any failure by GE to give
Crompton such timely written notice of such a Claim or determination conforming
in all respects with this Section 5A.4 shall relieve Crompton of liability with
respect thereto to the extent of any prejudice to Crompton. GE's notice shall
include a copy of the Environmental Agency's written determination, if
applicable, made within twenty (20) years after the Closing, that Remediation is
required to comply with Environmental Laws in effect at the Closing or a
citation to the specific Environmental Law that requires such Remedial Action,
as applicable. Failure to include a copy of the Environmental Agency's written
determination shall relieve Crompton of any responsibility under this Agreement
to pay Remediation Costs but only to the extent Crompton is prejudiced thereby.
5A.5 REMEDIATION STANDARD
Crompton's obligation to perform Remediation and/or pay Remediation Costs
at any of the OSi Premises shall be limited to the reasonable cost of work
necessary to achieve the minimally acceptable Remediation criteria for
industrial/commercial properties in the location where any of the OSi Premises
is located, or if subject to a Third-Party Claim, the minimal work or actions
necessary to resolve such a Claim. The issuance of a No Further Action
Determination shall conclusively establish that
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Crompton has met its obligations as provided in this Section 5A.5, except to the
extent such No Further Action Determination is subject to any Environmental
Re-openers. GE acknowledges that the completion of Remediation hereunder to
industrial/commercial standards, and/or the attainment of a No Further Action
Determination, may require engineering controls and institutional controls,
including deed restrictions that may limit future use of any of the OSi
Premises. GE agrees to accept and assist in obtaining such restrictions and
controls as may be required by an Environmental Agency consistent with this
Section 5A.5, and agrees that such restrictions and controls shall be binding on
GE and any successor or assign of GE, PROVIDED, HOWEVER, that such restrictions
and controls do not unreasonably impair the chemical manufacturing operations at
any of the OSi Premises or have a material adverse effect on the value or
salability of any of the OSi Premises as a site intended for similar industrial
use.
5A.6 FINES AND PENALTIES
Crompton shall be responsible for paying any administrative, criminal or
civil fines or penalties assessed by an Environmental Agency in connection with
OSi Pre-Closing Contamination, PROVIDED that Crompton shall not be responsible
for paying any administrative, criminal or civil fines or penalties imposed in
connection with any Remedial Action performed at any of the OSi Premises for
which GE is the Directing Party pursuant to Section 5A.11 or imposed in
connection with GE's actions after the Closing Date.
5A.7 [RESERVED]
5A.8 ALLOCATION OF CERTAIN CLOSURE COSTS
(a) The parties agree to allocate the closure costs of Landfill #2 based
upon the total volume of materials each party deposited in the landfill at the
time of its closing. The volume of material in Landfill #2 attributable to
Crompton shall be calculated by means of a survey of Landfill #2 by the Closing
Date. The volume of material in Landfill #2 attributable to GE shall be
calculated by subtracting the volume attributable to Crompton from the total
volume of material in Landfill #2 at the time GE stops depositing materials in
Landfill #2 determined by means of a survey of Landfill #2 taken at that time.
(b) GE shall be responsible for all closure costs of the active surface
impoundments at Sistersville, but not for Remediation Costs associated with the
active surface impoundments (except to the extent such costs arise from OSi
Post-Closing Contamination).
5A.9 CROMPTON'S OPTION TO OBTAIN NO FURTHER ACTION DETERMINATION
Crompton may, in its sole discretion, satisfy its obligations to address
particular OSi Environmental Conditions at any of the OSi Premises by obtaining
a No Further Action Determination with respect to such OSi Environmental
Conditions; PROVIDED,
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HOWEVER, that the satisfaction for such obligations shall be subject to any
applicable Environmental Re-openers and OSi Post-Remediation Care Requirements
with respect to any of the OSi Premises in its or their entirety and shall only
satisfy such obligations with respect to the particular contaminants and
environmental media identified in and covered by the No Further Action
Determination.
5A.10 [RESERVED]
5A.11 RESPONSIBILITY TO DIRECT WORK
(a) Except with respect to OSi Post-Remediation Care Requirements, Crompton
shall have primary responsibility for directing the performance of any
Remediation for which it is reasonably expected to have at least 50% of the
monetary liability under this Agreement and shall retain all environmental
consultants to perform the Remediation, and GE shall have primary responsibility
for directing the performance of any Remediation for which it is reasonably
expected to have greater than 50% of the monetary liability under this
Agreement, and shall retain all environmental consultants to perform the
Remediation. All environmental consultants so retained shall be with competent,
recognized consulting firms reasonably acceptable to the Other Party. The party
directing the Remediation shall be the "DIRECTING PARTY," and the other party
shall be the "OTHER PARTY." The Directing Party shall review with the Other
Party all material aspects of the proposed Remediation, as described below. The
Directing Party shall provide the Other Party with a draft of any proposed
Remedial Action work plan, investigation report, report regarding completed
Remedial Action and other similar reports and shall provide the Other Party with
an opportunity to review and comment upon the draft for a period of thirty (30)
days before it is submitted to an Environmental Agency or other Third Party. The
Directing Party shall incorporate any reasonable revisions suggested by the
Other Party if: (i) such revisions do not materially alter the cost or scope of
the proposed Remediation, or (ii) such revisions are necessary to comply with
the terms hereof, resolve a Third-Party Claim or comply with Laws. The Directing
Party shall also provide the Other Party with notice of, and the Other Party
shall be entitled to attend, any meetings with representatives of the
Environmental Agency having jurisdiction over the Remediation or environmental
consultants concerning the Remediation. Similarly, the Other Party shall advise
the Directing Party of any matters of which it has knowledge relating to any of
the OSi Premises, which may affect the Directing Party's ability to implement
the Remediation. The Other Party and the Directing Party generally shall
cooperate in good faith to develop a mutually satisfactory Remedial Action plan,
which can be accomplished within any deadlines established by an Environmental
Agency.
(b) The Directing Party shall have the right to initiate communications
with an Environmental Agency concerning the proposed Remediation at any time.
The Other Party agrees that it will not consult with any Environmental Agency
concerning a Remediation being undertaken and paid for by the Directing Party
without first providing notice to the Directing Party, unless after
consideration of the time delay associated with giving prior notice to the
Directing Party, any report that the Other Party is legally
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required to give to an Environmental Agency would be untimely. The Other Party
shall also provide the Directing Party with advance notice of any meeting it
proposes to have with any Environmental Agency concerning the Remediation, and
provide the Directing Party with an opportunity to attend. Regardless of whether
the Directing Party or a representative of the Directing Party attends any such
meeting, or in any other case, the Other Party agrees that it will not take any
action with the intent of interfering with or delaying the Directing Party's
work or increasing the Directing Party's responsibility beyond that which is
required under this Agreement, under any Law, or to resolve a Third-Party Claim.
(c) GE shall perform OSi Post-Remediation Care Requirements as an
independent contractor on Crompton's behalf consistent with practices prior to
the Closing Date and shall prepare and deliver to Crompton annually an invoice
for all such work on each anniversary of the Closing Date. Crompton shall pay
the invoice within thirty (30) days of receipt. Crompton shall have the right to
inspect the work and audit financial records associated with the invoice.
5A.12 IMPLEMENTATION OF WORK
If Crompton is the Directing Party, Crompton shall make all reasonable
efforts to conduct Remediation in a manner that does not materially interfere
with or materially adversely affect GE's operation of any of the OSi Premises at
which the Remediation is being performed. Subject to Crompton's right to direct
the work when it is the Directing Party, GE shall be kept advised of, and may
oversee, the implementation of the Remediation. GE, at its sole expense, and
when it is not the Directing Party, may also reasonably inspect all stages of
the Remediation, PROVIDED that such inspection does not unreasonably interfere
with or delay the work. Following completion of Remediation for which Crompton
is the Directing Party, GE shall have title to all improvements, equipment and
other items required with respect to any Remediation; PROVIDED that, following
completion of Remediation, the Directing Party shall (i) remove or cause to be
removed from the premises being Remediated, all Remediation-related equipment,
materials and wastes not required to perform post-Remediation monitoring or meet
post-Remediation care requirements; and (ii) close, plug and properly abandon
all monitoring wells that were installed by or on behalf of the Directing Party
to affect the Remediation unless the non-Directing Party gives notice that it
elects to retain such wells and such wells are not required for post-Remediation
monitoring.
5A.13 CROMPTON'S ACCESS TO THE OSI PREMISES
Crompton shall be granted access to any of the OSi Premises, for the
purpose of implementing any Remediation for which Crompton is responsible under
this Agreement. Crompton shall coordinate with GE as to the timing of specific
Remediation activities so as to minimize any disruption of GE's operations. In
this regard, Crompton shall provide GE with at least 24 hours' advance notice of
its intention to enter any of the OSi Premises for the purposes of performing
Remediation. GE and Crompton agree to cooperate in good faith to select a
mutually acceptable alternative date for entry onto any of the OSi
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Premises if entry on the date desired by Crompton would result in an
unreasonable interference with GE's use or operation of any of the OSi Premises.
5A.14 INSURANCE
(a) Crompton agrees that, in accessing any of the OSi Premises and/or in
performing Remediation of any of the OSi Premises, Crompton or Crompton's agents
shall carry liability insurance in the following minimum amounts:
KINDS OF INSURANCE IN LIMITS NOT LESS THAN
Workmen's Compensation Statutory
Employer's Liability $100,000 each accident/disease
$500,000 policy limit
Comprehensive General Liability Combined Bodily Injury and Property
Damage
$2,000,000 each person
$2,000,000 each occurrence
Automotive Bodily Injury Liability $2,000,000 each person
(including hired automobiles and $2,000,000 each occurrence
non-ownership liability)
Automotive Property Damage Liability $2,000,000 each person
(including hired automobiles and $2,000,000 each occurrence
non-ownership liability)
Contractors' Pollution Legal $5,000,000 each occurrence
Liability
Umbrella $5,000,000
(b) Crompton agrees to indemnify, defend and hold GE free and harmless from
any Losses, injuries, or liens, arising out of or relating to the conduct of
Remediation, or entry into any of the OSi Premises, by Crompton or its officers,
employees, agents, suppliers, customers, outside contractors or other
representatives or associates, other than such Losses, injuries or liens arising
out of the negligence or willful misconduct of GE or GE's officers, employees,
agents, suppliers, customers, outside contractors or other representatives or
associates.
(c) Prior to Crompton's entry onto any of the OSi Premises for the purpose
stated in Section 5A.13, Crompton shall deliver to GE a certificate of insurance
evidencing compliance with the terms of this Section 5A.14.
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5A.15 NON-APPLICABILITY
Sections 5A.11, 5A.12, 5A.13 and 5A.14 shall not apply to any Remediation
for which GE has sole responsibility.
5B. REMEDIATION OF SC ENVIRONMENTAL CONDITIONS
5B.1 GE'S OBLIGATIONS REGARDING REMEDIATION OF SC ENVIRONMENTAL CONDITIONS
Subject to each of the conditions and limitations set forth in the
remaining sections of this Article 5B, GE shall have monetary and legal
responsibility for Remediation Costs of (a) SC Pre-Closing Contamination and any
Claims related thereto, if and to the extent that an Environmental Agency or a
court determines, in writing, within twenty (20) years following the Closing,
that Remedial Action is required in order to comply with Law, or if and to the
extent that during such period a Third Party Claim is made under Environmental
Laws; (b) those liabilities referred to in Sections 2.9(c) and 2.9(d) hereof;
and (c) SC Pre-Closing Contamination if and to the extent an Environmental
Agency or court determines in writing that Remediation is required as a result
of an Environmental Re-opener.
5B.2 LIMITATIONS ON GE'S OBLIGATIONS
Notwithstanding any other provision of this Agreement, GE shall not have
any liability or legal responsibility for, and Crompton shall have sole monetary
and legal responsibility for, the following matters:
(a) Remediation Costs or Claims relating to any of the SC Premises
Post-Closing Contamination;
(b) Remediation Costs associated with Remedial Action that has not been
required in writing within twenty (20) years after the Closing by an
Environmental Agency or a court, or which has not been required to settle or
discharge a Third-Party Claim which was asserted within twenty (20) years after
the Closing Date, PROVIDED that such time restriction shall not apply to SC
Pre-Closing Contamination Remediation Costs if and to the extent an
Environmental Agency or court determines in writing that Remediation is required
as a result of an Environmental Re-opener;
(c) Remediation Costs associated with any Environmental Claim for which
Crompton has failed to provide GE notice in accordance with Section 5B.4 hereof;
(d) Crompton Discretionary Remediation;
(e) Remediation Costs incurred as a consequence of (i) a change in Laws,
after the Closing Date, or (ii) a change in the use from industrial to
non-industrial of any of the SC Premises by Crompton after the Closing Date;
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(f) Remediation Costs incurred by Crompton in conducting Remedial Action at
any of the SC Premises, or any portion thereof, for which a No Further Action
Determination has been obtained except to the extent that (i) an Environmental
Agency or court determines in writing that Remediation is required as a result
of an Environmental Re-opener related to SC Pre-Closing Contamination or (ii)
there are SC Post-Remediation Care Requirements;
(g) except as otherwise provided in Section 9.3(e)(ii), costs, expenses or
Claims relating to or associated with (i) testing, cleaning, emptying, repairing
or taking any other action with respect to any fixed assets or fixtures located
at any of the SC Premises and which are, or may be, contributing to soil or
groundwater conditions requiring Remediation hereunder, (ii) compliance with
Laws relating to the ongoing operations of any of the SC Premises or (iii) costs
and expenses associated with obtaining and/or maintaining any financial
assurance mechanisms required by Law relating to the Post-Closing operation of
any of the SC Premises;
(h) Remediation Costs necessitated by Crompton's refusal to assist GE in
obtaining reasonable institutional controls, including deed restrictions on the
future use of any of the SC Premises necessary for GE to obtain a No Further
Action Determination, PROVIDED, HOWEVER, that such institutional controls do not
have an adverse effect on Crompton's ability to operate the SC Business or use
the Transferred SC Assets after the Closing as such SC Business was operated or
Transferred SC Assets were used prior thereto and, PROVIDED, FURTHER, such
institutional controls do not have a material adverse effect on the value or
salability of any of the SC Premises as a site intended for similar industrial
use;
(i) Remediation Costs resulting from Crompton's actions in contravention of
the provisions of Section 5B.3 or 5B.11 hereof;
(j) All Remediation Costs caused by Crompton's operation of any of the SC
Premises after the Closing Date, including Remediation Costs at Third-Party
Sites caused by Crompton's sending its waste to such Sites after the Closing
Date; and
(k) All Remediation Costs incurred by Crompton to settle or discharge a
Third-Party Claim, which settlement or discharge was not approved by GE,
PROVIDED, HOWEVER, that GE's approval was not unreasonably withheld.
5B.3 SOLICITATION OF REMEDIAL ACTION
Crompton shall take no affirmative action to solicit from any Third Party,
including any Environmental Agency, any proceeding, order, directive or other
mandate to conduct Remedial Action at any of the SC Premises that GE is
responsible for performing pursuant to the terms and conditions hereof, unless
Crompton believes in good faith, and so informs GE no less than thirty (30) days
in advance in writing, that Crompton has a lawful obligation to take such
action. In furtherance, and not in limitation, of the foregoing, Crompton will
not knowingly initiate or undertake any
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activity primarily for the purpose of finding conditions requiring Remedial
Action, or accelerating the timing or increasing the cost of any Remedial
Action, unless Crompton is compelled to take such action by Environmental Law or
in response to a written request from an Environmental Agency. The foregoing
shall not restrict Crompton from (a) reporting to any Governmental Body,
including an Environmental Agency, any SC Environmental Condition which Crompton
has a legal obligation to report under applicable Environmental Laws; (b)
conducting environmental compliance audits to identify violations of
Environmental Law at any of the SC Premises so long as such compliance audits do
not include soil or groundwater investigations at any of the SC Premises not
compelled by any Environmental Law or a written request from an Environmental
Agency; (c) investigating subsurface conditions in connection with expansion,
modification or maintenance of buildings, reactors, tanks, improvements,
fixtures or equipment located at any of the SC Premises; or (d) activities
associated with the Phase II ESAs as provided in Section 5.1.
5B.4 NOTICE
GE's obligation to pay Remediation Costs under Section 5B.1 hereof is
expressly conditioned upon Crompton providing timely written notice to GE of (a)
an Environmental Claim; or (b) the fact that Environmental Laws compel Remedial
Action for which GE may be responsible pursuant to this Agreement. Notice shall
be considered timely if it is delivered to GE within twenty (20) years after the
Closing and within thirty (30) days of Crompton's receipt of an Environmental
Claim, or Crompton's determination pursuant to subsection 5B.4(b) herein that
such Remedial Action is required or applicable. Any failure by Crompton to give
GE such timely written notice of such a Claim or determination conforming in all
respects with this Section 5B.4 shall relieve GE of liability with respect
thereto to the extent of any prejudice to GE. Crompton's notice shall include a
copy of the Environmental Agency's written determination, if applicable, made
within twenty (20) years after the Closing, that Remediation is required to
comply with Environmental Laws in effect at the Closing or a citation to the
specific Environmental Law that requires such Remedial Action, as applicable.
Failure to include a copy of the Environmental Agency's written determination
shall relieve GE of any responsibility under this Agreement to pay Remediation
Costs, but only to the extent GE is prejudiced thereby.
5B.5 REMEDIATION STANDARD
GE's obligation to perform Remediation and/or pay Remediation Costs at any
of the SC Premises shall be limited to the reasonable cost of work necessary to
achieve the minimally acceptable Remediation criteria for industrial/commercial
properties in the location where any of the SC Premises is located, or if
subject to a Third-Party Claim, the minimal work or actions necessary to resolve
such a Claim. The issuance of a No Further Action Determination shall
conclusively establish that GE has met its obligations as provided in this
Section 5B.5 except to the extent such No Further Action Determination is
subject to any Environmental Re-openers. Crompton acknowledges that the
completion of Remediation hereunder to industrial/commercial standards, and/or
the
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attainment of a No Further Action Determination, may require engineering
controls and institutional controls, including deed restrictions that may limit
future use of any of the SC Premises. Crompton agrees to accept and assist in
obtaining such restrictions and controls as may be required by an Environmental
Agency consistent with this Section 5B.5, and agrees that such restrictions and
controls shall be binding on Crompton and any successor or assign of Crompton,
PROVIDED, HOWEVER, that such restrictions and controls do not unreasonably
impair the chemical manufacturing operations at any of the SC Premises or have a
material adverse effect on the value or salability of any of the SC Premises as
a site intended for similar industrial use.
5B.6 FINES AND PENALTIES
GE shall be responsible for paying any administrative, criminal or civil
fines or penalties assessed by an Environmental Agency in connection with SC
Pre-Closing Contamination, PROVIDED that GE shall not be responsible for paying
any administrative, criminal or civil fines or penalties imposed in connection
with any Remedial Action performed at an SC Premises for which Crompton is the
Directing Party pursuant to Section 5B.11 or imposed in connection with
Crompton's actions after the Closing Date.
5B.7 [RESERVED]
5B.8 [RESERVED]
5B.9 GE'S OPTION TO OBTAIN NO FURTHER ACTION DETERMINATION
GE may, in its sole discretion, satisfy its obligations to address
particular SC Environmental Conditions at any of the SC Premises by obtaining a
No Further Action Determination with respect to such SC Environmental
Conditions; PROVIDED, HOWEVER, that the satisfaction for such obligations shall
be subject to any applicable Environmental Re-openers and SC Post-Remediation
Care Requirements with respect to any of the SC Premises in its or their
entirety and shall only satisfy such obligations with respect to the particular
contaminants and environmental media identified in and covered by the No Further
Action Determination.
5B.10 [RESERVED]
5B.11 RESPONSIBILITY TO DIRECT WORK
(a) Except with respect to SC Post-Remediation Care Requirements, GE shall
have primary responsibility for directing the performance of any Remediation for
which it is reasonably expected to have at least 50% of the monetary liability
under this Agreement and shall retain all environmental consultants to perform
the Remediation, and Crompton shall have primary responsibility for directing
the performance of any Remediation for which it is reasonably expected to have
greater than 50% of the monetary liability under this Agreement, and shall
retain all environmental consultants to perform the Remediation. All
environmental consultants so retained shall be with
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competent, recognized consulting firms reasonably acceptable to the Other Party.
The party directing the Remediation shall be the "DIRECTING PARTY," and the
other party shall be the "OTHER PARTY." The Directing Party shall review with
the Other Party all material aspects of the proposed Remediation, as described
below. The Directing Party shall provide the Other Party with a draft of any
proposed Remedial Action work plan, investigation report, report regarding
completed Remedial Action and other similar reports and shall provide the Other
Party with an opportunity to review and comment upon the draft for a period of
thirty (30) days before it is submitted to an Environmental Agency or other
Third Party. The Directing Party shall incorporate any reasonable revisions
suggested by the Other Party if: (i) such revisions do not materially alter the
cost or scope of the proposed Remediation, or (ii) such revisions are necessary
to comply with the terms hereof, resolve a Third-Party Claim or comply with
Laws. The Directing Party shall also provide the Other Party with notice of, and
the Other Party shall be entitled to attend, any meetings with representatives
of the Environmental Agency having jurisdiction over the Remediation or
environmental consultants concerning the Remediation. Similarly, the Other Party
shall advise the Directing Party of any matters of which it has knowledge
relating to any of the SC Premises, which may affect the Directing Party's
ability to implement the Remediation. The Other Party and the Directing Party
generally shall cooperate in good faith to develop a mutually satisfactory
Remedial Action plan, which can be accomplished within any deadlines established
by an Environmental Agency.
(b) The Directing Party shall have the right to initiate communications
with an Environmental Agency concerning the proposed Remediation at any time.
The Other Party agrees that it will not consult with any Environmental Agency
concerning a Remediation being undertaken and paid for by the Directing Party
without first providing notice to the Directing Party, unless after
consideration of the time delay associated with giving prior notice to the
Directing Party, any report that the Other Party is legally required to give to
an Environmental Agency would be untimely. The Other Party shall also provide
the Directing Party with advance notice of any meeting it proposes to have with
any Environmental Agency concerning the Remediation, and provide the Directing
Party with an opportunity to attend. Regardless of whether the Directing Party
or a representative of the Directing Party attends any such meeting, or in any
other case, the Other Party agrees that it will not take any action with the
intent of interfering with or delaying the Directing Party's work or increasing
the Directing Party's responsibility beyond that which is required under this
Agreement, under any Law, or to resolve a Third-Party Claim.
(c) Crompton shall perform SC Post-Remediation Care Requirements as an
independent contractor on GE's behalf and shall prepare and deliver to GE
annually an invoice for all such work on each anniversary of the Closing Date.
GE shall pay the invoice within thirty (30) days of receipt. GE shall have the
right to inspect the work and audit financial records associated with the
invoice.
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5B.12 IMPLEMENTATION OF WORK
If GE is the Directing Party, GE shall make all reasonable efforts to
conduct Remediation in a manner that does not materially interfere with or
materially adversely affect Crompton's operation of any of the SC Premises at
which the Remediation is being performed. Subject to GE's right to direct the
work when it is the Directing Party, Crompton shall be kept advised of, and may
oversee, the implementation of the Remediation. Crompton, at its sole expense,
and when it is not the Directing Party, may also reasonably inspect all stages
of the Remediation PROVIDED that such inspection does not unreasonably interfere
with or delay the work. Following completion of Remediation for which GE is the
Directing Party, Crompton shall have title to all improvements, equipment and
other items required with respect to any Remediation; PROVIDED that, following
completion of Remediation, the Directing Party shall (i) remove or cause to be
removed from the premises being Remediated, all Remediation-related equipment,
materials and wastes not required to perform post-Remediation monitoring or meet
post-Remediation care requirements; and (ii) close, plug and properly abandon
all monitoring wells that were installed by or on behalf of the Directing Party
to affect the Remediation unless the non-Directing Party gives notice that it
elects to retain such wells and such wells are not are required for
post-Remediation monitoring.
5B.13 GE'S ACCESS TO THE SC PREMISES
GE shall be granted access to any of the SC Premises, for the purpose of
implementing any Remediation for which GE is responsible under this Agreement.
GE shall coordinate with Crompton as to the timing of specific Remediation
activities so as to minimize any disruption of Crompton's operations. In this
regard, GE shall provide Crompton with at least 24 hours' advance notice of its
intention to enter any of the SC Premises for the purposes of performing
Remediation. Crompton and GE agree to cooperate in good faith to select a
mutually acceptable alternative date for entry onto any of the SC Premises if
entry on the date desired by GE would result in an unreasonable interference
with Crompton's use or operation of any of the SC Premises.
5B.14 INSURANCE
(a) GE agrees that, in accessing any of the SC Premises and/or in
performing Remediation of any of the SC Premises, GE or GE's agents shall carry
liability insurance in the following minimum amounts:
KINDS OF INSURANCE IN LIMITS NOT LESS THAN
Workmen's Compensation Statutory
Employer's Liability $100,000 each accident/disease
$500,000 policy limit
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Comprehensive General Liability Combined Bodily Injury and
Property Damage
$2,000,000 each person
$2,000,000 each occurrence
Automotive Bodily Injury $2,000,000 each person
Liability (including hired $2,000,000 each occurrence
automobiles and non-ownership
liability)
Automotive Property Damage $2,000,000 each person
Liability (including hired $2,000,000 each occurrence
automobiles and non-ownership
liability)
Contractors' Pollution Legal $5,000,000 each occurrence
Liability
Umbrella $5,000,000
(b) GE agrees to indemnify, defend and hold Crompton free and harmless from
any Losses, injuries, or liens, arising out of or relating to the conduct of
Remediation, or entry into any of the SC Premises, by GE or its officers,
employees, agents, suppliers, customers, outside contractors or other
representatives or associates, other than such Losses, injuries or liens arising
out of the negligence or willful misconduct of Crompton or Crompton's officers,
employees, agents, suppliers, customers, outside contractors or other
representatives or associates.
(c) Prior to GE's entry onto any of the SC Premises for the purpose stated
in Section 5B.13, GE shall deliver to Crompton a certificate of insurance
evidencing compliance with the terms of this Section 5B.14.
5B.15 NON-APPLICABILITY
Sections 5B.11, 5B.12, 5B.13 and 5B.14 shall not apply to any Remediation
for which Crompton has sole responsibility.
6. CONFIDENTIAL NATURE OF INFORMATION
6.1 CONFIDENTIALITY AGREEMENTS
(a) GE and Crompton agree that the Confidentiality Agreements shall apply
to (i) all documents, materials and other information that each shall have
obtained regarding the other party or such party's Affiliates during the course
of the negotiations leading to the consummation of the transactions contemplated
hereby (whether obtained before or after the date of this Agreement), any
investigations made in connection therewith and the preparation of this
Agreement and related documents and (ii) all analyses, reports, compilations,
evaluations and other materials prepared by either party or its counsel,
accountants or financial advisors that contain or otherwise reflect or are based
upon, in whole or in part, any of the provided information; PROVIDED, HOWEVER,
that, subject to
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Section 6.2(a), the Confidentiality Agreements shall terminate as of the Closing
and shall be of no further force and effect thereafter with respect to
information of one party the ownership of which is transferred to the other
party.
(b) GE and Crompton agree that all confidential information of the other
party relating to pre-Closing research and development conducted with Affiliated
groups of such party shall, in addition to being subject to the Confidentiality
Agreements, be deemed "Trade Secrets" of such party and kept confidential as
provided in Section 6.2.
(c) Notwithstanding anything to the contrary contained herein or in the
Confidentiality Agreements, the Confidentiality Obligations as they relate to
the transactions contemplated by this Agreement shall not apply to the "tax
structure" or "tax treatment" of such transactions (as these terms are used in
the Confidentiality Regulations) from and after the date of this Agreement, at
which point, each party hereto (and any employee, representative, or agent of
any party hereto) may disclose to any and all persons, without limitation of any
kind, the "tax structure" and "tax treatment" of the transactions contemplated
by this Agreement. In addition, each party hereto acknowledges that it has no
proprietary or exclusive rights to any tax matter or tax idea related to the
transactions contemplated by this Agreement.
6.2 CROMPTON'S AND GE'S TRADE SECRETS
(a) Except as provided in Sections 6.2(b) and (d), after the Closing and
for a period of five years following the Closing Date, each of Crompton and GE
agree that it will keep confidential (i) all Trade Secrets of the other party or
its Affiliates that are received from, or made available by, such party either
in the course of the transactions contemplated hereby or as a result of the
consummation of the transactions contemplated hereby (including Trade Secrets of
Crompton that are known to or in the possession of any OSi Business Employees
and Trade Secrets of GE that are known to or in the possession of SC Business
Employees), except for such Trade Secrets of the other party or its Affiliates
that are conveyed as part of the Transferred OSi Assets or Transferred SC
Assets, and (ii) all Trade Secrets relating to the business that it is
transferring to the other party hereby.
(b) Notwithstanding the foregoing, such Trade Secrets shall not be deemed
confidential and neither Crompton nor GE shall have any obligation with respect
to any such Trade Secrets that:
(i) are Trade Secrets of the other party but at the time of disclosure
were already known to Crompton or GE, as the case may be, other than as a result
of this transaction, free of restriction as evidenced by documentation in
Crompton's or GE's possession, as the case may be;
(ii) are or become publicly known through publication, inspection of a
product or otherwise, and through no negligence or wrongful act of Crompton or
GE, as the case may be;
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(iii) are received by Crompton or GE, as the case may be, from a Third
Party without similar restriction and without breach of any agreement;
(iv) are Trade Secrets of the other party but are independently
developed by Crompton or GE, as the case may be, as evidenced by documentation
in Crompton's or GE's possession, as the case may be, to the extent of such
independent development; or
(v) are, subject to Section 6.2(c), required to be disclosed under
applicable Law or judicial process.
(c) If Crompton (or any of its Affiliates) or GE (or any of its
Affiliates), as the case may be, is requested or required (by oral question,
interrogatory, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Trade Secrets of the
other party, such party will promptly notify the other party of such request or
requirement and will cooperate with such other party such that such other party
may seek an appropriate protective order or other appropriate remedy. If, in the
absence of a protective order or the receipt of a waiver hereunder, either party
(or any of its Affiliates) is in the opinion of its counsel compelled to
disclose the Trade Secrets of the other party or else stand liable for contempt
or suffer other censure or material penalty, such party (or its Affiliate) may
disclose only so much of the Trade Secrets of the other party to the Person
compelling disclosure as is required by Law. Crompton or GE, as the case may be,
will exercise its (and will cause its Affiliates to exercise their) commercially
reasonable efforts to obtain a protective order or other reliable assurance that
confidential treatment will be accorded to such Trade Secrets.
(d) Notwithstanding anything in this Article 6 to the contrary, in the
event that any such Trade Secret is also subject to a limitation on disclosure
or use contained in another written agreement between GE and Crompton or either
of their respective Affiliates that is more restrictive than the limitation
contained in this Article 6, then the limitation in such agreement shall
supersede this Article 6.
7. CLOSING
At the Closing, the following transactions shall take place:
7.1 DELIVERIES BY CROMPTON OR THE OSI SUBSIDIARIES
On the Closing Date, Crompton shall (or shall cause an OSi Subsidiary to)
deliver to GE the following:
(a) the Collateral Agreements;
(b) all consents, waivers or approvals theretofore obtained by Crompton
with respect to the sale of the Transferred OSi Assets or the consummation of
the transactions contemplated by this Agreement or the Collateral Agreements;
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(c) a certificate of an appropriate officer of Crompton (in such person's
representative capacity and not individually), dated the Closing Date,
certifying the satisfaction of the conditions set forth in Sections 8.2(a) and
(b);
(d) evidence of the obtaining of, or the filing with respect to, any
required approvals of a Governmental Body set forth on SCHEDULE 3.4;
(e) a certificate in form and substance reasonably satisfactory to GE, duly
executed and acknowledged, certifying that Crompton and each OSi Subsidiary
selling a "United States real property interest" (as defined in Section 897(c)
of the Code) to GE is exempt from withholding under Section 1445 of the Code;
(f) a certificate evidencing the Transferred OSi Subsidiary Shares,
together with the resignations of all directors and officers who are not OSi
Continuing Employees; and
(g) all such customary documents, affidavits and other instruments as
reasonably requested by any title insurance company, PROVIDED that no such
instrument shall alter the parties' rights or obligations hereunder.
7.2 DELIVERIES BY GE
On the Closing Date, GE shall (or shall cause an SC Subsidiary to) deliver
to Crompton the following:
(a) the Purchase Price as provided in Section 2.3;
(b) the Collateral Agreements;
(c) all consents, waivers or approvals theretofore obtained by GE with
respect to the sale of the Transferred SC Assets or the consummation of the
transactions contemplated by this Agreement or the Collateral Agreements;
(d) a certificate of an appropriate officer of GE (in such person's
representative capacity and not individually), dated the Closing Date,
certifying the satisfaction of the conditions set forth in Sections 8.3(a) and
(b);
(e) evidence of the obtaining of, or the filing with respect to, any
required approvals of a Governmental Body set forth on SCHEDULE 4.4(B);
(f) a certificate in form and substance reasonably satisfactory to
Crompton, duly executed and acknowledged, certifying that GE and each SC
Subsidiary selling a "United States real property interest" (as defined in
Section 897(c) of the Code) to Crompton is exempt from withholding under Section
1445 of the Code; and
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(g) all such customary documents, affidavits and other instruments as
reasonably requested by any title insurance company, PROVIDED that no such
instrument shall alter the parties' rights or obligations hereunder.
7.3 CLOSING DATE
The Closing shall take place at the offices of Wachtell, Lipton, Rosen &
Katz, New York, New York, at 10:00 a.m., local time, two Business Days following
the date on which the last of the conditions specified in Article 8 has been
satisfied or waived, or at such other place or time or on such other date as
Crompton and GE may agree upon in writing (such date and time being referred to
herein as the "CLOSING DATE"). The effective time for the consummation of the
transactions contemplated hereby shall for all purposes be 11:59 p.m., local
time, in New York, New York on the Closing Date.
7.4 CONTEMPORANEOUS EFFECTIVENESS
All acts and deliveries prescribed by this Article 7, regardless of
chronological sequence, will be deemed to occur contemporaneously and
simultaneously on the occurrence of the last act or delivery, and none of such
acts or deliveries will be effective until the last of the same has occurred.
8. CONDITIONS PRECEDENT TO CLOSING
8.1 GENERAL CONDITIONS
The respective obligations of GE and Crompton to effect the Closing of the
transactions contemplated hereby are subject to the fulfillment, prior to or at
the Closing, of each of the following conditions:
(a) NO INJUNCTIONS. No order of any court or administrative agency shall be
in effect that enjoins, restrains, conditions or prohibits consummation of this
Agreement or the Collateral Agreements.
(b) ANTITRUST LAWS. Any applicable waiting period under the HSR Act or
other antitrust or competition laws relating to the transactions contemplated by
this Agreement or the Collateral Agreements shall have expired or been
terminated and any approvals or consents required in respect of the antitrust or
competition filings from the applicable foreign Governmental Bodies, including
those of the jurisdictions set forth on SCHEDULE 8.1(B), shall have been
obtained or waived.
(c) CERTAIN PROCEEDINGS. Crompton and GE shall have engaged in all
consultations necessary by law with works councils representing Employees, and
no further actions or consultations shall be required by law with respect
thereto.
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8.2 CONDITIONS PRECEDENT TO GE'S OBLIGATIONS
The obligations of GE to effect the Closing of the transactions
contemplated hereby are subject to the fulfillment, prior to or at the Closing,
of each of the following conditions, any of which may be waived in writing by
GE:
(a) REPRESENTATIONS AND WARRANTIES OF CROMPTON TRUE AT CLOSING. The
representations and warranties of Crompton or its Affiliates contained in this
Agreement (i) that are qualified by materiality shall have been true and correct
as of the date hereof, and that are not so qualified shall have been true and
correct in all material respects as of the date hereof and (ii) without regard
to any limitation or qualification as to materiality in any such representation
or warranty, shall be true and correct as of the Closing Date (except under (i)
or (ii) above to the extent that such representations and warranties are made as
of a specified date, in which case such representations and warranties (without
regard to any limitation or qualification as to materiality) shall be true and
correct as of such date), PROVIDED that this condition shall be deemed satisfied
unless the failure of any such representations and warranties to be true and
correct under (i) or (ii) above, individually or in the aggregate, results in,
or would reasonably be expected to result in, a Crompton Material Adverse
Effect.
(b) PERFORMANCE BY CROMPTON. Crompton and/or the applicable OSi Subsidiary
shall have performed in all material respects all covenants required by this
Agreement to be performed or complied with by it prior to or at the Closing,
including executing the Collateral Agreements pursuant to Section 5.9(a).
(c) FINANCIAL STATEMENTS. GE shall have received from Crompton the
financial statements required under Section 3.12 and Section 5.20(a), and,
subject to Section 12.1(e), five Business Days shall have elapsed since the
delivery of the financial statements required under Section 5.20(a).
(d) LIENS. Crompton shall have either obtained the written release and
waiver from all appropriate Persons of any and all liens, pledges or mortgages
on Transferred OSi Assets that secure Third-Party indebtedness that is not
included in the Assumed OSi Liabilities or, other than with respect to
indebtedness under the Crompton Credit Agreement, made reasonably adequate
provision for the full satisfaction or removal of such liens, pledges or
mortgages.
(e) EXPORT CONTROLS. No Claim has been made or threatened, in writing, by a
Governmental Body alleging a violation of the Export Control Requirements by
Crompton or its Affiliates with respect to the OSi Business which Claim is
reasonably likely to result in material monetary damages or sanctions in respect
of the OSi Business.
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8.3 CONDITIONS PRECEDENT TO CROMPTON'S OBLIGATIONS
The obligations of Crompton to effect the Closing of the transactions
contemplated hereby are subject to the fulfillment, prior to or at the Closing,
of each of the following conditions, any of which may be waived in writing by
Crompton:
(a) REPRESENTATIONS AND WARRANTIES OF GE TRUE AT CLOSING. The
representations and warranties of GE or its Affiliates contained in this
Agreement (i) that are qualified by materiality shall have been true and correct
as of the date hereof, and that are not so qualified shall have been true and
correct in all material respects as of the date hereof and (ii) without regard
to any limitation or qualification as to materiality in any such representation
or warranty, shall be true and correct as of the Closing Date (except under (i)
or (ii) above to the extent that such representations and warranties are made as
of a specified date, in which case such representations and warranties (without
regard to any limitation or qualification as to materiality) shall be true and
correct as of such date), PROVIDED that this condition shall be deemed satisfied
unless the failure of any such representations and warranties to be true and
correct under (i) or (ii) above, individually or in the aggregate, results in,
or would reasonably be expected to result in, a GE Material Adverse Effect.
(b) PERFORMANCE BY GE. GE and/or the applicable SC Subsidiary shall have
performed in all material respects all covenants required by this Agreement to
be performed or complied with by it prior to or at the Closing, including
executing the Collateral Agreements pursuant to Section 5.9(a).
(c) FINANCIAL STATEMENTS. Crompton shall have received from GE the
financial statements required under Section 4.12 and Section 5.20(b), and,
subject to Section 12.1(f), five Business Days shall have elapsed since the
delivery of the financial statements required under Section 5.20(b).
(d) LIENS. GE shall have either obtained the written release and waiver
from all appropriate Persons of any and all liens, pledges or mortgages on
Transferred SC Assets that secure Third-Party indebtedness or made reasonably
adequate provision for the full satisfaction or removal of such liens, pledges
or mortgages.
(e) EXPORT CONTROLS. No Claim has been made or threatened, in writing, by a
Governmental Body alleging a violation of the Export Control Requirements by GE
or its Affiliates with respect to the SC Business which Claim is reasonably
likely to result in material monetary damages or sanctions in respect of the SC
Business.
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9. STATUS OF AGREEMENTS
The rights and obligations of GE and Crompton under this Agreement shall be
subject to the following terms and conditions:
9.1 SURVIVAL
(a) The representations and warranties of GE and Crompton contained in this
Agreement shall survive the Closing solely for the purpose of this Article 9,
and such representations and warranties shall terminate at the close of business
on the date that is the first anniversary of the Closing Date, PROVIDED that (i)
the representations and warranties contained in Sections 3.3, 3.8(a), 4.3 and
4.8(a) shall survive the Closing until the third anniversary of the Closing
Date, (ii) the representations and warranties contained in Sections 3.2(b),
3.2(d), 3.5(a), 3.7(a)(ii), 3.13(a)(ii), 4.5(a), 4.7(a)(ii) and 4.13(a)(ii)
shall survive the Closing until the fifth anniversary of the Closing Date, and
(iii) the representations and warranties contained in Sections 3.15 and 4.15
(and Sections 3.11 and 4.11, but only to the extent that the matters covered
therein do not give rise to indemnification rights under Section 9.3(e)) shall
survive the Closing until the close of business on the date that the applicable
statute of limitations (taking into account any applicable extension periods)
relating to matters addressed by such representations and warranties has
expired. If written notice of a claim for indemnification by any Indemnified
Party in respect of a breach of any representation or warranty has been given
prior to the expiration of such representation or warranty, then such
representation or warranty shall survive as to such claim and only as to such
claim, until such claim has been fully and finally resolved and all obligations
with respect thereto are fully satisfied.
(b) The covenants and agreements of GE and Crompton contained in this
Agreement shall survive the Closing.
9.2 TAX INDEMNIFICATION
Anything in Sections 9.3(a) through (d), (h) and Section 9.4 to the
contrary notwithstanding, indemnification for any and all Tax matters and the
procedures with respect thereto shall be governed exclusively by this Section
9.2 (but shall be subject to the provisions of Section 9.3(f), (g), (i), (j) and
(k)).
(a) (i) Crompton shall indemnify GE and its Affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives and hold them harmless from all liability for Excluded OSi
Taxes.
(ii) GE shall indemnify Crompton and its Affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives and hold them harmless from all liability for Excluded SC Taxes.
(b) (i) GE shall indemnify Crompton and its Affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives and
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hold them harmless from (A) all liability for Taxes relating to the Transferred
OSi Assets or the Acquired OSi Subsidiaries other than Excluded OSi Taxes, (B)
all liability for Transfer Taxes or VAT for which GE is responsible pursuant to
Section 2.16 and (C) all liability for Taxes attributable to a breach by GE of
its obligations under this Agreement.
(ii) Crompton shall indemnify GE and its Affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives and hold them harmless from (A) all liability for Taxes relating
to the Transferred SC Assets other than Excluded SC Taxes, (B) all liability for
Transfer Taxes or VAT for which Crompton is responsible pursuant to Section
2.16, and (C) all liability for Taxes attributable to a breach by Crompton of
its obligations under this Agreement.
(c) (i) Crompton shall indemnify GE and its Affiliates and each of their
officers, directors, employees, stockholders, agents and representatives and
hold them harmless from and against any and all Losses resulting from a breach
of the representations and warranties contained in Section 3.15.
(ii) GE shall indemnify Crompton and its Affiliates and each of their
officers, directors, employees, stockholders, agents and representatives and
hold them harmless from and against any and all Losses resulting from a breach
of the representations and warranties contained in Section 4.15.
(d) CONTESTS.
(i) If any Governmental Body asserts a Claim with respect to Taxes,
then the party hereto first receiving notice of such Claim promptly shall
provide written notice thereof to the party that may be responsible for such
Taxes under this Agreement; PROVIDED, HOWEVER, that the failure of such party to
give such prompt notice shall not relieve the other party of any of its
obligations hereunder, except to the extent that the other party is actually
prejudiced thereby. Such notice shall specify in reasonable detail the basis for
such Claim and shall include a copy of the relevant portion of any
correspondence received from the Governmental Body.
(ii) Notwithstanding anything contained in this Agreement to the
contrary, but subject to Section 2.16(e), neither GE nor Crompton shall have the
right to participate in any defense, settlement or compromise of a Third Party
Claim (A) that the other party is defending and (B) that relates exclusively to
Taxes (other than Taxes relating to the Acquired OSi Subsidiaries to the extent
such matters are otherwise addressed in Section 9.2(d)(iii)-(v)) for which the
other party is responsible, without such party's express written consent.
(iii) Crompton shall have the exclusive right to control, at its own
expense, any audit, examination, contest, litigation or other proceeding by or
against any taxing authority (a "TAX PROCEEDING") in respect of any Acquired OSi
Subsidiary for any Pre-Closing Tax Period other than a Tax Proceeding relating
to a Straddle Period Return; provided, however, that Crompton shall not settle
or compromise any such Tax
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Proceeding if it would adversely affect such Acquired OSi Subsidiary in any
Post-Closing Tax Period without the prior written consent of GE (such consent
not to be unreasonably withheld or delayed). For purposes of this paragraph,
settling or compromising a Tax Proceeding on a basis consistent with a position
previously taken on the relevant Tax return to which such proceeding relates
shall not be deemed to have an adverse effect on an Acquired OSi Subsidiary in a
Post-Closing Tax Period.
(iv) In the case of a Tax Proceeding relating to a Straddle Period
Return of any Acquired OSi Subsidiary with respect to which Crompton could have
responsibility for Taxes pursuant to this Agreement, (A) GE shall control, at
its own expense, such Tax Proceeding and (B) Crompton shall have the right (but
not the obligation) to participate, at its own expense, in such Tax Proceeding.
In the event Crompton elects to participate in such Tax Proceeding, (A) GE shall
provide Crompton with a timely and reasonably detailed account of each phase of
such Tax Proceeding, (B) GE shall consult with Crompton before taking any
significant action in connection with such Tax Proceeding, (C) GE shall consult
with Crompton and offer Crompton an opportunity to comment before submitting any
written materials prepared or furnished in connection with such Tax Proceeding,
(D) Crompton shall be entitled to participate in any meetings with a
Governmental Body relating to such Tax Proceeding, (E) GE shall defend such Tax
Proceeding diligently and in good faith as if it were the only party in
interest, and (F) GE shall not settle, compromise or abandon any such Tax
Proceeding without obtaining the prior written consent of Crompton, which
consent shall not be unreasonably withheld or delayed. Any dispute relating to
the defense, settlement or compromise of any such Tax Proceeding shall be
resolved by the Independent Arbitrator. The Independent Arbitrator's
determination shall be final and binding upon the parties and its expenses shall
be borne equally by the parties.
(v) GE shall have the exclusive right to control, at its own expense,
any Tax Proceeding in respect of any Acquired OSi Subsidiary other than a Tax
Proceeding described in Section 9.2(d)(iii) or (iv); provided, however, that GE
shall not settle or compromise any such Tax Proceeding if it would adversely
affect such Acquired OSi Subsidiary for any Pre-Closing Tax Period for which the
relevant statute of limitations on assessment has not yet expired without the
prior written consent of Crompton (such consent not to be unreasonably withheld
or delayed). For purposes of this paragraph, settling or compromising a Tax
Proceeding on a basis consistent with a position previously taken on the
relevant Tax return to which such proceeding relates shall not be deemed to have
an adverse effect on an Acquired OSi Subsidiary in a Pre-Closing Tax Period.
9.3 GENERAL AGREEMENT TO INDEMNIFY
(a) Subject to Sections 9.1, 9.4 and 9.5, Crompton and GE shall each
indemnify, defend and hold harmless the other party hereto, any Affiliate
thereof, and any director, officer or employee of such other party or Affiliate
thereof from and against any and all Losses to the extent that such Losses arise
out of or in connection with, subject to Section 9.1, the failure of any
representation or warranty of such party contained in this
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Agreement to be true and correct as of the Closing Date (except to the extent
that such representation or warranty is made as of a specific date, in which
case the failure of such representation or warranty to be true and correct as of
such date). For purposes of this Article 9, a breach of the representations and
warranties in this Agreement shall be deemed to exist either if such
representation or warranty is actually inaccurate or breached or if such
representation or warranty would have been breached or been inaccurate if such
representation or warranty had not contained any limitation or qualification as
to materiality, Crompton Material Adverse Effect, Crompton Material Adverse
Change, GE Material Adverse Effect or GE Material Adverse Change (PROVIDED that,
for the avoidance of doubt, for purposes of this paragraph, the term "Material"
in "Material OSi Contracts" and "Material SC Contracts" shall not be deemed to
be such a limitation or qualification). Notwithstanding the foregoing, any
representation or warranty as to the accuracy and completeness of any of
Schedules 3.9(b), 3.13(d), 4.9(b), or 4.13(d) shall not be deemed to be breached
if such Schedule fulfills the applicable representation or warranty as drafted
(I.E., ignoring the immediately preceding sentence).
(b) (i) Crompton further agrees to indemnify and hold harmless GE from and
against any Losses incurred by GE arising out of, resulting from, based upon, in
connection with or relating to: (A) the Excluded Crompton Liabilities (other
than Excluded OSi Taxes); and (B) subject to Section 2.15(a), GE's waiver of any
applicable bulk sales Laws.
(ii) GE further agrees to indemnify and hold harmless Crompton from and
against any Losses incurred by Crompton arising out of, resulting from, based
upon, in connection with or relating to: (A) the Excluded GE Liabilities (other
than Excluded SC Taxes); and (B) subject to Section 2.15(b), Crompton's waiver
of any applicable bulk sales Laws.
(c) (i) Crompton further agrees to indemnify and hold harmless GE from and
against any Losses incurred by GE arising out of, resulting from, based upon, in
connection with or relating to any failure of Crompton to assume, pay, perform
or otherwise discharge any of the Assumed SC Liabilities.
(ii) GE further agrees to indemnify and hold harmless Crompton from
and against any Losses incurred by Crompton arising out of, resulting from,
based upon, in connection with or relating to any failure of GE to assume, pay,
perform or otherwise discharge any of the Assumed OSi Liabilities.
(d) (i) Crompton further agrees to indemnify and hold harmless GE from and
against any Losses incurred by GE arising out of, resulting from, based upon, in
connection with or relating to any failure of Crompton or of any Affiliate of
Crompton to perform any of its covenants and agreements set forth in this
Agreement.
(ii) GE further agrees to indemnify and hold harmless Crompton from and
against any Losses incurred by Crompton arising out of, resulting from, based
upon,
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in connection with or relating to any failure of GE or of any Affiliate of
GE to perform any of its covenants and agreements set forth in this Agreement.
(e) (i) Crompton further agrees to indemnify and hold harmless GE from and
against any Losses, other than fines and penalties, incurred by GE arising out
of the failure of the OSi Business or Crompton or any of its Affiliates to
comply prior to the Closing with any Environmental Laws, but only to the extent
that:
(A) such failure was or is identified in SCHEDULE 3.11 of this
Agreement, in pre-Closing compliance inspection reports exchanged
between the parties prior to the Closing Date pursuant to Section
5.1(c) of this Agreement or within ninety (90) days after
Closing;
(B) such failure is not corrected prior to the Closing Date (the
parties agree that any actual or alleged violations can be
corrected by obtaining written confirmation of compliance from a
Governmental Body having the authority to issue such a
confirmation);
(C) in the case of (i) Losses associated with capital expenditures
necessary to correct any such failures that are included in the
OSi Business long-range capital plan attached hereto as SCHEDULE
9.3(E)(I)(C), the capital expenditures necessary to correct any
such failures exceeds (in the aggregate for all such failures)
the cost estimates in the OSi Business long-range capital plan by
$50,000 or more (in which case this indemnity shall apply to all
such Losses in excess of the budgeted amount), and (ii) Losses
associated with failures for which capital expenditures are not
addressed in the OSi Business long-range capital plan attached
hereto as SCHEDULE 9.3(E)(I)(C), this indemnity shall apply to
all Losses in excess of $25,000 associated with each such
failure;
(D) Losses associated with such failures do not exceed the reasonable
least costly means of achieving full compliance, which compliance
shall be reliable and reasonable;
(E) the Indemnifying Party has the right to inspect the work related
to capital projects necessary to correct pre-Closing violations
of Environmental Law and audit records associated with such work;
and
(F) work necessary to correct such failures commences no later than
the later of one (1) year from the Closing Date or one (1) year
from discovery.
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(ii) GE further agrees to indemnify and hold harmless Crompton from and
against any Losses, other than fines and penalties, incurred by Crompton arising
out of the failure of the SC Business or GE or any of its Affiliates to comply
prior to the Closing with any Environmental Laws, but only to the extent that:
(A) such failure was or is identified in SCHEDULE 4.11 of this
Agreement, in pre-Closing compliance inspection reports exchanged
between the parties prior to the Closing Date pursuant to Section
5.1(c) of this Agreement or within ninety (90) days after
Closing;
(B) such failure is not corrected prior to the Closing Date (the
parties agree that any actual or alleged violations can be
corrected by obtaining written confirmation of compliance from a
Governmental Body having the authority to issue such a
confirmation);
(C) in the case of (i) Losses associated with capital expenditures
necessary to correct any such failures that are included in the
OSi Business long-range capital plan attached hereto as SCHEDULE
9.3(E)(II)(C), the capital expenditures necessary to correct any
such failures exceeds (in the aggregate for all such failures)
the cost estimates in the SC Business long-range capital plan by
$50,000 or more (in which case this indemnity shall apply to all
such Losses in excess of the budgeted amount), and (ii) Losses
associated with failures for which capital expenditures are not
addressed in the SC Business long-range capital plan attached
hereto as SCHEDULE 9.3(E)(II)(C), this indemnity shall apply to
all Losses in excess of $25,000 associated with each such
failure;
(D) Losses associated with such failures do not exceed the reasonable
least costly means of achieving full compliance, which compliance
shall be reliable and reasonable;
(E) the Indemnifying Party has the right to inspect the work related
to capital projects necessary to correct pre-Closing violations
of Environmental Law and audit records associated with such work;
and
(F) work necessary to correct such failures commences no later than
the later of one (1) year from the Closing Date or one (1) year
from discovery.
(f) Amounts payable in respect of the parties' indemnification obligations
shall be treated as an adjustment to the consideration paid for the OSi Business
and/or the SC Business, as appropriate. GE and Crompton agree to cooperate in
the preparation of a
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supplemental Asset Acquisition Statement as required by Section 5.4 and the
Treasury Regulations under Section 1060 of the Code as a result of any such
adjustment. Whether or not the Indemnifying Party chooses to defend or prosecute
any Third-Party Claim both parties hereto shall cooperate in the defense or
prosecution thereof and shall furnish such records, information and testimony,
and attend such conferences, discovery proceedings, hearings, trials and
appeals, as may be reasonably requested in connection therewith or as provided
in Section 5.1.
(g) The amount of the Indemnifying Party's liability under this Agreement
shall be net of any applicable insurance proceeds actually received from
Third-Party insurers (other than a captive or other tax consolidated insurance
Affiliate of such Indemnifying Party), and other savings, including Tax savings,
that actually reduce the overall impact of the Losses upon, the Indemnified
Party or its Affiliates. The indemnification obligations of each party hereto
under this Article 9 shall inure to the benefit of the directors, officers and
Affiliates of the other party hereto on the same terms as are applicable to such
other party.
(h) Each Indemnified Party entitled to indemnification for any Losses
suffered or incurred by such Person resulting from, arising out of, based on or
relating to any breach of any representation or warranty in Sections 3.2(b),
3.2(d), 3.14 and 4.14 or any failure to perform any covenant, agreement or
undertaking of the Indemnifying Party shall be entitled to such indemnification
for the full amount of such Losses regardless of the amount of the Losses. The
Indemnifying Party's liability for all Claims for indemnification brought under
Section 9.3(a) in respect of breaches of any representations or warranties made
by such Indemnifying Party or its Affiliates under this Agreement shall be
subject to the following limitations:
(i) where the Indemnifying Party is Crompton, (A) the Indemnifying
Party shall have no liability under Section 9.3(a) for Claims in respect of
breaches of any representations or warranties made by Crompton or its Affiliates
under this Agreement until the aggregate amount of the Losses incurred with
respect to such Claims exceeds $7,500,000, and the Indemnifying Party shall be
liable for only the amount of such Losses in excess of $7,500,000 and (B) the
Indemnifying Party shall have no liability for any individual Loss relating
thereto that is less than $100,000 and any such Losses shall not be counted
against such $7,500,000 (and in the event that any such Claims result from or
arise out of or in connection with the same or substantially similar facts,
events or circumstances or a series or pattern of facts, events or
circumstances, then the Losses attributed to such Claims shall be aggregated for
purposes of clauses (A) and (B)). Except as provided in Section 9.3(h), the
Indemnifying Party's aggregate liability for all Claims in respect of breaches
of any representations or warranties made by Crompton or its Affiliates under
this Agreement shall not exceed $150,000,000.
(ii) where the Indemnifying Party is GE, (A) the Indemnifying Party
shall have no liability under Section 9.3(a) for Claims in respect of breaches
of any representations or warranties made by GE or its Affiliates under this
Agreement until the aggregate amount of the Losses incurred with respect to such
Claims exceeds $1,500,000,
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and the Indemnifying Party shall be liable for only the amount of such Losses in
excess of $1,500,000 and (B) the Indemnifying Party shall have no liability for
any individual Loss relating thereto that is less than $100,000 and any such
Losses shall not be counted against such $1,500,000 (and in the event that any
such Claims result from or arise out of or in connection with the same or
substantially similar facts, events or circumstances or a series or pattern of
facts, events or circumstances, then the Losses attributed to such Claims shall
be aggregated for purposes of clauses (A) and (B)). Except as provided in
Section 9.3(h), the Indemnifying Party's aggregate liability for all Claims in
respect of breaches of any representations or warranties made by GE or its
Affiliates under this Agreement shall not exceed $30,000,000.
(i) Except with respect to claims based on fraud and/or claims seeking
equitable remedies (including injunctive relief) and except as otherwise
expressly provided elsewhere in this Agreement, the indemnification remedies set
forth in this Agreement shall constitute the sole and exclusive remedies of the
parties hereto with respect to any breach of representation, warranty or
obligation under this Agreement, and, with respect to Remediation of OSi
Environmental Conditions and SC Environmental Conditions, the parties' exclusive
rights and obligations shall be those set forth in Articles 5A and 5B, and the
parties waive all other rights against each other related to such Remediation
and Claims for Remediation, including rights otherwise provided by Law.
(j) Except as set forth in Section 2.3(j), the rights to indemnification
pursuant to this Agreement shall not be subject to set-off for any Claim by the
Indemnifying Party against any Indemnified Party, whether or not arising from
the same event giving rise to such Indemnified Party's Claim for
indemnification.
(k) Notwithstanding anything else in this Agreement, neither GE nor
Crompton shall have any rights to indemnification with respect to any Losses to
the extent such Losses have been accounted for in calculations or adjustments
made pursuant to Section 2.10 hereof.
9.4 GENERAL PROCEDURES FOR INDEMNIFICATION
(a) The Indemnified Party seeking indemnification under this Agreement
shall promptly notify the party against whom indemnification is sought of the
assertion of any Claim, or the commencement of any action, suit or proceeding by
any Third Party, in respect of which indemnity may be sought hereunder and shall
give the Indemnifying Party such information with respect thereto as the
Indemnifying Party may reasonably request, but failure to give such notice shall
not relieve the Indemnifying Party of any liability hereunder (unless the
Indemnifying Party has suffered material prejudice by such failure to give
notice). The Indemnifying Party shall have the right, but not the obligation,
exercisable by written notice to the Indemnified Party within thirty days (or
sooner, if the nature of the Third-Party Claim so requires) of receipt of notice
from the Indemnified Party of the commencement of or assertion of any
Third-Party Claim, to
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assume the defense and control the settlement of such Third-Party Claim that
involves solely money damages.
(b) The Indemnifying Party or the Indemnified Party, as the case may be,
shall have the right to participate in (but not control), at its own expense,
the defense of any Third-Party Claim that the other is defending, as provided in
this Agreement.
(c) The Indemnifying Party, if it has assumed the defense of any
Third-Party Claim as provided in this Agreement, shall not consent to any
compromise or settlement of, or the entry of any judgment arising from, any such
Third-Party Claim without the Indemnified Party's prior written consent (which
consent shall not be unreasonably withheld or delayed); PROVIDED, HOWEVER, that,
if and only if such consent is withheld and the settlement or compromise
involves only the payment of monetary damages and provides an unconditional and
complete release by such Third Party of the Indemnified Parties, the
Indemnifying Party's liability shall be limited to the amount for which the
Indemnifying Party agreed with the claimant to settle and the Indemnifying Party
shall remain responsible for its costs and attorneys' fees to the date such
settlement was rejected by the Indemnified Party and the Indemnified Party shall
be responsible for the attorneys' fees and disbursements in respect of such
Claim thereafter.
(d) If the Indemnifying Party elects not to defend against, negotiate,
settle or otherwise deal with any Third-Party Claim which relates to any Losses
for which indemnification is required hereunder, fails to notify the Indemnified
Party of its election as herein provided or contests its obligation to indemnify
the Indemnified Party for such Losses under this Agreement, the Indemnified
Party may defend against, negotiate, settle or otherwise deal with such
Third-Party Claim. If the Indemnified Party defends any Third-Party Claim, then
the Indemnifying Party shall reimburse the Indemnified Party for any and all
reasonable expenses of defending such Third-Party Claim upon submission of
periodic bills. If the Indemnifying Party shall assume the defense of any
Third-Party Claim, the Indemnified Party may participate, at his or its own
expense, in the defense of such Third-Party Claim; PROVIDED, HOWEVER, that such
Indemnified Party shall be entitled to participate in any such defense with
separate counsel at the expense of the Indemnifying Party if (i) so requested by
the Indemnifying Party to participate or (ii) in the reasonable opinion of
counsel to the Indemnified Party a conflict or potential conflict exists between
the Indemnified Party and the Indemnifying Party that would make such separate
representation advisable.
(e) The Indemnified Party and the Indemnifying Party shall permit each
other reasonable access to books, records, facilities and personnel and shall
otherwise cooperate (including by providing personnel for deposition, interview,
consultation or otherwise as necessary or appropriate) with all reasonable
requests of each other to the extent reasonably necessary to assist it in
defending or settling any such Third-Party Claim; PROVIDED, HOWEVER, that such
access shall be conducted in such manner as not to interfere unreasonably with
the operation of the business of the Indemnified Parties. Except as reasonably
necessary to assist it in defending or settling such action, proceeding or
claim, the Indemnified Party shall not be required to disclose any
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information with respect to itself or any of its Affiliates (or former
Affiliates), and the Indemnified Party shall not be required to participate in
the defense of any claim to be indemnified hereunder, unless otherwise required
or reasonably necessary in the defense of any claim to be indemnified hereunder.
9.5 DISPUTE RESOLUTION
In the event of any dispute, controversy or Claim arising out of or
relating to this Agreement, or the performance thereof, other than any disputes
arising out of Section 2.10, 2.16(e) Section 5.4, Section 5.22, Section 5.23, or
Section 9.2(d)(iv) (which shall be resolved as provided in such sections), the
parties shall first endeavor to resolve such dispute at the working team level
(I.E., among the persons principally responsible for discharging the parties'
respective obligations hereunder). If the parties are unable to resolve the
dispute at the working team level, the dispute shall be referred to a
representative of senior management of each of Crompton and GE for resolution.
The parties shall have thirty (30) days from the date on which such dispute is
referred to their respective members of senior management to resolve the matters
being disputed. If the parties are unable to resolve the disputes within such
thirty (30)-day period, the disputes shall be referred for final resolution at
the discretion of either party in accordance with the provisions of Sections
11.5, 11.6 and 11.7.
10. [RESERVED]
11. MISCELLANEOUS PROVISIONS
11.1 NOTICES
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given upon receipt if (i) mailed by certified
or registered mail, return receipt requested, (ii) sent by Federal Express or
other express carrier, fee prepaid, (iii) sent via facsimile with receipt
confirmed or (iv) delivered personally, addressed as follows or to such other
address or addresses of which the respective party shall have notified the
other.
(a) If to Crompton, to: Crompton Corporation
Attn: General Counsel
199 Benson Road
Middlebury, CT 06749
United States of America
Facsimile: (203) 573-4301
With a copy to: Wachtell, Lipton, Rosen & Katz
Attn: Steven A. Cohen, Esq.
51 West 52nd Street
New York, NY 10019
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United States of America
Facsimile: (212) 403-2000
(b) If to GE, to: GE Specialty Materials
Attn: General Counsel
187 Danbury Road, 2nd Floor
Wilton, CT 06897
United States of America
Facsimile: (203) 761-1924
With a copy to: Weil, Gotshal & Manges LLP
Attn: Howard Chatzinoff, Esq.
Waajid Siddiqui, Esq.
767 Fifth Avenue
New York, NY 10153
United States of America
Facsimile: (212) 310-8007
11.2 EXPENSES
Except as otherwise provided in this Agreement, each party to this
Agreement will bear all the fees, costs and expenses that are incurred by it in
connection with the transactions contemplated hereby, whether or not such
transactions are consummated.
11.3 ENTIRE AGREEMENT; MODIFICATION
The agreement of the parties, which consists of this Agreement, the
Schedules and Exhibits hereto and the documents referred to herein, including
the Collateral Agreements and the confidentiality agreement with respect to GE
Silicones dated April 4, 2003, between GE and Crompton, sets forth the entire
agreement and understanding between the parties and supersedes any prior
agreement or understanding, written or oral, relating to the subject matter of
this Agreement.
11.4 ASSIGNMENT; BINDING EFFECT; SEVERABILITY
This Agreement may not be assigned, except by operation of law, by any
party hereto without the other party's written consent; PROVIDED, HOWEVER, that
(i) either party may assign any or all of its rights and obligations to an
Affiliate of such party (if such assignment does not delay Closing or require
any additional filing, consent or notice), PROVIDED such party continues to
remain fully and unconditionally subject to its obligations under this Agreement
and (ii) Crompton may assign its rights, but not its obligations, in respect of
Sections 2.3(c), (d), (e) and (f) to a Third Party only in connection with the
sale of all or substantially all of its assets to such Third Party, PROVIDED
that neither Crompton nor any such Third Party successor or assignee of Crompton
shall have any remaining right to participate in the Advisory Committee and such
Advisory Committee shall be immediately and permanently disbanded. This
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Agreement shall be binding upon, inure to the benefit of and be enforceable by
the successors, legal representatives and permitted assigns of each party
hereto. The provisions of this Agreement are severable, and in the event that
any one or more provisions are deemed illegal or unenforceable the remaining
provisions shall remain in full force and effect unless the deletion of such
provision shall cause this Agreement to become materially adverse to either
party, in which event the parties shall use commercially reasonable efforts to
arrive at an accommodation that best preserves for the parties the benefits and
obligations of the offending provision.
11.5 GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK IRRESPECTIVE OF AND WITHOUT
REGARD FOR THE CHOICE OF LAWS PRINCIPLES OF THE STATE OF NEW YORK, AS TO ALL
MATTERS, INCLUDING MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, ENFORCEABILITY,
PERFORMANCE AND REMEDIES.
11.6 CONSENT TO JURISDICTION
GE and Crompton irrevocably submit, and agree to cause their Affiliates to
irrevocably submit, to the exclusive jurisdiction of (a) the Supreme Court of
the State of New York, New York County, and (b) the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby (and each agrees that no such action, suit or proceeding relating to this
Agreement or any transaction contemplated hereby shall be brought by it or any
of its Affiliates except in such courts). GE and Crompton further agree, and
agree to cause their Affiliates to agree, that service of any process, summons,
notice or document by U.S. registered mail to such person's respective address
set forth in Section 11.1 above shall be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction as set forth above in the immediately preceding
sentence. GE and Crompton irrevocably and unconditionally waive (and agree not
to plead or claim), and agree to cause the OSi Subsidiaries to irrevocably and
unconditionally waive (and not to plead or claim), any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) the Supreme Court of the State of New
York, New York County, or (ii) the United States District Court for the Southern
District of New York, or that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
11.7 WAIVER OF JURY TRIAL
Each party hereby waives, and agrees to cause each of its Affiliates to
waive, to the fullest extent permitted by applicable Law, any right it may have
to a trial by jury in respect of any litigation directly or indirectly arising
out of, under or in connection with this Agreement. Each party (i) certifies
that no representative of any other party has
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represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other parties hereto have been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
Section 11.7.
11.8 EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
11.9 PUBLIC ANNOUNCEMENT
Prior to the signing of this Agreement, Crompton and GE shall prepare
separate press releases announcing the transaction contemplated hereby, and each
party shall have the opportunity to review and comment on the other party's
press release prior to publication. The parties shall agree on a schedule for
publicizing such press releases and any additional information relating to the
transaction. After the publication of such press releases, each of Crompton and
GE shall make reasonable efforts to consult with the other to the extent
practicable prior to making any additional press releases, announcements or
other statements or communications regarding this Agreement or the transactions
contemplated hereby that disclose information not previously disclosed.
11.10 NO THIRD-PARTY BENEFICIARIES
Nothing in this Agreement, express or implied, is intended to or shall (a)
confer on any Person, other than (i) the parties hereto and their respective
successors or permitted assigns or (ii) as set forth in Article 9, any rights
(including Third-Party beneficiary rights), remedies, obligations or liabilities
under or by reason of this Agreement or (b) constitute the parties hereto as
partners or as participants in a joint venture. This Agreement shall not provide
Third Parties with any remedy, Claim, liability, reimbursement, cause of action
or other right in excess of those existing without reference to the terms of
this Agreement. Nothing in this Agreement shall be construed as giving to any
OSi Business Employee or SC Business Employee, or any other individual, any
right or entitlement under any Crompton or GE Benefit Plan, policy or procedure
maintained by either party, except as expressly provided in such Benefit Plan,
policy or procedure. No Third Party shall have any rights under Section 502,
503, 504 or 510 of ERISA or any regulations thereunder because of this Agreement
that would not otherwise exist without reference to this Agreement. No Third
Party shall have any right, independent of any right that exists irrespective of
this Agreement, under or granted by this Agreement, to bring any suit at law or
equity for any matter governed by or subject to the provisions of this
Agreement.
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11.11 DESIGNATED AFFILIATES
GE shall use its commercially reasonable efforts to identify to Crompton
all of its designated Affiliates for the purposes of the transactions
contemplated by this Agreement as soon as practicable following the date hereof.
GE acknowledges and agrees that any representation, warranty, agreement or
covenant of Crompton which is breached or is not true and correct, shall be
deemed true and correct and not breached to the extent such breach or inaccuracy
resulted solely from the designation by GE of a designated Affiliate or the
failure of GE to designate a designated Affiliate.
12. TERMINATION AND WAIVER
12.1 TERMINATION
This Agreement may be terminated at any time prior to the Closing Date by:
(a) MUTUAL CONSENT. The mutual written consent of GE and Crompton;
(b) FAILURE OF GE CONDITION. GE, upon written notice to Crompton, if any of
the conditions to the Closing set forth in Section 8.2 shall have become
incapable of fulfillment and shall not have been waived in writing by GE;
(c) FAILURE OF CROMPTON CONDITION. Crompton, upon written notice to GE, if
any of the conditions to the Closing set forth in Section 8.3 shall have become
incapable of fulfillment and shall not have been waived in writing by Crompton;
(d) COURT OR ADMINISTRATIVE ORDER. GE or Crompton, upon written notice to
the other, if there shall be in effect a final, non-appealable order of a court
or government administrative agency of competent jurisdiction prohibiting the
consummation of the transactions contemplated hereby;
(e) DIVISION EARNINGS OF OSI BUSINESS.
(i) If the sum of Division Earnings plus depreciation for the twelve-
month period ended December 31, 2002 as set forth on the Audited OSi Special
Purpose Financial Statements is less than $94,800,000, and GE notifies Crompton
of its desire to negotiate within five Business Days following receipt of the
Audited OSi Special Purpose Financial Statements, then the parties hereto shall
negotiate in good faith with respect to any adjustment to the relative economics
of the transactions contemplated hereby in light of the foregoing. If the
parties do not reach agreement on any adjustment within seven calendar days of
such notice, this Agreement shall be terminable by written notice delivered on
such seventh calendar day by GE;
(ii) If the sum of Division Earnings plus depreciation for the twelve-
month period ended December 31, 2002 as set forth on the Audited OSi Special
Purpose Financial Statements is less than $99,800,000 and more than $94,800,000,
the Purchase
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Price payable by GE at Closing shall be reduced by the product of (x) 8.7 times
(y) the difference between such sum of Division Earnings plus depreciation and
$99,800,000;
(iii) For purposes of Sections 12.1(e)(i) and 12.1(e)(ii), any debit
audit adjustment up to $1,600,000 in the Audited OSi Special Purpose Financial
Statements related to the year-end 2002 reversal of the MRO Inventory
Obsolescence reserve shall not be included in Division Earnings.
(f) DIVISION EARNINGS OF SC BUSINESS.
(i) If the sum of Income Before Income Taxes plus interest expense,
corporate allocation, loss on PolymerAdditives.com and depreciation (such sum,
"SC EARNINGS") for the twelve-month period ended December 31, 2002 as set forth
on the Audited SC Special Purpose Financial Statements is less than $29,800,000,
and Crompton notifies GE of its desire to negotiate within five Business Days
following receipt of the Audited SC Special Purpose Financial Statements, then
the parties hereto shall negotiate in good faith with respect to any adjustment
to the relative economics of the transactions contemplated hereby in light of
the foregoing. If the parties do not reach agreement on any adjustment within
seven calendar days of such notice, this Agreement shall be terminable by
written notice delivered on such seventh calendar day by Crompton;
(ii) If SC Earnings for the twelve-month period ended December 31, 2002
as set forth on the Audited SC Special Purpose Financial Statements is less than
$31,500,000 and more than $29,800,000, the Purchase Price payable by GE at
Closing shall be increased by the product of (x) 5.5 times (y) the difference
between SC Earnings and $31,500,000;
(g) DELAY. GE or Crompton, upon written notice to the other, if the Closing
shall not have occurred by the close of business on October 30, 2003 (the
"INITIAL TERMINATION DATE"); PROVIDED, HOWEVER, that, if on the Initial
Termination Date all conditions to the Closing other than the condition set
forth in Section 8.1(b) have been or have become capable of being satisfied,
then the Initial Termination Date shall be extended to the close of business on
April 30, 2004;
PROVIDED, HOWEVER, that the party seeking termination pursuant to clause (b),
(c) or (g) is not then in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
12.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement in accordance with
Section 12.1, this Agreement shall become void and have no effect, without any
liability on the part of any party or its directors, officers or stockholders,
except for the obligations of the parties hereto as provided in Section 3.14,
Section 4.14, Article 6 relating to the obligations of GE and Crompton to keep
confidential certain information, Article 11, Section 12.3 and
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this Section 12.2. Nothing in this Section 12.2 shall be deemed to release
either party from any liability for any willful and material breach of this
Agreement.
12.3 COLLATERAL AGREEMENTS; MATERIAL TO BE RETURNED
(a) In the event of the termination of this Agreement in accordance with
Section 12.1, the transactions contemplated by this Agreement shall be
terminated, without further action by any party hereto, and each of Crompton and
GE shall immediately enter into, or cause its relevant Affiliates to enter into,
written consents to terminate each Collateral Agreement that has been signed by
the parties.
(b) Furthermore, in the event that this Agreement is terminated as provided
herein, as promptly as practicable:
(i) GE shall return or destroy all documents and other material
received from Crompton or any Affiliate of Crompton or any representative of
Crompton or any Affiliate of Crompton relating to the OSi Business or the
transactions contemplated by this Agreement, whether obtained before or after
the execution of this Agreement, to Crompton, and shall destroy all analyses and
other notes containing information ascertained from such documents and
materials; and
(ii) Crompton shall return or destroy all documents and other material
received from GE or any Affiliate of GE or any representative of GE or any
Affiliate of GE relating to GE or the transactions contemplated by this
Agreement, whether obtained before or after the execution of this Agreement, to
GE, and shall destroy all analyses and other notes containing information
ascertained from such documents and materials.
12.4 WAIVER OF AGREEMENT
Any term or condition hereof may be waived at any time prior to the Closing
Date by the party hereto which is entitled to the benefits thereof by action
taken by its Board of Directors or its duly authorized officer or employee,
whether before or after the action of such party; PROVIDED, HOWEVER, that such
action shall be evidenced by a written instrument duly executed on behalf of
such party by its duly authorized officer or employee. The failure of either
party to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor shall it in any way affect the
validity of this Agreement or the right of such party thereafter to enforce each
and every such provision. No waiver of any breach of this Agreement shall be
held to constitute a waiver of any other or subsequent breach.
12.5 AMENDMENT OF AGREEMENT
This Agreement may be amended, modified, superseded or canceled, and any of
the terms, covenants, representations, warranties or conditions hereof may be
waived, only by an instrument in writing signed by each of the parties hereto
or, in the case of a waiver, by or on behalf of the party waiving compliance.
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IN WITNESS WHEREOF, each party has caused this Agreement to be duly
executed on its behalf by its duly authorized officer as of the date first
written above.
CROMPTON CORPORATION
By: /s/ Vincent A. Calarco
---------------------------------
Name: Vincent A. Calarco
Title: Chairman, President and Chief
Executive Officer
GENERAL ELECTRIC COMPANY
By: /s/ William A. Woodburn
---------------------------------
Name: William A. Woodburn
Title: Senior VP